MB 79 | November 2010 by Macau Business

YESTERDAY’S HERO MANUFACTURING DEAD ON ITS FEET

ISSN 1812-6855

EXCLUSIVE INTERVIEW POLICY PLEDGES

LAWRENCE HO

knows what he’s thirsty for: more mass market and better results. And he says Melco Crown deserves more land, too

THINK TWICE

NI N

CAN CREATIVITY CREATE PROFIT? G

& SPIRI INE TS W ,

FI N E D I

We want more

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NOVEMBER AUGUST 2010

NOVEMBER 2010

Photo: Lines Lab

Economy & Finance 28 Healthy households Local households enjoy significant net wealth 29 Waste not, want not New water tariff scheme begins in January 30 Is the end nigh? Macau’s manufacturing sector is dying on its feet 33 Getting it together Experts applaud the expansion of the Zhuhai Special Economic Zone

Politics 38 Keeping score What did Fernando Chui Sai On achieve from what he promised in his maiden policy address? 43 Changing channels Government-backed report recommends changes for TDM

Legal affairs 44 Waiting for justice Cases are piling up in Macau’s courts

MB Report 46 Constructing creativity Can cultural and creative industries be profitable?

Property 54 Market watch Investors are still trying to assess the effect of government measures to curb speculation NOVEMBER 2010

CEO Interview

60 Lawrence Ho Melco Crown’s boss talks about land, results and the need to outperform the market

Gaming 68 Billions race New monthly revenue record 69 The lion awakes MGM Macau’s operating profits go up 71 Stock watch Eye-popping results 74 Step by step Interview with Success Universe Group’s Hoffman Ma 78 Round one Former Sands China chief Steven Jacobs sues Las Vegas Sands 80 Cards off the table Signing on gamblers for membership programmes is tough work in Macau 83 New battle in casino war New Cotai launches lawsuits against Macao Studio City partners 84 The Indochina frontier There is money to be made at Cambodia’s mini-casinos 86 Back in business Seoul’s Seven Luck Casino has reopened

Business 87 The Eastern Starbucks Comebuy’s plans to grow

SEPTEMBER NOVEMBER 2010

119 Meetings & Conventions 88 Fair quantity, mixed quality How useful is the Macau International Trade and Investment Fair?

Technology 92 Opportunity knocks E-commerce is making inroads among local consumers 94 Clueless about wireless The government’s free wireless Internet network has been switched on, but who knows about it?

Essential 97 Fine dining, wine and spirits Your guide to indulgence

Arts & Culture 113 Artistic foundation Macau Foundation is gearing up to buy works from local artists 115 A diva in Cotai Sarah Brightman dazzles fans 116 Boys’ own tale “THE Living ROOM” asks ´What does manhood mean?´

NOVEMBER 2010

Special 119 Grand Prix Your guide to Macau’s biggest sport event

Corporate Social Responsibility 164 Swinging success Charity was the real winner at the Macau Business Charity Golf Tournament

Entertainment 172 Golf calling card Swiss town of Lugano holds golf tournament in Macau

Opinion 10 From the publisher’s desk Paulo A. Azevedo 13 Editorial Emanuel Graça 25 The need for predictability José I. Duarte 37 Why target big banks? Avinash Persaud 59 Effort plus income does note equal benefit Keith Morrison 96 The other Asia Ejaz Ghani 118 Premature virtue George Soros 173 Pulling a MacGyver Ricardo Andorinho

SEPTEMBER OCTOBER 2010

Start again THE GOVERNMENT’S CLUMSY ATTEMPT TO initiate a revision of the Press Law and Broadcasting Operation Ordinance has become one of the silliest attacks on common sense. It has also demonstrated that there are government bureaus which should have been seriously remodelled a long time ago. The Government Information Bureau commissioned a study by specialists from the Macau University of Science and Technology to get the revision process underway. The process is typical of the Information Bureau, from the same playbook as the unusual way they attribute their publications or create strange agreements leading to the creation of news outlets under their wing. The bureau feels it should change laws it believes are old, although, deep down, you suspect it has no intention of creating a Press Council as was defined long ago in the current legislation. It wants to change the law because of the influence of the Internet and because there are updates to be made. However, they do not know how to go about it. We would be surprised if they knew. The university does not know either and the report it submitted contains only questions – four, to be precise. Answers? None.

A need for transparency If the government’s intention was to find answers, they had to be content with more questions. As if the government isn’t

NOVEMBER 2010

confused enough and knee-deep in a long exercise of pretending it can cope with Macau’s fast growth and the growing need for transparency. It is transparency that is required in the decision-making process. Transparency in Macau took hundreds of years to develop, against a culture of disrespect for the simplest norms of civility that worked to achieve the absolute opposite results. The outcome was opacity, indecipherable policies, a situation that only provided privileges to a few. Obviously, the law revision process was attacked by the press, with greater potency by the non-Chinese Press. The director of the “Macau Daily Times” raised the issue in his editorial. “By its own reasoning, the University of Science and Technology feels that any answers to those questions are to be found among the local population. It also gives the mass media professionals the ‘privilege’ of being included among the lot. “Oddly enough, one of the four questions dwells precisely on the doubt whether there is a need to change the law, if so, whether changes should be deep and defacing”. I’m grateful to my colleague Rogério Beltrão Coelho for confirming that I’m not an extraterrestrial, after all. There are those who consider this curious case to be just another example of the lack of common sense, a lack that should make us cry, then laugh – albeit nervously because these people are leading us.

“When a public consultation process is launched, its aims are often to disguise the policy-making process and provide a sense that the final result was not previously decided”

A few days later, the director of the Portuguese daily “Ponto Final” couldn’t help but go further, highlighting the lack of insight demonstrated when something is changed without first consulting the professionals operating in that area. “The Information Bureau wants to conduct a survey among the general population, as if these laws are discussed while smoking a cigarette and having a couple of coffees, or while having a couple of dumplings and a Tsingtao,” wrote Isabel Castro. She concludes, and I agree: “Just because I have a general idea about what should be the characteristics of a nurse or a doctor, I won’t dare comment on specific competences”. “And just because I have a few personal opinions on the role of lawyers, I don’t expect to be heard when their internal regulations are being formulated”.

Hiding the real issue What are we supposed to think when public departments continue to produce this sort of nonsense – despite the strong

arguments against – and then act as if it is a question of honour and disregard the damage to the public image of their institutions? Days after Castro’s article, I read a commentary from Newman Lam, associate professor of University of Macau’s Public Administration Department. The “Hoje Macau” report began: “There’s an overall lack of courage from government officials to go forward with reforms and some of them believe that public consultations are nothing more than empty measures, with the sole purpose of making people feel better”. It continued, the “occultation of results from public consultations regarding certain policies has also allowed social elites to, indirectly, influence the political decision process”. In these matters, good faith is irrelevant. When a public consultation process is launched, its aims are often to disguise the policy-making process and provide a sense that the final result was not previously decided. This sort of trick has worked well throughout the years. Still, just like the competence of some department heads, this trickery also has an expiry date. So, what do you say? Shall we begin anew, taking advantage of a near-new political leadership and create drastic procedural changes, in order to effectively create greater transparency in government?

NOVEMBER 2010

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

Let’s get serious

The most troubling question has not yet been asked: is there a market for cultural and creative products made in Macau? Experience says one needs to be cautious, to say the least

THE CULTURAL AND CREATIVE INDUSTRIES ARE THE Macau government’s latest attempt to diversify the casino-dominated economy. If that is to happen, there is still much to be done, as we report in this issue of Macau Business. For starters, what does the concept mean? According to UNESCO, cultural industries “are defined as those industries which produce tangible or intangible artistic and creative outputs, and which have a potential for wealth creation and income generation through the exploitation of cultural assets and production of knowledgebased goods and services (both traditional and contemporary)”. Unlike Hong Kong, in Macau there is no official estimate of the cultural and creative industries’ contribution to the economy. It is easy to conclude that Macau currently does not have enough people engaged in producing artistic and creative products to give the sector any real weight in terms of job creation. Further, the wealth creation and income generation from these activities is at very low levels. Most of the cultural and creative production taking place in Macau is as a hobby or a second job, not as the primary source of income. However, the most troubling question has not yet been asked: is there a market for cultural and creative products made in Macau? Experience says one needs to be cautious, to say the least. Several projects in the cultural industries, including fashion clothing design, film, video and other audiovisual production, live music, performing arts and entertainment, visual arts, antiques, writing and publishing have struggled to survive. Many closed because of lack of demand.

Potential but no vision It is clear that Macau, with its rich history and mix of cultures, does have some potential to develop cultural industries, especially those in which inspiration is derived from heritage.

The question is whether that potential is enough to allow real economic diversification, as the government hopes. There is just too much doubt about whether the sector will be worth a relevant slice of Macau’s GDP any time soon. Even taking an optimistic perspective, greater government involvement would be required if the idea was to take off. At this stage, the chief executive and his team are just not putting enough effort or cash into it. There is neither a strategy nor even a clear choice of which areas to promote and which to ditch. Macau, with loads of money and proper planning, coupled with the importation of highly skilled labour, could potentially trigger the creation of a small but highly competitive local creative cluster relatively swiftly. This would first need vision, which is currently in short supply.

Where are the MICE? Poor planning is seen not only in the cultural and creative field. The bet previously backed by the government to promote economic diversification was the meetings, incentives, conventions and exhibitions (MICE) industry. Here too, the lack of an aggressive strategy to position Macau in such a highly competitive market has meant that the city still lags behind its competitors in the region. However, if we compare cultural industries to the conventions and exhibitions industry, the latter offers greater potential for economic diversification in Macau. This is because its value chain is closely linked with that of the hospitality sector, which has expanded rapidly over recent years to support the boom in the gaming industry. Macau does need to push forward a cluster of cultural industries but not for its potential economic role. Cultural industries are sorely needed here for their crucial role in identity building and for their contribution to freedom of expression and cultural diversity. In short, they could help Macau recover the soul it seems to have lost in pursuit of fast economic growth. NOVEMBER 2010

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NOVEMBER 2010

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Disclaimer: In Macau Business magazine, the translation of MOP amounts into US$ amounts (and vice-versa) is made at the rate of MOP8 to US$1 for the purposes of illustration only.

NOVEMBER 2010

We Deliver Decision Makers

NOVEMBER 2010

Gaining momentum Progress on minimum wage to take place in 2011, says government he Secretary for Economy and Finance, Francis Tam Pak Yuen, said last month that the government hopes to acquire “a consensus on a certain level” in 2011 regarding the implementation of a minimum wage in Macau. Mr Tam said that such consensus could then work as a framework for Macau to begin the legislative process on this area. “There is a possibility to launch the work on a legislation framework next year”, he added. According to Mr Tam, cleaning, security and property management could become the first industries chosen to

implement the measure. A recent survey commissioned by the Macau Federation of Trade Unions concluded that the majority of the 4,290 respondents were in favour of an hourly minimum wage between MOP30 and MOP34. A total of 85 percent of respondents said they supported the creation of legislation on minimum wage. The Standing Committee for the Coordination of Social Affairs will discuss the minimum wage for the first time early this month.

Population more confident in economy: survey Macau’s Economic Confidence Index has increased steadily during the third quarter of 2010, according to the most updated Macao Public Confidence Index Survey Report. Macau’s Economic Confidence Index achieved an average score of 61.3 points for the third quarter of 2010. In the first quarter of 2010, the index average was 55.1 points. The range

of this index is from 0 to 100. The index soared to its highest level in September, with 77 percent of respondents saying the economic situation nowadays in Macau was “kind of good” or “very good”. The Macao Public Confidence Index Survey Report is organized by the Macao Polling Centre and the Macao Polling Research Association.

Fibre optic broadband on the way

Macau perceived as more corrupt

The director of the Bureau of Telecommunications Regulation, Tou Veng Keong announced that the government and CTM have achieved an agreement regarding the prices for the company’s residential fibre optic broadband service. The official monthly fees will be MOP608 for the 50 megabytes per second plan, and MOP780 for the 100 megabytes service. However, during the first two years of operation, the company will offer promotional fees of MOP488 and MOP588, respectively, Mr Tou told Radio Macau. In its initial stage, the service will only be available in the most densely populated areas of Macau peninsula and Taipa.

Macau dropped to 46th on the 2010 Transparency International 2010 Corruption Perception Index. A year ago, the territory was 43rd. On a regional level, Macau is ranked 10th within the Asia-Pacific region. The 2010 Corruption Perception Index measures the perceived levels of public sector corruption in 178 countries and regions around the world. Denmark, New Zealand and Singapore were the countries with the best score.

NOVEMBER 2010

Dagong Global issues rating for Macau Dagong Global Credit Rating Co. Ltd., a Chinese credit rating firm, released last month its second sovereign or regional credit rating report covering nine countries and regions, including Macau. In terms of domestic currency-denominated debt, Macau was rated AA-plus. Compared to the U.S.-based Moody’s, Standard & Poor’s, and Fitch, Dagong Global gave Macau a higher rating. Neighbouring Hong Kong received the firm’s top AAA rating, while Taiwan received an AA-minus. Dagong Global provides three-level (A,B,C) assessments, with each level containing three sub-levels, for example AAA, AA, A. Dagong Global released its first sovereign credit rating report on July, covering 50 countries.

CEM to have contract extended

No raises yet Social security contributions to stay put potential increase in the value of the current regular contributions from workers (MOP15) and employers (MOP30) to Macau’s social security system will not take place in 2011, it was announced last month. The consensus was reached at a meeting between representatives of the government, employers and workers. However, all parties agreed that it is necessary to increase the contribution’s amount in the future, in order to ensure the system’s sustainability. Macau will launch a new social security system on January 1, 2011. It basically extends the coverage of the current system to more people, but with no major changes in terms of benefits. Meanwhile, the Social Security Fund, which has been supervised by the secretary for

NOVEMBER 2010

Economy and Finance since the establishment of the Macau SAR in 1999, will come under control of the secretary for Social Affairs and Culture next year. The transfer of supervision takes into consideration the closer links between the fund and departments under the secretary for Social Affairs and Culture in the future, such as the Social Welfare Bureau. Adjustments to the function and structure of the fund will be made. The government also appointed Ip Peng Kin, the current president of the Social Welfare Bureau, as president of the administrative committee of the Social Security Fund, starting November 1, replacing Fung Ping Kuen. Mr Fung will assume the post of deputy director of the Centre of Sino-Western Cultural Studies Centre of the Macao Polytechnic Institute.

Macau’s only electricity utility CEM will have its contract renewed for 15 years this month, according to the director of the Energy Sector Development Office, Arnaldo Santos. Mr Santos said that the new contract would reduce the current 12-percent guaranteed profit return rate to a single digit rate, according to Macau Post Daily. With the new contract, CEM will retain its monopoly as Macau’s only electricity supplier.

Xi Jinping closer to the top Vice President Xi Jinping was appointed vice chairman of the Central Military Commission of the Communist Party of China last month. Mr Xi, who is in charge of Hong Kong and Macau affairs, is seen as the most likely successor of Hu Jintao, who will step down as China’s president in 2012. Mr Xi’s latest promotion is seen as a key point in his move to become China’s next leader. He last visited Macau in January 2009.

NOVEMBER 2010

Farewell, professor Lawyer cum writer Henrique de Senna Fernandes passes away ocal Macanese lawyer cum writer Henrique de Senna Fernandes passed away on October 4. He was 86 years old. Mr Senna Fernandes’ literary works (novels and short stories) are a significant contribution to the history of Macau in the last 50 to 60 years. His works not only contributed to a better understanding between the Chinese and the Portuguese communities but also reflect the way in which the two harmonized each other. They are also regarded as major contributions to the establishment of a Macau identity. Mr Senna Fernandes was often referred to as “Macau’s living memory”.

He is the author of “The Bewitching Braid” (1993), and “Love and Tiny Toes” (1986) which were both turned into films, “Nam Van - Stories of Macau” (1978) and “Mong Há” (1998). Born in 1923, Mr Senna Fernandes graduated in Law in 1952 from Coimbra University, Portugal, where he wrote his first fiction. He worked as a lawyer in Macau for more than 50 years. He was the oldest member of the local lawyers’ community. He was a study colleague and friend of several renowned intellectuals such as Carlos Wallenstein, one of the best Portuguese actors and theatre directors, and Agostinho Neto, poet and the first President of Angola.

French companies suffering from labour pains

Viva president to launch new airline

Imported labour constraints are “the only clear expression of dissatisfaction” from French companies operating in Macau, says the consul general of France in Hong Kong and Macau, Marc Fonbaustier. However, in an interview with Macau Daily Times, Mr Fonbaustier stressed that French businessmen are still “very confident” in the prospects of the local economy. Currently there are around 30 French companies in Macau, Mr Fonbaustier said.

President of the defunct low cost airline Viva Macau Ngan In Leng says he is planning to start a new private jet company. Mr Ngan said he was currently waiting for the arrival of new airplanes, but didn’t give any other details on the project, Macau Post Daily reported.

Macau less risky

Photo: Luís Almoster | mspagency.org

Macau rose 15 places on Euromoney’s country risk ranking and is now 30th among 186 countries and territories, with 74.40 points out of 100. In the previous ranking, released in March, the territory was in position 45. Norway (93.33) tops the list, followed by Switzerland (90.22) and Sweden (88.93). Hong Kong (87.18) is the only Asian representative in the top 10. It ranks ninth, while six months ago it was 16th. Political risk, economic performance/ projections, debt indicators, credit rating and access to bank finance/capital markets are some of the factors included in the ranking. NOVEMBER 2010

NOVEMBER 2010

Hard times

Local companies investing in Zhaoqing

SMEs neglected by the government, says association leader he local small and medium enterprises (SMEs) have been neglected by the government in comparison to the gaming sector, says the SMEs Association president, Stanley Au. “They have given priority to the casinos; they even gave free training to the casino staff”, he said in an interview with Macau Daily Times. Mr Au conceded that the government has introduced some policies to help local SMEs, but he says the companies “are not making much use of them, because they are not user-friendly”, requiring too much paperwork and red tape. He also harshly criticized the restrictions on importing labour, noting that there is not a general unemployment problem in Macau – this only affects construction workers and some very low-quality

workers, Mr Au stressed. “There are even some small businesses that employ unqualified local people just for the sake of getting their imported labour quota. These people are not hired to work, they are just hired to satisfy the Human Resources Office”, he pointed out. According to Mr Au, local SMEs “are having a very difficult time,” especially due to the “shortage of labour and very high rentals”. He added, “a lot of companies have shut down”. Mr Au also mentioned the lack of bargaining power of local SMEs to compete with the government and casinos in terms of wages. Although not being in favour of a minimum wage, Mr Au said “all the local SMEs are willing to pay a minimum wage if they can get more foreign labour”.

Eighteen co-operation projects were signed last month between Macau and Zhaoqing companies. The agreements inked are worth US$1.3 billion. The investment and industrial projects cover the real estate, hotel, jewellery and leisure industries. According to Zhaoqing Mayor Guo Feng, a total of “136 enterprises from Macau have been incorporated in Zhaoqing, and Macau has become an important region for Zhaoqing to attract foreign capital”. Zhaoqing is a prefecturelevel city of Guangdong province, northwest of Macau.

Smuggled ivory seized Customs officials seized a ton of raw and carved smuggled ivory last month in Coloane, near the Westin Resort golf course. The value of the seizure was estimated at MOP10 million (US$1.25 million). No arrests were made during the operation, as two men allegedly involved in the contraband were able to escape.

New head for Macau Affairs Office

Photo: Luís Almoster | mspagency.org

The State Council has announced the appointment of Vice Foreign Minister, Wang Guangya, as the new director of the Hong Kong and Macau Affairs Office. Mr Wang replaced Liao Hui in the post. Mr Wang, who is 60, had been working at the Ministry of Foreign Affairs since 1975 and served as China’s permanent representative to the United Nations from 2003 to 2008. During his time at the United Nations, Mr Wang helped build relations between China and third world countries. The Chief Executive, Fernando Chui Sai On, has congratulated Mr Wang on his appointment.

NOVEMBER 2010

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

The need for predictability THE GOVERNMENT’S PUZZLING BEHAVIOUR ON ESSENTIAL LABOUR AND LAW POLICIES MAY IMPACT ECONOMIC AND SOCIAL STABILITY t is an accepted fact of life that governments sometimes play their cards close to their chests. The ill-timed disclosure of intentions or news can cause harm or endanger the likelihood of achieving stated objectives. But it is also understood that steadiness and clarity of purpose are essential qualities of good governance. In a sense, it is as important to know what the government wants through its objectives, as it is to ensure that its policies are “good”. If governments can create and sustain a political and legal framework that is transparent and stable - therefore, predictable - public administrations can reduce uncertainty and promote economic and social stability. We all gain from this state of affairs. It provides individuals and companies with a setting where they can plan and act without unnecessary uncertainty. There are a few areas where the administration’s dependability is critical for companies and investors, let alone citizens. In two of them, in very noticeable ways, the behaviour of the Macau administration is somewhat puzzling.

Labour hurdles

Few areas today are as critical for Macau’s future development as the labour market. It is worrying to find the administration behaving erratically, if not arbitrarily, in this area. According to recent statistics and media reports, after months of contraction in the hiring of non-resident workers, their number is on the rise. In some cases, authorisations for imported labour have been issued in the thousands. It appears we live in a permanent regime of stop-and-go, alternating periods of labour starvation with periods of excess. The reasons are never properly substantiated by anything more than expressions of bare populism or through the invocation of vaguely defined market necessities. The decisions do not seem to be the result of a vision for the future or a necessary measure to achieve an explicit objective. They are never explained as a required tool to answer an obvious need or the outcome of an education or training policy. The stop-and-go regime leaves the impression of an administration pandering to the demands of whoever is noisiest at any single moment, irrespective of real market conditions or the practical consequences of such action. These consequences, we must underline, go well beyond the labour market itself. Is anyone counting the costs – social, economic, environmental – that this stop-and-go course of action has inflicted on the businesses and people of the Pearl River Delta region?

Changing laws for what?

Let us next look at the legal system. Time and time again, we hear complaints about the overall running of the courts. They question the adequacy of the law, protest against the perceived insufficient use of Chinese in the system and they state the need for changes because the laws are “old”. You name it. Seldom, if ever, do those levelling the criticism underpin their claims with adequate practical or theoretical reasons to

Photo: Luís Almoster | mspagency.org

justify the demand that this law or that law should be changed. The issue has been around for a long time but it gains added relevancy when top justice officials declare - without solid justification or, seemingly, reflection - the need to introduce changes that appear potentially hurtful to the consistency of the system. The calls for change could be viewed as a diversion, a symptom of the difficulties justice officials face in determining the causes of a perceived problem and in then finding a solution. This hypothesis may be the case if, as others suggest, any remedy that fails to correct the deficiencies attributed to the system means the problem probably lies, first and foremost, in the inadequacy of the diagnostics.

Making this clear

To stop fighting ghosts, we should nonetheless start by clarifying a few issues. First, contrary to what is often implied, there are no laws that are not available in both official languages. Second, in the case of the law, age is not an argument. Major laws and legal principles do not come with a use-by date and should only be changed when they clearly fail to fulfil their purpose. Third, that justice is carried in one language or another is not an essential matter. What is needed is that justice is seen to be done in a consistent and speedy way at all times. Finally, just a modicum of common sense would suggest the need to deal with these matters with the utmost care. The stability of the legal system and the coherence of law enforcement are essential elements to sustain social stability and an environment favourable to business and investment. That stability may be at risk if, as a result of insufficiently mature ideas and hastily implemented changes, a coherent system is transformed in a patchwork of rules made to suit circumstantial, and not necessarily compatible, opinions and interests. Unsettlingly, in both the areas addressed here, the labour market and the legal system, the main threats to stability appear to be precisely those whose responsibilities include the duty to preserve it. NOVEMBER 2010

Photo: Luís Almoster | mspagency.org

Sharp increase in imported workers

The number of imported workers has increased for the third month in a row, after almost two years of decline. In August, the total number of non-resident workers in Macau stood at 73,719, up by 1,510 people or two percent in comparison with the previous month. In September 2008, Macau had a total of 104,281 imported workers, but since then the number has continually fallen month-to-month until it began to rise up again for the first time in June 2010.

Unemployment rate unchanged The Macau unemployment rate for July-September 2010 remained unchanged from the previous period (June-August 2010) at 2.9 percent, official figures show. The number of unemployed people held stable at 9,400. With more graduates entering the labour market, the proportion of fresh labour force entrants looking for their first job rose by 1.8 percentage points over the previous period to 19 percent. Analyzed by industry, employment in restaurants and similar activities saw a decrease, while the gaming sector and wholesale and retail trades registered an increase.

Forex reserves up

The preliminary estimate of Macau’s foreign exchange reserves amounted to MOP169.7 billion (US$21.23 billion) at the end of September 2010, according to the monetary authority. The reserves rose by 2.7 percent from the revised value of MOP165.2 billion for the previous month. When compared with a year earlier, the reserves increased by MOP27.4 billion or 19.3 percent. Macau’s foreign exchange reserves at end-September 2010 represented 33 times the currency in circulation.

NOVEMBER 2010

Less labour injuries A total of 2,626 workers became victims of labour injuries in Macau during the first six months of 2010, a decrease of 5.4 percent year-on-year. Four victims died and one lost his long-term working ability, according to figures released by the Labour Affairs Bureau. Analyzed by the victims’ careers, the majority worked in the service industry and in the hotel and restaurant sectors.

MOP2.91 billion for wealth sharing The government has so far spent a total of MOP2.91 billion on the 2010 edition of the so-called “Wealth Partaking Scheme”, it was officially announced. According to this program, each local permanent and non-permanent resident received MOP6,000 and MOP3,600 from the government, the same amount as last year. Overall, the government expects to spend a total of MOP3.38 billion on the scheme. However, 13.2 percent of the 487,000 cheques issued have still not been cashed.

Airport losing passengers Macau International Airport handled a total of 364,014 passengers in August, a year-on-year decrease of 10 percent. In August, the airport dealt with 3,077 aircraft movements, a year-on-year decrease of 9.4 percent. In the first eight months of 2010, the airport handled a total of 2.8 million passengers, a yearon-year 0.5 percent drop. Meanwhile, the airport has announced that several new routes linking Macau to mainland China and South East Asia will be launched in the forthcoming months. Xiamen Airlines will launch its first Macau-Jinjiang service on November 5, operating three services a week. By the end of November, new entrant Jin Air, a Korean low cost company will start scheduled services operating between Macau and Incheon, the airport said. In the coming November and December, Air Macau will also add new routes to Singapore, Ninbo, and Hefei.

Still hiring civil servants

The number of public sector workers in Macau has increased every year since 2005, according to official data. Just in the first half of 2010, 562 new workers were admitted. As of the end of June 2010, Macau had 22,558 public sector workers. However, almost half of them had temporary contracts. One third of Macau’s public sector workers have basic monthly wages ranging between MOP11,800-17,641. A total of 270 people earn MOP53,100 or more and 3,364 workers take home less than MOP11,800 each month.

Public revenue rising In the first nine months of 2010, Macau’s total public revenue (not including autonomous agencies) rose by 37.3 percent to MOP55.82 billion (US$7 billion). The increment was attributable to notable increases in direct taxes from gaming and other current revenue, up by 60.5 percent and 46.2 percent respectively. Direct taxes from gaming totalled MOP46.56 billion. Total public expenditure was MOP23.91 billion, with a year-on-year increase of 17.7 percent. A fiscal surplus of MOP31.91 billion was recorded in the first nine months of 2010, up by 56.7 percent as compared with the same period last year.

Inflation soars Macau’s Composite Consumer Price Index (CPI) for September 2010 increased by 3.83 percent year-on-year, on account of dearer prices of men’s clothing, women’s shoes, gold jewellery, fresh seafood, vegetables, gasoline and airfares. Prices also rose for outbound package tours, outpatient medical services and meals bought outside the home. The Composite CPI is Macau’s main indicator for inflation. The Composite CPI for September increased by 0.27 percent, while the average Composite CPI for the first nine months of 2010 increased by 2.43 percent year-on-year. For the 12 months ended September 2010, the average Composite CPI rose by 1.78 percent from the preceding period.

NOVEMBER 2010

Economy & Finance

Healthy households A pioneering study of the financial position of the city’s households finds most enjoy significant net wealth and low debt ow has the remarkable recent upsurge in income and housing prices affected Macau households’ asset and liability positions? A first answer is finally available, with a new study concluding that “Macau’s household balance sheet appears to be healthy” even after so many rapid changes in fortune. The results of the study, conducted by Annette Un of the Monetary Authority of Macau, were published in last month’s issue of the Macau Monetary Research Bulletin. This is the first attempt to construct a balance sheet of the household sector, aimed at assessing its financial vulnerability. The study used an indirect approach to estimate the assets and liabilities of the household sector last year (see tables). It concluded that households’ assets greatly outweigh liabilities, while household net wealth was about MOP427 billion at the end of last year.

Growth spurt While the sector’s financial position appears healthy, there has been a marked increase in gross liabilities. Between the end of 1999 and last year, loans to individuals increased from MOP24.4 billion to MOP42.4 billion. NOVEMBER 2010

Photo: Luís Almoster | mspagency.org

While the sector’s financial position appears healthy, there has been a marked increase in gross liabilities. Between the end of 1999 and last year, loans to individuals almost doubled While the Un report describes the mortgage ratio (the ratio of mortgage loans to household liabilities) as “relatively high”, it also says: “The low ratios of outstanding loans to GDP/personal disposable income as well as the high ratio of net wealth to personal disposable income reveal [a] light debt burden on the households.” The report adds: “Household assets provide apparently sufficient support for the debts incurred to Macau households. Total household liabilities are valued at less than 15.0 percent of total household financial assets, or less than 10.0 percent of total household assets. Such a low level of indebtedness and the strong financial position within the household sector helps explain the resilience of both the Macau economy and its financial system.” For the purposes of the study, a household is defined as either an individual that occupies one dwelling, or two or people that share a single dwelling and jointly consume goods and services. Ms Un’s study describes households as key functional units of an economic system. “Therefore, their financial positions fundamentally affect the performance of the economy,” it says.

Waste not, want not

The new water tariff scheme begins in January, with the heaviest users including casinos and hotels paying the highest price

n two months from now, think twice before you open the tap. From January 1, Macao Water’s residential consumers will be billed according to their consumption. Commercial and industrial users will pay different rates, depending on their industry, with casinos and hotels paying the most. The government says the new tariff scheme will discourage waste. For residential consumers, the first 28 cubic metres consumed every two months will cost MOP4.35 per cubic metre, the next 28 cubic metres will cost MOP4.83 per cubic metre and each cubic metre after will cost MOP5.27. The commercial and industrial sectors, public bodies, schools, hospitals and associations are classified as general non-residential users, and will be charged MOP5.27 per cubic metre. Casinos, hotels, saunas, golf courses, construction sites and provisional water users belong in a “special consumption use” category and will pay the highest rate, MOP5.80 per cubic metre. At present, all users pay MOP4.39 per cubic metre. The government estimates that 61 percent of

households will pay less for their water from January but only a marginal MOP0.04 to MOP1.12 less every two months. All other households will pay more. Nine percent of residential consumers will pay MOP12.08-plus more. The government expects that around 75 percent of users in the commercial, industrial and service sectors will pay about MOP30 more every two months. Casinos and hotels will pay, on average, MOP2,000 more.

Gently does it The director of the Maritime Administration, Susana Wong Soi Man, says the increases are gentle. “It is the first time we have set up such changes. Residents are used to paying

low water bills and we don’t want to go ahead with a big change in society,” she said. The strategy is to take a stepby-step approach, Ms Wong says. The new scheme will remain in force until 2013. The government wants to end subsidies for imported water gradually, as people become more comfortable with the principle that the more they use, the more they should pay. The government subsidises water imported from the mainland at a rate of MOP1 a cubic metre. According to Macao Water’s deputy general manager, Oscar Chu Wai Man, the new scheme is not expected to benefit the company financially. Macao Water is the city’s sole water utility.

NOVEMBER 2010

Economy & Finance Economy & Finance

Photos: John Si

Is the end nigh?

It used to be an economic powerhouse and at its height employed more people directly than the gaming industry. But after two decades of body blows, Macau’s manufacturing sector is dying on its feet. Time is running out to save the “Made in Macau” brand BY EMANUEL GRAÇA

acau’s manufacturing industry seems to be heading towards its death unless someone steps in. Historically dominated by the textile and garment sector, the industry has always been labour-intensive and export-oriented, with most of its products ending up in stores in the United States and Europe. This formula no longer seems to work. It was in the 1990s that manufacturing’s luck changed as its business model stopped making sense amid rising domestic wages and competitive pricing from newly developing industrial countries, including the mainland. At the

NOVEMBER 2010

same time, the city’s economic structure also started to change, leaning towards the service industries which are dominant today. A slow agonising death has since then kicked in.

Waning influence The GDP contribution of the traditional manufacturing sector has slumped dramatically, down from 37 percent in the 1980s to less than 3 percent in 2007. In 2009 the production value and other receipts from the sector was MOP7.79 billion, down year-on-year by 31.9 per-

cent. The gross value added amounted to MOP1.67 billion, decreasing by 22.2 percent. Also down is the number of factories: in 2009, there were 1,002, 4.2 percent fewer than in the previous year. Most of the companies that closed were in the textile and garment sector. A far cry from the halcyon days of the 1980s when there were more than 1,500 registered factories in Macau, covering more than 50 lines of business. Back then, the industry directly employed nearly 70,000 people, a figure which has never been achieved by

The only chance for survival is the creation of successful quality brands, after many years of providing services to international companies, businessmen say the gaming sector, which employs just 44,000 people today. However, times have changed. At the end of the first quarter of 2010, only 15,203 people were employed in manufacturing, far fewer than the 18,200-plus dealers in Macau’s casinos at the end of last year.

Going down This slump has had a direct impact on Macau’s exports, the value of which stood at MOP7.67 billion in 2009, down 52.1 percent on the previous year - a figure far less than the monthly revenues generated by Macau’s casinos. Last year the value of textile and garment exports shrank by 73 percent year-on- year to account for 32.2 percent of the total exports in 2009. It was the first time since the handover that the val-

Export blues O

ue of non-textile exports surpassed that of textile and garment exports. However, it must be noted that in 2009, non-textile exports also fell by a sharp 24.4 percent. Markets for “Made in Macau” products have also changed. Exports to the United States and Europe, which used to be the territory’s biggest clients, dropped by 79.6 and 60.3 percent, respectively. Since last year, Hong Kong has been Macau’s biggest exporting consumer. Exports to the former British colony fell by “only” 4.7 percent in 2009, accounting for 39.3 percent of the territory’s total export value in the period.

percent have 100 or more people. This has prevented most companies from benefiting from economies of scale while making it harder to innovate or access financial, technical and human resources. Using labour-intensive practices, the manufacturing industry offers wages seen as very low and unattractive. In March 2010, the average monthly earnings of full-time workers - excluding bonuses and allowances - was MOP5,780, with sewing machine operators earning just MOP3,480 on average.

Weaknesses

After the handover in 1999, the Macau government tried to push manufacturing, but with no success. In October 2003, the Mainland China and Macau Closer Economic Partnership Arrangement (CEPA) was signed, coming into force in January 2004. Six subsequent supplementary protocols to CEPA were also signed. There were expectations that CEPA could help the local manufacturing industry to flourish once more. Under CEPA, all goods originating from Macau that have established rules of origin are able to enjoy zero-tariffs in the mainland. It was hoped this could give the territory an edge,however the impact has been disappointing. From January 2004 until July 2010, the accumulated exports of CEPA goods reached only MOP140 million, according to official data. In another bid to promote the local

One of the industry’s weaknesses is that small businesses still dominate. Around 85 percent of companies in the sector have fewer than 30 workers and only 3

nly 36.5 percent of Macau’s interviewed manufacturers in the second quarter of 2010 were optimistic about the territory’s exports in the coming six months, an official survey released by the Economic Services Bureau shows. Among these, the majority expect that exports will only “slightly increase”. Meanwhile, some 26.1 percent of the interviewed manufacturers deemed that exports will slow down in the coming six months. The survey also indicated that 77.8 percent and 77.6 percent of the interviewed manufacturers respectively said they faced the challenge of surging prices of materials and increasing international competition in the second quarter. Some 40.9 percent, 33.1 percent and 38.2 percent of the manufacturers respectively said they were affected by the problems of a lack of orders, worker shortages and increasing wages.

No CEPA salvation

NOVEMBER 2010

Economy & Finance

The future of the local manufacturing industry is far from bright. Although the government keeps on supporting it with subsidies and other measures, it is no longer a political priority manufacturing industry, the Macau government proposed a plan to the central government to build a cross-border industrial zone between Macau and Zhuhai to combine the advantages of the two regions. The idea was approved by the State Council in December 2003 and the industrial zone was inaugurated in December 2006. However, the project failed to fulfil expectations, and drew much criticism from local businessmen. Recently, the government announced that the industrial zone will be reviewed and its operations will be upgraded.

Bye, bye quotas Things got worse for the local manu-

facturing industry in 2005, with the removal of the international garment trade quota system. Macau had benefited from this scheme which had been in place for about 40 years, but was now obliged to start competing with some developing countries, like the mainland and India, which were able to offer lower export prices. More bad news was to come. In April 2008, the European Union started applying a 16.5 percent duty on shoes manufactured in Macau. This was after finding that mainland exporters were shipping leather shoes via the territory or assembling them here, to evade a levy which had been imposed on China since 2006 to

A second chance? T

he rising renminbi can benefit the Macau manufacturing industry, says Antonio Chui Yuk Lum, vice-chairman of the board of directors of the Macau Industrial Association. According to Mr Chui, the higher renminbi is reducing profits for local businessmen that have transferred their factories to mainland China. This is because export invoicing is done in US dollars, while operational costs are paid in renminbi, he said, quoted by Macau Post Daily. Mr Chui also noted that eventual anti-dumping measures applied to China by foreign countries would also not affect Macau-made products. “In due course, these investors may switch their investments from the mainland to Macau. This is giving Macau’s manufacturing sector a second chance,” he said. Macau’s currency, the pataca, is indirectly linked to the US dollar.

NOVEMBER 2010

punish Chinese exporters for selling leather shoes in Europe below prices in the mainland or below production costs. Macau imported 5.1 million pairs of shoes from China between April and December 2007 compared with 40,000 during the same period in 2005, according to the EU.

What of the future? The future of the local manufacturing industry is far from bright. Although the government keeps on supporting it with subsidies and other measures, it is no longer a political priority. In recent years, the government has instead stressed the need for economic diversification in sectors closer to gaming, like conventions and exhibitions. Another bet are the so-called cultural industries, although Fernando Chui Sai On’s team has failed to provide a clear development plan for this area yet (see MB Report in this issue). The only chance for survival is the creation of successful quality brands, after many years of providing services to international companies, businessmen say. This is the approach the Industrial Association of Macau has been trying to push forward, asking the government to promote “Made in Macau” products in the mainland. The question is whether that will be enough to revive this dying industry.

Getting it together Experts applaud the recent expansion of the Zhuhai Special Economic Zone BY HERMAN HE

ou may not have noticed it yet but the neighbouring Zhuhai Special Economic Zone is now bigger – much bigger. Last month the zone was expanded to include the entire urban area of the Zhuhai municipality. The zone now covers 1,687.8 square km of land and 5,965.2 square km of sea. Unlike in the past, new enterprises established in the expanded zone will not benefit from the same preferential tax policies as those already operating there. According to some experts, the expansion of the Zhuhai Special Economic Zone will boost the region’s economic development. More importantly, it will

clear up the mess caused by having different rules in different parts of the greater Zhuhai municipality. Professor Zheng Tianxiang of the Centre for Studies of the Pearl River Delta at Sun Yat-Sen University points out that, before, several elements of the infrastructure important for the economic development of Zhuhai, such as the port, airport and the railway to Guangzhou, were outside the zone, as were key industries such as the marine engineering and equipment manufacturing, aerospace and petrochemical industries.

By increasing the zone’s area, the State Council has brought all under one umbrella, Mr Zhen says. He believes this will be crucial for the cohesion and development of the greater Zhuhai municipality, improving its competitiveness. Yang Zhenghu, chairman of the Guangdong Contemporary Economic Research Centre, says that before Zhuhai had a “one city, two jurisdictions” system, meaning that there was one set of rules for companies inside the special economic zone and another for those outside. Mr Yang says this made management of the municipality much more challenging, resulting in uneven development and income differences between the two parts of Zhuhai. The decision to integrate the urban area of the municipality with the special economic zone will improve regulation and boost the urbanisation and modernisation of Zhuhai, he says.

NOVEMBER 2010

Economic Trends by JosĂŠ I. Duarte Prices

TABLE 1 - Consumer Price Index (CPI)

TABLE 1

100=(Apr08-Mar09) 105

100 95

80 75 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 10 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

Table 1 shows the consumer price index or CPI was mostly flat last year. In fact, there was a slight deflation of prices at the start of the year. This year, prices have increased quickly. This recent change has given rise to some concerns about a return of high levels of inflation. Let us note that, in absolute levels, the inflation rate cannot be considered high. On a quarterly basis the rate stands at about 2 or 3 percent across the last three periods. That is after a trough in the fourth quarter of last year. The rate of inflation certainly deserves a degree of attention, as the more recent data suggests that the rate of growth is accelerating. TABLE 2

TABLE 2 - CPI: select components

Food&Bev

100=(Apr08-Mar09)

House&Fuels

Cloth&Foot Health

Education

130 120 110 100 90 80 70 60

TABLE 3

2004

2005

2006

2007

2008

2009

2010Q3

TABLE 3 - CPI: cumulative price change, select components (2004 - 2010Q3) (%) 60 50 40 30 20 10 0 -10

Looking at the major index components, the biggest contributor to the overall rise in the price index is food and beverages. This component alone has risen by more than 10 percent since the beginning of the year. This steep rise was to be expected as a result of the appreciation of the renminbi. There is little that can be done. No one expects Macau to start producing its food and it is unlikely the government will change its import licensing policies, no matter how desirable that might be. As long as the renminbi keeps appreciating, there will be price pressures on the food section of the consumer price index. Those pressures will be most acutely felt by lower income households.

Food&Bev

House&Fuels

Overall

-20 -30

NOVEMBER 2010

Health

Cloth&Foot

Transport

Education Communication

Since the casino boom started in 2004, the essential needs of food and housing have been the two components of the price index that have registered the highest cumulative increases and had the greatest effect on the inflation rate. Any analysis of this trend needs to be carried out prudently. First, with the dramatic social end economic changes of the past few years, how representative of the average consumer is the basket of goods used in the CPI calculation? Second, the mashing up of housing and fuels consumption is as questionable as ever, even leaving aside the idiosyncrasies of the real estate market. It may be useful to publish two different sets of indices, one with housing and the other without.

TABLE 4 - Visitor’s expenditure per capita

Non-shopping

Shopping

Tourist spending TABLE 4

(mop) 1,100 1,050 1,000 950 900 850 800 750 700 650 600 2004

2005

2006

2007

2008

2009

2010Q2

TABLE 5 - Vistor’s expenditure per capita, select origins (mop)

Expenditure per capita

Mainland China

Hong Kong

Taiwan

Japan

4,000 3,500 3,000 2,500 2,000

With so many tourists arriving in Macau, reliable information on their spending patterns is crucial to business, especially small and medium enterprises. The data made available by the Statistics and Census Service for visitors’ expenditure is expressed per capita and obtained by surveying a sample of visitors that may be susceptible to oscillations that are difficult to explain. There are, however, some hints to these interesting trends. The first attention-grabbing pattern is the relative stability of individual expenditure across the past six years. Together, shopping and non-shopping expenses, which do not include gaming, appear to have levelled out at about MOP1,600. Given the period of time shown in this graph, the changes in the origins of visitors and the changes in income and exchange rates associated with mainland visitors, that “flatness” is surprising. Moreover, the data for the second quarter of 2010 shows a sharp switch from non-shopping to shopping expenses. It is also surprising, suggesting spending substitution between the two that is implausible. Future figures are required to confirm this trend. TABLE 5

1,500 1,000 500 0 2004

2005

2006

2007

2008

2009

2010Q2

Table 5 displays the expenditure levels for a range of Asian visitors, including some top source countries and territories for tourists. It shows a possible decrease in the spending of mainland tourists. This is another trend worth monitoring, as they have been Macau’s most profligate tourists. TABLE 6

TABLE 6 - Nominal and real expenditure per capita (mop)

Nominal

Real

1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100

The final table provides the most surprising result of this analysis. By crudely deflating visitors’ per capita expenditure using the tourist price index, there is a pronounced decrease in their real expenditure. If this is more than a statistical fluke, it suggests a pronounced change in spending behaviour that calls for careful analysis. Either there are important changes taking place that are being ignored and whose consequences may not be anticipated, or the collection methods are providing us with unreliable data and should be reassessed.

1,000 900 800 2004

2005

2006

2007

2008

2009

2010Q2

NOVEMBER 2010

Economic Trends

by JosĂŠ I. Duarte

Output and expenditure 2009 (in MOP) GDP current

169,343

million

Consumption

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

million

Investment

Economic Activity

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

million million million million million

% var

- 2.4 5.7 - 39.0 12.6 - 5.1 9.1 - 2.4

Latest (in MOP)

54,794

million

11,089 6,343 3,549 - 10,979 44,790 48,080

million million million million million million

Notes

% var

41.2 9.8

- 29.0 8.3 22.4 63.3 75.9

% var

Notes

Q2 Q2 Q2 Q2

Money and prices 2009 M1 (in MOP) M2 (in MOP) Credit (in MOP) Deposits (in MOP) IPC/Inflation rate(*) AMCM base

30,608 million 212,153 million 101,064 million 207,247 million 101.40 base - 2008 0.50 %

% var

23.8 11.8 10.1 11.8 1.16 --

Latest

34,427 million 228,253 million 116,979 million 223,166 million 104.38 base - 2008 0.5 %

19.8 9.5 24.9 9.5 2.55 --

Latest

% var

July July July July September September

Population/Labour force

Labour force Median wage rate (in MOP) Unemployment

% var

542,200 329,200 8,500

- 1.3 - 1.5 6.3 - 0.1

3.0 %

544,600 326,000 8,500

0.1 0.1 --

2.9 %

- 0.9

Notes Q2 Q2 Q2 July

Construction 2009

Major sectors

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

Finished

m2 tons million million

% var

- 57.1 40.7 - 56.9 - 1.9 - 27.7

Latest

15,253 48,753 17,570 387 940

m2 m2 tons million million

% var

Notes

758.6 49.7 - 24.9 207.1 - 3.7

September September September September September

Gaming 2009 Gross revenue (in MOP) Casinos Tables Machines

120,383 33 4,770 14,363

million

% var

Latest

9.6 2 18.7 21.1

15,892 33 4,838 14,316

% var million

39.3 0 1.4 - 0.3

Notes September Q3, var, ytd Q3 Q3

Tourism 2009

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

% var

- 5.1 - 6.5 -9.8 -2.9 0.6

Latest

2,358,000 1,575 0.90 days 19,759 78.2 % 1.48 nights

% var

Notes

16.6 3.0 - 0.20 8.6 13.9 --

September

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

Q2 Q2 July Q2 July

Sources: DSEC (Statistics and Census Service), AMCM (Monetary Authority of Macau), DICJ (Gaming Inspection and Coordination Bureau)

2009 Population

AVINASH PERSAUD CHAIRMAN OF INTELLIGENCE CAPITAL LIMITED, A FINANCIAL ADVISORY FIRM BASED IN LONDON

Why target big banks? IT IS THE CONTAGIOUSNESS OF FINANCIAL CRISES, NOT BANKS’ SIZE, THAT MATTERS t seemed that a new model for global governance had been forged in the white heat of the financial crisis. But now that the ashes are cooling, different perspectives on bank regulation are emerging on either side of the Atlantic. The emphasis in Europe has been on regulating financial markets with a view to moderating future crises. Credit mistakes are made during the boom, not during the crash, so the argument goes. Better regulation and monetary policy during the boom years, therefore, could limit the scale of any bust. By contrast, the emphasis in the United States has been on finding market-friendly ways to contain spillovers from bank failure. Policy debates in the US are chiefly preoccupied with ensuring that banks are never “too big to fail”; that private investors rather than taxpayers hold “contingent capital,” which in a crash can be converted into equity; and that “over-thecounter” markets’ functioning be improved through greater reliance on centralized trading, clearing, and settlements. The chief point of intersection between the European and US approaches is major banks. This convergence has less to do with regulatory thinking on bank size or function than with a common need to play to the political gallery and raise more tax revenue.

Size doesn’t matter Banks’ balance sheets are systemically dangerous when bloated by leverage, and it is this that regulatory or fiscal policy should address through liquidity buffers and leverage ratios. After all, it is the contagiousness of financial crises, not banks’ size, that matters. Any list conjured up in 2006 of institutions that were “too big to fail” would not have included Northern Rock, Bradford & Bingley, IKB, Bear Sterns, or even Lehman Brothers. Banks lend to banks, so while some are more illiquid than others, they are all intrinsically illiquid institutions. Small failures can give birth to large panics, which means that in a crisis almost everyone is “too big to fail.” The reality is that we can have as large a financial boom and subsequent bust as we just experienced, resulting in the same economic misery, in a world made up only of small banks. Many argue that bankers’ belief that their institutions are too big to fail and that their jobs are safe encourages them to underestimate the risks that they assume. But if that belief dominated bankers’ thinking, they would still worry about their savings. In other words, they would not wrap themselves up in their institutions’ equity and the leveraged products they were selling. Yet they did. The revealed preference of banks’ and bankers’ behaviour is that they did not lend more because they thought they could get away with it, but because they thought it was safe. They were fools more than knaves. The main driver of excessive lending and leverage is a mistaken view of risk that is shared by everyone. The riskiest institutions were not the largest: firms like J.P. Morgan and HSBC proved safer than others, and neither sought nor needed

state funding. Those that failed were relatively small, like IKB, Bear Sterns, and so on.

Assessing risk Big banks like the idea that regulation should care less about banks’ size and more about their riskiness, and so champion a “risk-sensitive” approach – not least because they have the bigger risk-management operations and databases, so risk-sensitive regulation is more onerous for their smaller competitors. But this approach suffers from a fatal fallacy: if booms are fuelled by underestimation of risks, and regulation is made more sensitive to the estimation of risks, booms will be bigger and busts deeper. A better argument for curbing bank size is the excessive influence of big banks on policy. What policymakers should therefore be looking for is regulation that makes the financial system less sensitive to error in markets’ estimation of risk, not more so. There are two ways to do this. The first is to observe that this error is correlated with the boom-bust cycle. Booms have similar characteristics – strong growth in banks’ balance sheets and credit, and therefore a rise in leverage. These trends imply an increased probability that the market is underestimating risk, so systemic risk regulators should raise minimum capital requirements as soon as they spot them. Counter-cyclical capital requirements fit with this idea, and a range of indicators could be used to calibrate the increase in capital requirements, coupled perhaps with some discretion. There are many reasons why the market fails to correct systemic error, including that booms are always founded on a belief by both regulators and bankers that “this time it is different.” Let’s not forget the essays in central banks’ stability reports on how credit derivatives were benefiting the financial sector. The second way to reduce the financial system’s sensitivity to risk-estimation errors is to limit the flow of risks to institutions with a structural, rather than a statistical, capacity for holding that risk. That way, when the risk modellers get it wrong, we will be in less trouble.

Diversification is key Credit risk is best hedged through diversification across uncorrelated credits. Liquidity risk is best hedged through diversification across time. Market risk is best hedged through a combination of diversification across assets and enough time to decide when to sell. In the past, risks with volatility of similar statistical magnitudes were considered to be fungible, and, could flow to whomever was prepared to bear them. But, while banks with short-term funding and many branches originating loans have a deep capacity for holding credit risks, they have a limited capacity for holding market risks, and little capacity for holding liquidity risk. Insurance companies and pension funds, on the other hand, have limited capacity for credit risk, but more for market and liquidity risks. The lesson for regulators is simple: capacity for risk is related to the maturity of funding, not to what an institution is called. NOVEMBER 2010

Politics

Keeping score Ahead of Chief Executive Fernando Chui Sai On’s second policy address, Macau Business finds there are still many broken promises from is maiden speech BY LUCIANA LEITÃO

hief Executive Fernando Chui Sai On is due to make his policy address for 2011 on November 16. But what has he achieved in the past eight months? Macau Business dusted off his maiden policy address, delivered in March, to see what has been achieved and what he is yet to do. Mr Chui’s March address contained few blockbusters and followed the course taken by his predecessor, Edmund Ho Hau Wah. Among Mr Chui’s goals were promoting the diversification of the economy, creating a financial reserve system and constructing 19,000 public housing units by 2012. Mr Chui said the economy could be diversified by limiting the growth of the gaming industry and by developing cultural and creative industries. The

HAVING THEIR SAY

number of gaming tables was capped and approvals for new casinos were frozen. The promised review of the Gaming Industry Regulatory Framework is still unfinished. The review has raised expectations, even though there is little chance of any major reform. The most substantive change will likely be the raising of the minimum age for admission to casinos from 18 to 21 and allowing for “preventive interdiction” of problem gamblers and “non-welcomed” players.

Creative talk and inaction To build on the pledge to develop the cultural and creative industries, a committee was established and the Economic Services Bureau was put in charge of

the process (see more on MB Report in this edition). Some analysts feel it is not enough. “In terms of the diversification of the economy, not much has been done, except there has been a lot of talking,” says political analyst Larry So Man Yum. “Things have been said but what has really been implemented is not that much.” The financial reserve system is finally seeing some developments; a bill to create a reserve is ready and was sent late last month to the Legislative Assembly for approval. Mr So says there has been popular pressure for action in this area. By the end of last year, Macau had accumulated budget surpluses worth MOP98 billion, excluding the operating surpluses

MACAU BUSINESS ASKS FIVE NOTABLE FIGURES IN MACAU TO ANSWER FOUR QUESTIONS ABOUT CHIEF EXECUTIVE FERNANDO CHUI SAI ON’S UPCOMING POLICY ADDRESS FOR 2011

HENRY BROCKMAN | PRESIDENT, BRITISH BUSINESS ASSOCIATION OF MACAU What do you expect to hear in the policy address? I think people like to be surprised. Therefore, on some of the issues that concern us all in Macau, if there can be two or three pleasant surprises in there, I think everyone would be very happy. Personally, what would you like to hear? There are three areas that we, in the British Association, would like to see change... We feel that it doesn’t make sense that we have a liberalised gaming market, but a monopoly on sports betting. It is an untapped opportunity. The second point is: we’re looking for a fairer balance when it comes to employing non-resident labour. The third point is on the environment. In a small, densely populated city like Macau, there’s a lot more vision which the government can show in leading the way. CEM has recently NOVEMBER 2010

been delivered two electrical cars for testing for the next two years. These cars have been more than tested elsewhere. Let’s see some action. Will the chief executive continue the Wealth Partaking Scheme? It’s great that the government can find ways of giving incentives to the population. I’m not convinced that the cash handout is the best way of going about it, but once you’ve started it, it is very difficult to stop. Will political reform be included? Any reform is a sign of a vigorous government who is not afraid of re-examining the way they have been doing things. Problems come if there seems to be any step backwards when it comes to the management of the legal system and the social environment. The legal system is something that was put in place for 50 years in both SARs, and that seems to be untouchable.

“In terms of the diversification of the economy, not much has been done, except there has been a lot of talking,” says political analyst Larry So Man Yum of autonomous public agencies, but there were no plans to put the cash reserve to use.

On the drawing board In 2007, Mr Ho, the former chief executive, announced 19,000 public housing units would be built by 2012 and Mr Chui, in his first policy address, reaffirmed the target. Analysts however say it will be difficult, perhaps impossible, to meet this. By September, just 2,606 public housing units had been built, while 4,440 were under construction, according to the Housing Bureau president, Tam Kuong Man. The remaining other 11,954 flats were still at the planning stage. However, people on the waiting list did get a rent subsidy boost, as promised by Mr Chui. In his March address Mr Chui said the government would support small and medium enterprises (SMEs) with tax cuts, financing programmes and the acceleration of the approval of their

MÁRIO DUQUE | ARCHITECT What do you expect to hear in the policy address? My interest in Macau’s policy address is similar to my curiosity in reading horoscopes during Chinese New Year. It is a tradition moved by expectations, fears and the uncertainties about what the future holds... Viewing it in this light, I would be very satisfied if it was a speech showing the maturity that would be appropriate 10 years after the creation of the SAR, looking at what we have won, what we have lost or what we still need to achieve, and using this as a framework for policy-making. Personally, what would you like to hear? I would like local architects to be recognised more for the thought that they put into planning the urban space than for the profit that their contribution generates. I would like it if architects’ professional actions were not frequently viewed with

suspicion but, on the contrary, were worthy of the trust that their profession should deserve. Will the chief executive continue the Wealth Partaking Scheme? The government could hardly justify the removal of a measure it once said was necessary to ease the disadvantages borne by Macau residents when, in reality, those disadvantages are still with us. The Wealth Partaking Scheme will certainly be continued, but if it continues to use the present system, the government will be accused of thinking that every resident’s needs are exactly the same. It’s time to refine the scheme in the light of a better understanding of the social fabric. Will political reform be included? Not at all. The Macau government is not the one in charge of reforming the political system. This does not mean that reforms should not be drafted, if only in the mind. NOVEMBER 2010

Politics

applications to import labour, to ease the shortage of appropriate skills in Macau. However, the head of the SMEs Association, Stanley Au, recently told the Macau Daily Times that SMEs were struggling because they “are not just competing for workers with the casinos but now also with the government”. Mr Au said some SMEs were hiring locals just to get an imported labour quota (see In the News).

Unreformed thinking As for political reform, no programme or schedule has been drawn up. Mr Chui spoke of bringing forward public consultation on the democratisation of the political system to this year. It has not happened. Moreover, Mr Chui promised a “sunshine law” obliging top officials to disclose their business interests. There has been no news on the initiative. The same can be said for the planned accountability system for principal officials. Little in the way of law reform has been accomplished, either. Last month the merger of the International Law Office and the Law Reform Office was announced. This is meant to speed up reform. “Mr Chui has been talking about legislative reform but there’s nothing being done,” says Mr So. Despite the chief executive’s promises, no programmes to promote green transportation and products have been approved. As for the construction of the light rail system, it has yet to start, owing to delays in announcing the winner of the tender for the systems and rolling stock needed for the first phase.

And there is no sign of the food safety centre Mr Chui announced after scares over food from the mainland.

More transparent Among Mr Chui’s accomplishments, another cash handout for residents and the continuation of special subsidies meant to offset the effects of inflation and the financial crisis - namely health vouchers, the electricity subsidy and support for the elderly. The chief executive also pledged a more transparent style of government that listened more to the public. Mr So

Fernando Chui Sai On spoke of bringing forward public consultation on the democratisation of the political system to this year. It has not happened says it has happened. “To a certain extent, Mr Chui has been trying hard. He has been doing a lot more consultations. In a way, his administration is trying very hard to make it more transparent”. Mr So points to meetings the chief executive has had with representatives of several sectors of society – even the outspoken New Macau Association. Spokespersons were appointed to improve communication with the media and the population, and the creation of a think tank to improve policy was announced.

The promised new hospital for Cotai has a plot of land assigned to it and planning has begun, the government says.

Land use After Mr Chui said the law on land grants should be brought up to date, developers that had failed to use government land were asked why. According to the Land, Public Works and Transport Bureau, there were around 100 cases of plots of land recorded as undeveloped “for several years” of which more than 20 are considered “more seri-

EILO YU | PROFESSOR OF PUBLIC ADMINISTRATION, UNIVERSITY OF MACAU What do you expect to hear in the policy address? The chief executive should pay more attention to social welfare... I believe he will do so in his forthcoming policy address. Perhaps he will give more details on the new double-tier social security system. Housing issues should be mentioned. Personally, what would you like to hear? I don’t see public administration as an area where the government has to make a very big effort. Fernando Chui Sai On indicated in his first policy address that the government would study and address the pay and welfare of public servants. The Executive Council has already passed a legal package in this area. However, the government still has a lot of NOVEMBER 2010

difficulties in modernising public administration. Will the chief executive continue the Wealth Partaking Scheme? The cash handout scheme was used in the past to cool down the public discontent before Labour Day demonstrations, but I don’t see we have a problem at this level now. Usually, this cash handout’s details are rolled out before Labour Day, instead of in the policy address. Will political reform be included? The government is still reluctant to talk about political reform. I’m quite disappointed. The government was mentioning about having more discussions with the public, but it does not promote any discussion or debate on how this should be done.

ous” cases. The bureau says it is considering the responses from the developers. However, Mr Chui also promised a new round of public consultation on the revision of the law on land grants and the introduction of amendments soon after. Nothing has happened. The same applies to new urban planning legislation, with a draft version scheduled to be released only by June next year. In light of Beijing’s suggestion that Macau could have an important role in improving the relationship between the mainland and Taiwan, Mr Chui said

Macau would strive for greater contact and cooperation with Taiwan. The government kept its word with a visit to Taipei by the Secretary for Social Affairs and Culture Cheong U in September. He became the first senior Macau official to go to Taiwan since the handover. Mr Chui toured cities in the Pearl River Delta, seeking the greater regional cooperation he had promised.

Policy promises 2.0

icy address “will try hard to please the public regarding public housing”. The chief executive will also focus on living standards and inflation, he says. Expect to hear about progress towards a two-tier social security system that incorporates the revamped old-age pension system and the new, non-mandatory central savings scheme. Mr Chui may also have an announcement on political reform and a comprehensive youth development policy, Mr So predicts. Let us see.

Looking ahead, Mr So believes the pol-

Additional reporting by Emanuel Graça

DUARTE SANTOS | PROFESSOR OF LAW, UNIVERSITY OF MACAU What do you expect to hear in the policy address? I would like to see every Macau citizen benefit from the economic development that the region has had. On the other hand, I would like the government to increase social support for those who are in need, and I would like it to pay more attention to areas such as education and health.

the judicial system of Macau is.

Personally, what would you like to hear? As far as justice is concerned, I would like to see more and better judges and public prosecutors, with more knowledge about what they are doing. Also, I would like to see continuing law reform, but in a carefully thought-out way, without being infl uenced by people who are unaware of what

Will political reform be included? It would be good to see the Legislative Assembly playing a more autonomous role from the government. It would be good if, gradually, directly elected legislators could replace all indirectly elected ones. It would be good if the appointed seats by the government were progressively eliminated.

Will the chief executive continue the Wealth Partaking Scheme? This scheme should be directed more toward those who really need it and not toward those who don’t. In fact, this programme is indiscriminate, because it treats the rich and the poor exactly the same way.

NOVEMBER 2010

Politics

Great expectations Some of the most outspoken voices of Macau’s grass roots say what they want from the policy address for 2011 BY LUCIANA LEITÃO

Fernando Chui Sai On meets with representatives from the New Macau Association

uch is expected of Chief Executive Fernando Chui Sai On’s policy address for 2011, to be delivered later this month. Whether he will meet these expectations remains to be seen. Nevertheless, Mr Chui has spent recent weeks meeting representatives of grass roots groups, including some of the most vociferous, and some of the government’s critics are interpreting this as a sign of change. Pereira Coutinho is head of the biggest association of civil servants and has been one of the most outspoken legislators since he was first elected in 2005. “For the first time, there was some effort to listen to Macau people,” he says. This is why he is hoping that the policy address for 2011 will cover matters that he has been speaking out

about for several years. He expects Mr Chui to propose ways to make senior officials more accountable, and to announce electoral reforms that would increase the number of directly elected legislators. At present the Legislative Assembly has 12 directly elected members, 10 indirectly elected and seven appointed by the chief executive. Mr Coutinho wants a law that allows for the creation of trade unions and for collective bargaining.

Speculating He also wants action against real estate speculation. “The government must present, urgently, concrete measures to regulate housing, namely though the presentation of a plan for both public and private housing,” Mr Coutinho says.

“The government could negotiate with real estate agencies or could give land for the construction of private housing,” he says, but he insists on the government setting the price per square foot for the apartments to be built. The New Macau Association is one of the groups enjoying Mr Chui’s new-found taste for dialogue. For the first time, the government has conferred with the association in advance of the policy address. One of the association’s demands is the removal of the Secretary for Administration and Justice, Florinda da Rosa Silva Chan, who attended the meeting.

Slogan The association, which elected three legislators in 2009, continues to urge the government to push ahead with the democratisation of the political system, and to have more public housing built. Members say Mr Chui’s government has yet to achieve much of what it has set out to do. Legislators Au Kam San, Ng Kuok Cheong and Paul Chan Wai Chi told a press conference last month that for all the talk of “sunshine government”, the expression was just a slogan, and that problems in administration and justice were getting worse and required urgent reforms.

JAMES CHU | ARTIST What do you expect to hear in the policy address? I want to see some real changes in public administration policies. For instance, they encourage people to use less paper, through e-mail, but the truth is we receive post every day from the government. We only see people talk, talk and talk. This is something I really wish they would do – improve the quality of administration.

policy to help artists to develop their artistic careers. Right now, I really see it spending a lot of money inviting artists from elsewhere, but not investing in local artists.

Personally, what would you like to hear? In the cultural sector, I really expect the government to invest more in hardware and software. In hardware, Macau needs a lot more performing spaces and exhibition spaces, not necessarily museums, but more small spaces where local artists can exhibit. In software, I hope that the government will have a real

Will political reform be included? Everything develops step by step, slowly. The important thing is that we have to start. Right now, our government is afraid to start and takes so long to research and research and nothing happens. I don’t mind taking it slowly, as long as we make a start.

NOVEMBER 2010

Will the chief executive continue the Wealth Partaking Scheme? It should still be applied, using a better system. Right now, everybody just gets the same amount no matter whether you’re rich or poor. I think we should have a much more clever system.

Changing channels A government-backed report recommends big changes at public TV and radio broadcaster TDM to improve standards

overnment-owned Teledifusão de Macau (TDM) seems to be heading for a big shake-up if a government-appointed working group has its way. Chief Executive Fernando Chui Sai On says changes may be announced as soon as this month and it appears that TDM’s autonomy and editorial independence will be respected. The Strategy Development Working Group for TDM report, handed to the government last month, lists the TV and radio broadcaster’s problems as “an unclear positioning and set of goals, an inadequate internal system, unregulated management and ineffective supervision”. The working group was created in April, after some lawmakers and other critics accused TDM of biased news reporting, failing to uphold its editorial independence and wasting public funds. The working group’s report did not mention any case of editorial independence being compromised but did say TDM needs to “reinforce its internal management, in order to establish a fair and transparent system as well as a team of professional, dedicated and fair managers”.

Independent voice The working group’s leader, lawmaker and trade unionist Kwan Tsui Hang, said the report did not amount to a call for the management team to be fired. TDM has been led by Manuel Gonçalves for the past 14 years. The working group’s report calls for several internal changes in fields ranging

from finance to human resources, and it calls for news reporting and presenting guidelines. The goal is to turn TDM into a fully fledged public broadcasting service. The report also noted a need to improve TDM’s facilities and equipment. TDM was created in 1983 and began broadcasting the following year. It now has six TV channels and two radio services. By the end of last year it had 455 employees. The government became TDM’s sole shareholder in 2005, although it is still run as a private company. TDM’s

Wanted: more and better

he public is not satisfied by either the quantity or quality of TDM’s programmes, according to a survey commissioned by the Strategy Development Working Group for TDM. The survey found that TDM is a primary source of news for 70 percent of the respondents. However, viewers are unimpressed by the accuracy, speed or objectivity of TDM news. Respondents wanted better-quality newscasts, more information programmes and a more independent news reporting style. The working group says the public’s level of satisfaction should be the main guide in assessing the standard of TDM’s service. The survey included phone interviews with a randomly chosen sample of 1,044 TDM viewers aged 16 or older.

revenue was MOP175.3 million last year, including MOP123 million in direct subsidies from the government. Its expenditure was MOP155.2 million.

Tripping up The Commission of Audit released its own report on TDM last month. It said there were no internal regulations to ensure the proper use of staff welfare and business trip benefits and, notably, their use by Mr Gonçalves. The report noted he had taken annual leave in the course of business trips on four occasions. It said that was liable “to create a negative image, as a mixture between public service and private life”. It says business trips cost TDM more than MOP1 million each year, of which trips to take part in media conferences abroad accounted for more than 50 percent. TDM’s practice of granting free advertising airtime in exchange for goods or services is also criticised, although this is a common practice in media companies. The report says the broadcaster lacked consistent standards. Other aspects of TDM that dissatisfied the Commission of Audit include the mobile phone accounts it provides staff with, and its practice of giving staff moon cakes and lai si (red envelopes containing money, offered for good fortune) to mark holidays. The current Commissioner of Audit, Ho Veng Ho, was the government’s appointed representative in TDM for several years, until December 20, 2009, when he took up his current position. NOVEMBER 2010

Legal Affairs

Fernando Chui Sai On

Waiting for justice

Cases are piling up in Macau’s courts but the main players in the judicial system are split on how to solve the problem ustice delayed is justice denied or so the saying goes. In Macau, “delayed” means years, with court hearings already being scheduled for 2012. There are more than a few cases that have already waited six or more years to go to trial. The justice bottleneck has been apparent for a long time and is recognised by the leading figures in the judicial system, but they advocate different approaches to clear the jam. Chief Executive Fernando Chui Sai On acknowledges the independ-

NOVEMBER 2010

ence of the judicial system but says the government is willing to continue to pour resources into the training and enhancement of its human resources. The head of the Lawyers Association, Jorge Neto Valente, stresses the need to import more foreign judges. Macau has 33 judges at present. “It won’t be possible, with the current human resources, to reduce the number of pending cases to an acceptable level within the next few years,” he notes. “Unfortunately, the judiciary sec-

Jorge Neto Valente

tor has not followed the economic and social evolution that took place in Macau and is a far cry from being able to answer the needs of the territory,” he said during the ceremonial opening of the judicial year last month. He says the measures to ease the strain on the system, such as increasing the use of Chinese language in court, “hastily” training new judges and making minor amendments to laws, have had a limited effect – if any – with none of the changes improving the quality of justice.

Help wanted Mr Valente wants a dual strategy put in place. “On one hand, prepare good local judges, without jeopardising the quality of their training,” he said. “On the other, temporarily recruit experienced judges from the outside to tackle the urgent needs of the present.” Mr Valente, who was born in Portugal and has taken Chinese nationality, says the use of Portuguese in the judicial system should not be blamed for the delays. What Macau lacks is

Ho Chio Meng

trained interpreters and translators, which could be overcome with help from skilled mainland professionals. There are 189 lawyers at present in Macau, with around one-third speaking Chinese. The 60 local law fi rms have 125 trainee lawyers, 93 are native speakers of Chinese. Prosecutor General Ho Chio Meng says the delays are partly due to the legal system, which is based on Civil Law as it is practiced in Portugal. He says there is a need to “localise” Macau’s legal system. Mr Ho wants judicial procedures to be simplified. He has also suggested

Sam Hou Fai

“It won’t be possible, with the current human resources, to reduce the number of pending cases to an acceptable level within the next few years,” says the head of the Lawyers Association, Jorge Neto Valente

A CASE TO HEAR MACAU’S JUDICIAL BACKLOG Court Court of Final Appeal Court of Second Instance Lower Court Examining Magistracy Administrative Court Total

New cases

Cases decided Cases pending

1,129

880

873

11,588

15,153

9,510

3,767

3,711

1,474

147

107

19,915

11,965

16,696

September 2009 to August 2010 • SOURCE: Macau Courts

Macau adapt some legal processes from Hong Kong even though it is a system that is very different to Macau’s. He also wants more powers for the Public Prosecutions Office.

Increased productivity President of the Court of Final Appeal Sam Hou Fai remains optimistic. He says the number of pending cases fell sharply last year, with 11,965 cases awaiting trial at the end of August, 3,245 fewer than a year before. Mr Sam says the increased productivity is a result of more judges, most of which are the product of local training courses. Macau’s judicial system will be able to correct its shortcomings “within a few years”, he says. However, he says the Court of First Instance and the Court of Second Instance urgently need bigger facilities. Newly reclaimed land beside the peninsula has been set aside for new court buildings but since this will take at least five years or longer, Mr Sam says the government must find new temporary facilities for both courts. NOVEMBER 2010

mbreport Creative Industries 46

NOVEMBER 2010

47 ilson Lam says he is confident his business will improve in the near future, especially in light of the recent news. “According to what I know from the government, [the plan to foster creative industries] is a wonderful opportunity for the people in the sector,” Mr Lam tells Macau Business. After 16 years in Canada, the graphic designer returned home and set up Macau Creations, a company that designs custom-made products. The enterprise, in gestation in Canada for four years, opened its first shop in July, near the ruins of Saint Paul’s. “I’ve been working on this on my own and I had several difficulties to find a good location and for which I could pay the rent,” he says. Mr Lam believes the future of Macau Creations is bright now the government has a plan for creative industries. One of Chief Executive Fernando Chui Sai On’s priorities is economic diversification and Mr Lam believes creative industries are a vehicle to achieving this. However, economists, artists, promoters of culture and scholars are divided in their opinions. Some believe Macau has enough cultural strength to hatch a successful brood of creative industries, but all point to major structural problems. Can creativity really drive economic diversification? It is not only the government that is bullish about creative industries. Some local artists and scholars are also optimistic that Macau’s unique historical background is the main ingredient needed to develop successful cultural industries. “Macau has a history reaching back more than 400 years, marked by cultural exchanges between China and the West and a profound historical context. We can make use of these special cultural elements to further strengthen Macau’s cultural infrastructure and create a unique cultural brand for Macau,” says artist and head of the Cultural Affairs Bureau, Guilherme Ung Vai Meng. “These elements can also be one of the economic drivers to promote social advancement and transform Macau into an international city for leisure and tourism.”

THE GOVERNMENT SAYS IT IS FOSTERING CULTURAL AND CREATIVE INDUSTRIES IN AN EFFORT TO DIVERSIFY THE ECONOMY. CAN CREATIVITY BE PROFITABLE? BY ALEXANDRA LAGES

Photo: Lines Lab | Vincent Sin

Differentiation Simon Mak, a lecturer at the Macao Polytechnic Institute’s School of Arts, says Macau could differentiate itself from its neighbours by using its heritage. “This NOVEMBER 2010

mbreport Creative Industries 48

cultural niche can serve as the attraction for visitors coming to Macau, where they can enjoy both sightseeing historical sites as well as discovering the gaming experience,” Mr Mak says. Others think the well-established gaming and tourism industry could pave the way for the development of cultural and creative industries. Tina Fu, an instructor in graphic design at the Institute for Tourism Studies, says the amenability of residents to this kind of project is higher now. “Our society is more diversified, providing a very good timing and background to promote creative industries,” Ms Fu says. Economists paint a very different picture. Henry Lei of the University of Macau believes the city can make good use of its international heritage in devel-

NOVEMBER 2010

oping cultural and creative industries. However, he notes that “in comparison with the gaming industry, the economic significance of this sector should be much smaller, and it will also take a long time for the industry to develop solidly”. Mr Lei says cultural and creative industries cannot be expected to offer large numbers of job opportunities in the short- to medium-term, although they may contribute indirectly to the tourism industry.

Economic meaning Economist Albano Martins finds it hard to imagine how Macau can make creative industries an economic alternative to gaming. “I’m very sceptical. There are many creative industries in many parts of the world with expertise in this

area, but in Macau the only thing we have are ideas without meaning in economic terms,” he says. Mr Martins stresses Macau needs to gather more ingredients to foster successful creative industries. “Today we have a creative embryo of local creative people that are launching themselves into the market, but to develop an industry there must be enough professionals,” he says. “Not only is the number of creative people low, but there must also be industrial production and business capacity. Currently, we just have people working on a strictly personal basis, and family businesses.” Another economist, José Luis de Sales Marques, sees a future between the gaming and tourism industries but says

the arts are no replacement for either. ”Are creative industries going to replace gaming? Never. But they can be an alternative to some sectors,” Mr Sales Marques says. However, before taking any steps, the government has to put money into research, he argues, since there is a lack of detailed data. There are already creative industries mixed in with various sectors that actually have clout in the economy, according to a study by the Centre for Creative Industries, a project of the Institute of European Studies of Macau, which Mr Sales Marques heads. But he says this was “just a qualitative study”. The Cultural Affairs Bureau has a plan to create a database of cultural and creative industries. In the first phase, the

bureau will collect data from local industries on products originally designed in Macau. The bureau aims to use the database to further its understanding of the development of local cultural and creative industries and to enhance communication between the government and the various players. Another purpose of the database is to facilitate the collection and storage of market information for in-depth research into cultural and creative industries.

Need for goals Given the significance of gaming in the local economy, the government should clearly spell out what it means by economic diversification, says architect Carlos Marreiros, who is also the direc-

“Macau has a history marked by cultural exchanges between China and the West. We can make use of these special cultural elements to create a unique cultural brand,” says artist and head of the Cultural Affairs Bureau, Guilherme Ung Vai Meng

tor of the Albergue SCM, which aims to promote local creative industries. “There is a long way to go before creative industries can become an economic alternative. In addition, you need to know what goals to set in terms of trade,” says Mr Marreiros. Yet the government is still unsure how the economy can make the best use of creative industries. Asked about official goals in terms of their contributions to GDP and employment, Mr Ung says it takes time to study the situation, as local cultural and creative industries are still at an “initial stage”. The bureau has set short-, mediumand long-term goals for the development of cultural and creative industries. It aims within five years to establish policies and measures to help small and medium enterprises develop embryonic cultural and creative industries. Within 10 years, there will be physical facilities. The long-term goal is to improve education in order to stimulate the cultural and creative potential of the population.

Talent wanted Observers say the government should first put more effort into education and training. Some say Macau has the talent but lacks training and opportunities. Another school of thought doubts that there are sufficient local human resources to start successful creative industries. Kit Kelen of the Association of Stories in Macau, which gives young writers their start, believes the city is “per capita, a place of much more impressive NOVEMBER 2010

mbreport Creative Industries 50 creative output and potential” than similar cities, particularly in poetry and the visual arts. In contrast, Alan Gan, a lecturer in graphic design at the Macao Polytechnic Institute, argues that local talent is still scarce. “We need to attract and encourage young talent from inside and outside as well,” he says. The head of the Cultural Affairs Bureau agrees. “Macau currently lacks local talent in the cultural and creative industries due to its small population. It takes time to nurture talent,” Mr Ung says. James Chu, the leader of local art troupe Art For All Society, argues that there is much work to be done in education and training. Mr Chu believes there is not enough talent in this generation to develop creative industries and wants improvements in the education system.

Outsourcing Frank Lei, the artistic director of the Ox Warehouse art space, is like-minded. “We are just at the beginning,” Mr Lei says. “In the future, Macau will need more designers and several other professionals, so we should think about how

to train more people. At the same time, there is a need to create more opportunities for the young to develop their skills.” The mainland could solve some problems, says Mr Marreiros. “Products could be created here, using local creative and business potential, and then be manufac-

Gifted neighbours Hong Kong has audacious plans and deep pockets to develop its cultural and creative industries BY ALEXANDRA LAGES

he government here wants to do it the “Macau way” but it is hard to avoid comparing the city’s efforts to develop its cultural and creative industries to what is underway in Hong Kong. The head the Cultural Affairs Bureau, Guilherme Ung Vai Meng, told Macau Business that Macau would emphasise study and seeking new prospects to build the city’s own advantages, rather than following someone else’s model. “We will fully acquaint ourselves with global economic changes and development trends and make full use of Macau’s unique geographic advantages, the ‘one country, two systems’ policy, rich cultural resources and advanced services industry, to reshape Macau’s development orientation,” he said. Across the river delta, Hong Kong’s government is pushing ahead with the West Kowloon Cultural District to help foster cultural and creative industries. Three options for the concept of the district are up for public consultation until November 20. The district will have a modern art museum, numerous theatres, concert halls and other performance venues. It will be managed by the West Kowloon Cultural District Authority,

NOVEMBER 2010

2 THE THREE CONCEPTUAL PLAN OPTIONS FOR WEST KOWLOON CULTURAL DISTRICT Photo 1: Foster + Partners | Photo 2: Rocco Design Architects Ltd. | Photo 3: Office for Metropolitan Architecture

tured in mainland China, which is the factory of the world right now,” he said. This is what Macau Creations does. The company has brought together 30 local designers, but all its products are made on the other side of the border. “Created in Macau doesn’t mean made

in Macau,” says Mr Sales Marques. Fellow economist Mr Lei says Macau’s creative industries still need to keep an eye on the neighbouring regions to survive. “Creative industries could survive in Hong Kong, but it may be completely

different in Macau, given our small GDP and limited population size,” he says. “If the creative industries are not able to explore the Pearl River Delta market, it is impossible for them to survive in the long run, given the limited demand in Macau.”

year or about 5 percent of the total. The government’s official policy is that creative industries can be important economic drivers. Creativity helps increase the innovation capacity of the economy and can propel future economic growth. “Hong Kong has developed a leading edge in key areas of creative industries like film, television, music, design, architecture, comics and animation, games and digital entertainment,” the government says.

Showing initiative

Hong Kong’s government is pushing ahead with the West Kowloon Cultural District to help foster cultural and creative industries which is directly financed by the government, with one-off funding of HK$21.6 billion (MOP22.25 billion) for the planning, design and construction of all the facilities. The project was first meant to attract tourists to Hong Kong but the focus of discussion thereafter switched to the benefits for residents, both intellectually and economically. Hong Kong has around 32,000 establishments related to creative industries, engaging more than 176,000 people. The sector adds more than HK$60 billion to Hong Kong’s GDP a

Create Hong Kong is a government agency set up in June last year. It is responsible for the administration and management of funding schemes for creative industries, including the CreateSmart initiative, the DesignSmart initiative and the Film Development Fund. The Hong Kong Design Centre was created in 2001, becoming a strategic partner of the government in promoting design. In comparison, Macau’s drive to foster creative industries is still in its early stages. The Cultural Industry Committee had its first meeting in September after forming in May. It is meant to give opinions, make reports, do research and present proposals on policies for the development of cultural industries. The government has yet to decide how much to invest in fostering creative industries. Hong Kong’s HK$300 million CreateSmart initiative financially supports projects for the development of creative industries. By the end of May, 68 projects had applied for funding and 23 had successfully obtained HK$43 million in funding. The HK$250 million DesignSmart initiative aims to strengthen government support for design and innovation. By the end of May it had received 479 applications for a combined total of HK$268 million, of which 332 applications for HK$147 million had been approved. The HK$300-million Film Development Fund supports projects in the local film industry. From 2007 to the end of May this year, 12 film productions and 45 other film-related projects had been approved, together receiving HK$117.8 million.

NOVEMBER 2010

mbreport Creative Industries 52

Search for a home There are plenty of opinions around the potential homes for the city’s creative industries BY ALEXANDRA LAGES

ultural and creative industries will soon be homeless no longer. The government has announced that it will allocate three buildings to be used as “flagship properties” by the sector. However, this may not be enough. Some artists are already discussing whether there should be a district especially for creative industries and, if so, where it should be. One school of thought is demanding a piece of the proposed land reclamation off the Macau peninsula and Taipa. For now, the recently formed Cultural Industry Committee will use an empty commercial building in Tap Seac Square, the C Shop near the New

Photos: Luís Almoster | mspagency.org

NOVEMBER 2010

Yaohan department store and the Tourism Activities Centre near the Ruins of St. Paul’s to display products and host events. All are expected to open for business in their new roles at the beginning of next year. Different facilities will function in different ways. For instance, the property near the Ruins of St. Paul’s will be a multi-purpose facility for commercial activities, exhibitions and culinary promotions.

Where to put it? The government is also mulling over setting up a creative district like those in other cities. Recently, on a visit to

Huashan 1914, Taipei’s creative park, the chairman of the Cultural Industry Committee, Leong Heng Teng, said the government was planning to create a similar park in Macau, adding that the Barra district could be one of the areas to be considered. However, urban planner and engineer José Chui Sai Peng believes it is unlikely to happen because one of the main light railway stations will be in Barra, questioning how it would work together. Besides, Mr Chui, who is also a legislator, says Macau already has a creative industries area funded by the government. “There has been already investment in the St Lazarus district, where the Albergue SCM and 10 Fantasia are,” he says. Albergue SCM and 10 Fantasia are establishments dedicated to promoting cultural and creative industries. Chief Executive Fernando Chui Sai On and his predecessor Edmund Ho Hau Wah, have visited the district and made positive comments about it, says Mr Chui. Instead of one area for creative industries, there should be several, he adds. Apart from St Lazarus, there are other places where the creative industries concept is being explored. “There are many places, because creative people didn’t wait for the government, so it shouldn’t be restricted to just one place,” he says. Nevertheless, Mr Chui acknowledges that a creative park could be helpful if the government wants something to show tourists. In 2000, the St Lazarus district got the highest score among eight places looked at by the Creative Industries District Conceptual Study, conducted by Mr Chui. “At that time, Macau didn’t have much money and it had to be a place with business space availability, traffic convenience, cultural characteristics and extra space,” he explains. Four years later and former Chief Executive Mr Ho named the St Lazarus area as a creative industries incubator.

Itâ&#x20AC;&#x2122;s your daily business

NOVEMBER 2010

Property | Market Watch

Wait and see Investors are still trying to assess the likely effect of government measures to curb speculation

BY ALAN TSO

acau’s property market is shrouded in uncertainty after the government’s announcement of a string of measures aimed at preventing a housing bubble. Developers and homebuyers alike are digesting the news and waiting for the dust to settle before they make their next move. Among the new measures rolled out by the government in late September, the regulations on the sale of uncompleted homes have attracted the most attention, since off-plan properties have been a major part of the primary housing market. However, no details have been released so far, as the proposal is now in the hands of Macau’s chief executive,

NOVEMBER 2010

who will give the final nod to the plan. Analysts believe details of the plan are likely to be published after the chief executive’s policy address later this month. It is widely expected that the government will tighten the rules on the sale of off-plan properties to discourage speculative behaviour, in line with new moves by the authorities in Hong Kong and the mainland. Developers are already warning that the local housing market, a major pillar of the economy, may crumble if the new regulations go too far. Chong Sio Kin, president of the Real Estate Association of Macau, says the industry supports the government’s efforts to regulate the property market in principle. But

he points out that these efforts should be squarely aimed at curbing speculation, rather than suppressing investment sentiment.

Tax attack Apart from the expected regulations for off-plan properties, the government has also announced that the 0.5 percent tax on the intermediate transfer of properties will be replaced by a stamp duty tax of one to three percent. This new policy will directly increase the cost of property transactions, which is expected to deter speculators. According to Jane Liu, executive director of Ricacorp Properties (Macau), the new policy means a home with a price tag of MOP10 million or above

55 Residential units sold per record of stamp duty* NUMBER OF TRANSACTIONS

YEAR

MONTH

2009

January

172

February

235

March

394

April

580

May

775

June

922

July

1,339

August September

2010

976 1,366

October

1,185

November

1,360

December

2,003

January

1,297

February

1,084

March

1,503

April

2,202

May

1,627

June

1,543

July

1,204

August

940

* Note: The data includes transactions of residential units valued below MOP3 million, which are exempt from stamp duty.

Photo: Luís Almoster | mspagency.org

Value of residential units sold per record of stamp duty

Lower economic contribution

n 2009, real estate management companies in Macau posted a gross value added – that measures the sector’s contribution to the economy – of MOP504.53 million (US$63 million), a year-on-year decrease of 8.2 percent, official data shows. However, gross fixed capital formation surged 9.8 times to MOP40.65 million. In 2009,

will be subject to a 3.8-fold increase in stamp duty. She believes this will definitely have a short-term negative effect on the sale of off-plan properties in the primary market. In the long run however, she is confident that the new measure will not

there were 171 real estate management establishments in Macau, an increase of six over 2008. The total number of people engaged in the sector decreased by 8.2 percent to 4,525. Total receipts amounted to MOP844.75 million, down slightly by 0.9 percent year-on-year, while total expenditure rose by 3.1 percent to MOP659.72 million.

affect investor demand, as cash-rich homebuyers will find the tax increase negligible. Another new measure that has caused jitters in the property market is the tightening of housing loans. Under a directive issued by the Mon-

YEAR

MONTH

2009

January

299

February

372

March

594

April

2010

VALUE (10^6 MOP)

980

May

1,156

June

1,627

July

2,767

August

1,730

September

3,161

October

2,130

November

2,643

December

4,057

January

3,140

February

1,995

March

2,806

April

6,180

May

4,281

June

3,319

July

2,642

August

1,889 Source: DSEC

etary Authority of Macau, the maximum mortgage on a home valued at MOP3.3 million or more, is 70 percent of its value, compared with as much as 90 percent previously. There are some exceptions allowed under the new directive, which gives a bank’s board the NOVEMBER 2010

Property | Market Watch

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

3000

Total number of buyers in residential transactions in the first 8 months of 2010:

15,644

2500 2000

Proportion ion of buyers rs

1500 1000

10% 90%

Non-Residents

500 Jun

Jul

Aug

Sep 2009

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May 2010

Jun

Jul

Residents

Aug

Average transaction price of residential units per square metre Value (MOP)

3500 3000

Total value of residential transactions in the first 8 months of 2010:

26,253,000,000

2500

MOP

2000

Proportion on of buyerss

1500 1000

19% 81%

Non-Residents

500

Residents

0 Q2

Q3 2007

Q3 2008

Q3 2009

Speymill Macau plans to sell assets S

Q2 2010

peymill Macau Property Fund is intending to cease new investment activity in Macau. The company now wants to realise “in an orderly manner” its existing assets. Shareholders will vote on this new investment policy for the company at a general meeting on November 19. The company has stressed that the proposed new investment policy doesn’t mean “any form of ‘fire sale’ or disposing of investments within any given timescale”. As of June 30, 2010, Speymill Macau’s assets included the office tower AIA Tower. The company also had an 87 percent stake in Rafael (Macau) Limitada following an agreement with a Macau-based boutique property advisory firm. The enterprise was formed with the aim of acquiring and repositioning existing residential and commercial properties in the older, historical parts of Macau. As off June 30, 2010, the venture had four assets: Pink Palace, Houston Court, Ribas 5b and Wan Keng. In June 2010, Speymill Macau decided to liquidate the Rafael joint-venture, a process that is currently underway. Previously, Speymill Macau had also acquired 259 residential units in The Riviera development, in the Inner Harbour district. As of June 30, 2010, the company had sold 234 out of a total 259 units that it owned, at an average price of HK$3,595 per square feet. The remaining units, on the high floor zones, were valued at an average HK$3,711 per square feet. NOVEMBER 2010

power to set its own mortgage ceiling. The policy does not take effect until December 1. Ms Liu says most industry observers suspect the new policy will not curb speculation but rather hit homebuyers hardest, especially those who want to trade up their homes.

Healthy balance Housing loans in Macau have grown exponentially in recent years and they account for the lion’s share of household debt. According to a recent report by the Monetary Authority, housing mortgages made up 76.8 percent of household debt last year. The report attributes the sharp rise in housing loans to the surge in home values. The report says Macau’s household balance sheet remains healthy, as household debt is valued at less than 10 percent of household assets. The report also underlines the fact that rising home values have contributed to the city’s relatively high ratio of household net wealth to personal disposable income, which stood at 909.8 percent last year, compared with the United States’ figure of 483.3 percent (see the Economy and Finance section for more).

Property | Market Watch Notable residential property rentals - 16/08 to 15/09, 2010

Source: Centaline, Midland & Ricacorp.

District

Building/Street

Unit

Floor area (sq. ft)

Macau Macau Macau Macau Macau Macau Macau Taipa Macau Macau Taipa Taipa Macau Macau Taipa Taipa Macau Macau Taipa Taipa Macau Macau Macau Taipa Macau Macau Taipa Macau Macau Taipa Taipa Taipa Taipa Taipa Taipa Taipa Taipa Taipa Macau Macau Taipa Taipa Macau Macau Taipa Taipa Macau Macau Macau Macau Macau Taipa Macau Taipa Macau Taipa Taipa Macau Taipa

One Central One Central L’Arc One Central L’Arc L’Arc L’Arc Kings Ville One Central One Central Manhattan Nova City One Central One Central Supreme Flower City Nova City One Central The Residencia Supreme Flower City Supreme Flower City One Central Edifício Central Plaza The Residencia Nova City The Residencia One Central Kings Ville The Residencia La Cite Kings Ville Nova City Nova City Nova Taipa Nova City Hillsville Nova City Nova City Nova City La Cite The Praia Treasure Garden The Pacifica Garden La Cite La Cite Treasure Garden Hillsville The Praia The Praia The Praia The Praia Chino Plaza Chu Lai Garden The Praia Edf. Palacio do Sucesso The Praia Edf. Jardim de Wa Bao Jardins do Oceano The Praia Jardins do Oceano

Block 3, M/F, unit A Block 6, H/F, unit B H/F, unit G Block 1, H/F, unit F H/F, unit K H/F, unit K H/F, unit K Block 3, M/F, unit H Block 1, H/F, unit A Block 1, H/F, unit B M/F, unit A H/F, unit D Block 1, M/F, unit A Block 1, L/F, unit B Block 2, M/F, unit E M/F, unit B Block 1, H/F, unit C Block 4, H/F, unit A Block 3, H/F, unit K H/F, unit I Block 1, H/F, unit C M/F, unit C Block 1, L/F, unit C Bock 13, H/F, unit E Block 4, L/F, unit A Block 1, H/F, unit D Block 2, M/F, unit F Block 3, H/F, unit C (with car park) Block 1, H/F, unit B Block 2, M/F, unit F Block 13, M/F, unit D Block 7, L/F, unit C Block 23, H/F, unit E Block 13, L/F, unit E M/F, unit D Block 4, L/F, unit F Block 14, L/F, unit C Block 14, L/F, unit C Block 1, L/F, unit D Block 1, M/F, unit B Block 2, H/F, unit I L/F, unit F Block 5, H/F, unit A Block 5, H/F, unit A Block 1, M/F, unit C H/F, unit B Block 3, H/F, unit P Block 3, L/F, unit P Block 3, L/F, unit N Block 4, H/F, unit X Block 3, M/F, unit T L/F, unit A Block 1, H/F, unit B M/F, unit D Block 4, H/F, unit W Block 5, L/F, unit F Bauhina Court, L/F, unit L (with car park) Block 1, H/F, unit E Apricot Court, L/F, unit J (with car park)

2,729 2,261 2,411 1,841 2,261 2,261 2,261 2,102 1,273 1,359 2,314 2,500 1,273 1,359 2,060 1,983 918 1,693 2,060 2,060 918 1,002 1,570 1,634 1,693 654 1,422 1,559 1,803 1,423 1,556 1,974 2,167 1,634 1,715 1,340 1,318 1,318 1,515 1,239 1,707 1,188 1,450 1,450 1,196 1,394 1,426 1,426 1,558 979 1,400 1,478 1,239 1,100 979 1,152 1,262 1,239 1,268

Rent price (HK$)

Price per sq.ft. (HK$)

45,000 37,000 28,000 25,000 25,000 22,000 22,000 20,000 18,000 18,000 18,000 17,000 16,000 16,000 15,000 14,500 14,000 14,000 14,000 14,000 13,000 13,000 13,000 13,000 13,000 12,500 12,000 12,000 12,000 11,000 11,000 11,000 11,000 10,000 10,000 9,500 9,000 9,000 9,000 8,800 8,800 8,500 8,500 8,500 8,000 8,000 8,000 8,000 7,600 7,500 7,500 7,500 7,000 6,800 6,300 6,300 6,300 6,200 6,000

16.49 16.36 11.61 13.58 11.06 9.73 9.73 9.51 14.14 13.25 7.78 6.80 12.57 11.77 7.28 7.31 15.25 8.27 6.80 6.80 14.16 12.97 8.28 7.96 7.68 19.11 8.44 7.70 6.66 7.73 7.07 5.57 5.08 6.12 5.83 7.09 6.83 6.83 5.94 7.10 5.16 7.15 5.86 5.86 6.69 5.74 5.61 5.61 4.88 7.66 5.36 5.07 5.65 6.18 6.44 5.47 4.99 5.00 4.73

Note: L/F - Low floor; M/F - Middle floor; H/F - High floor

Notable commercial property rentals - 16/09 to 30/09, 2010 Type Shop Shop

Property Rua de S. Paulo Plaza Grande China

Unit The whole Shop

Source: Centaline

Floor area (sq. ft) 1,700 1,010

Rent price (HK$)

Price per sq.ft. (HK$)

160,000 27,000

94.12 26.73

Note: L/F - Low floor; M/F - Middle floor; H/F - High floor

NOVEMBER 2010

Property | Market Watch

Notable residential property transactions - 16/08 to 15/09, 2010 District

Building/Street

Unit

Macau Taipa Macau Taipa Taipa Macau Macau Macau Macau Taipa Taipa Macau Macau Macau Macau Macau Macau Macau Taipa Macau Taipa Macau Macau Taipa Taipa Taipa Coloane Taipa Taipa Taipa Taipa Taipa Taipa Taipa Taipa Macau Macau Macau Taipa Macau Macau Macau Macau Taipa Macau Taipa Macau Macau Macau Macau Taipa Taipa Macau Taipa Macau Macau Macau Taipa Macau Macau Macau

One Central One Grantai L’Arc One Grantai One Grantai Edf. Tai Keng Yuen One Central One Central One Central One Grantai Prince Flower City The Residencia L’Arc L’Arc L’Arc One Central L’Arc L’Arc One Grantai One Central One Grantai L’Arc L’Hermitage One Grantai Pearl On The Lough Pearl On The Lough Hellene Garden Pearl On The Lough Pearl On The Lough Nova City Jardins do Oceano Pearl On The Lough Nova City Jardins do Oceano Nova City L’Arc One Central One Central Nova City One Central One Central La Baie du Noble One Central Nova City One Central Nova City Villa de Mer Villa de Mer La Cite La Cite Nova City Nova City Millennium Court Nova City La Cite The Residencia Bo Fung Court Nova City The Praia Millennium Court Edf. Brilhantismo

Block 2, H/F, unit A M/F, unit B H/F, unit C M/F, unit W Block 6, M/F, unit W Block 1, L/F, unit G+H Block 2, H/F, unit B Block 5, H/F, unit B Block 4, M/F, unit B L/F, unit K Block 2, H/F, unit G Block 1, H/F, unit A H/F, unit D H/F, unit D H/F, unit B Tower 1, M/F, unit E H/F, unit E H/F, unit F Block 1, M/F, unit Z Block 2, M/F, unit B M/F, unit L H/F, unit E H/F, unit O L/F, unit J Block 2, M/F, unit F Block 2, H/F, unit H L/F, unit C Block 2, L/F, unit F Block 2, L/F, unit E Block 11, M/F, unit A Hibiscus Court, L/F, unit J Block 2, M/F, unit H Block 9, M/F, unit A Peony Court, M/F, unit B Block 9, H/F, unit D H/F, unit C Block 7, H/F, unit G Block 7, M/F, unit A Block 7, M/F, unit D Block 7, H/F, unit C Block 2, L/F, unit H Block 4, M/F, unit Q Block 1, H/F, unit A Block 11, H/F, unit B (with car park) Block 7, M/F, unit H Block 5, L/F, unit C (with car park) Block 3, H/F, unit B Block 3, H/F, unit B Block 5. H/F, unit E (with car park) Block 1, H/F, unit B Block 15, M/F, unit A Block 15, L/F, unit A Block 2, M/F, unit L Block 15, H/F, unit E Block 1, H/F, unit B Block 3, L/F, unit C Block 1, L/F, unit F (with car park) Block 15, L/F, unit E Block 1, H/F, unit C Block 2, L/F, unit K M/F, unit AA

Source: Centaline, Midland & Ricacorp.

Floor area (sq. ft) 4,623 5,340 3,557 3,025 2,931 4,755 2,267 2,312 2,585 2,211 4,252 2,188 2,411 2,411 2,803 1,819 2,261 2,191 2,165 2,267 2,027 2,261 2,004 2,019 2,839 2,055 2,450 2,839 2,055 2,505 2,573 2,055 2,505 2,912 2,500 1,821 1,178 1,269 2,505 1,176 2,055 2,236 1,273 1,984 1,178 1,973 1,475 1,803 1,649 1,803 1,729 1,729 1,299 1,630 1,802 1,559 1,909 1,628 1,558 1,391 1,700

Sale price (HK$) 55,476,000 37,380,000 19,919,000 17,545,000 17,540,000 16,500,000 15,869,000 15,380,000 15,122,000 13,708,000 13,000,000 12,090,000 12,080,000 12,055,000 12,053,000 11,824,000 11,757,000 11,750,000 11,258,000 11,110,000 10,945,000 10,853,000 10,677,000 10,297,000 9,937,000 9,248,000 8,570,000 8,517,000 8,200,000 8,200,000 8,200,000 7,980,000 7,860,000 7,800,000 7,770,000 7,648,000 7,600,000 7,500,000 7,480,000 7,409,000 7,398,000 7,350,000 7,002,000 6,700,000 6,361,000 6,300,000 6,300,000 6,100,000 6,100,000 5,900,000 5,880,000 5,880,000 5,845,000 5,800,000 5,800,000 5,680,000 5,450,000 5,420,000 5,380,000 5,000,000 4,080,000

Price per sq.ft. (HK$) 12,000 7,000 5,600 5,800 5,984 3,470 7,000 6,652 5,850 6,200 3,057 5,526 5,010 5,000 4,300 6,500 5,200 5,363 5,200 4,901 5,400 4,800 5,328 5,100 3,500 4,500 3,498 3,000 3,990 3,273 3,187 3,883 3,138 2,679 3,108 4,200 6,452 5,910 2,986 6,300 3,600 3,287 5,500 3,377 5,400 3,193 4,271 3,383 3,699 3,272 3,401 3,400 4,500 3,558 3,218 3,643 2,845 3,329 3,453 3,594 2,400

Note: L/F - Low floor; M/F - Middle floor; H/F - High floor

Notable commercial property transactions - 16/09 to 30/09, 2010 Type

Building/Street

Unit

Shop Shop Shop Shop

Rua dos Mercadores Edf. Jardim Hang Kei Nam Wa San, Block 6 Rua da Vitória

The whole Shop Shop The whole

Source: Centaline

Floor area (sq. ft) 2,400 1,800 1,614 1,720

Sale price (HK$) 20,000,000 9,000,000 5,500,000 5,500,000

Price per sq.ft. (HK$) 8,333 5,000 3,407 3,197

Note: L/F - Low floor; M/F - Middle floor; H/F - High floor

NOVEMBER 2010

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

Effort plus income does not equal benefit TOIL FROM LOW-PAID WORKERS IS FILLING THE POCKETS OF THE EXTREMELY WEALTHY AND THE REAL COST IS THE CITY’S SOCIAL FABRIC AND MENTAL HEALTH he French sociologist Émile Durkheim described social facts as ways of acting, thinking and feeling which are external to the individual and which exert a “compelling and coercive power” on how that individual behaves. Social facts include political, legal and cultural matters, religious practices, aesthetic values, social norms, employment conditions and economic factors. Take, then, some simple social facts about Macau. The table shows annual data on several social facts for the last three years. Source: Adapted from data from Macau’s Statistics and Census Service * The statistics service reports “intentional self-harm” as the underlying cause of death Despite a booming tourism and gaming industry, with monstrous increases in revenue over time and an ongoing absolute increase in overall GDP, there are key social indicators that

have either declined or shown negligible improvement: • Noise is an ongoing problem; • The social noise classification, which includes pollution from shouting, noisy conversations, music, karaoke and mahjong, remains a significant problem; • The number of divorces has increased dramatically; • Suicides peaked in 2008 and have fallen slightly since then; • Per capita GDP growth has decreased significantly; • GDP growth rates in real terms have declined enormously; • The bottom has dropped out of the export market; • Residential property is increasingly expensive; • The number of new mortgage loans has plummeted; • Median monthly earnings have grown but are still extremely low;

Social Fact

2010

2007

2008

2009

Noise complaints reported to public security police, including “social noise” as a percentage of the total

3,579

4,020

3,894

Social noise: 1,533 or 42.8%

Social noise: 1,919 or 47.7%

Social noise: 1,811 or 46.5%

Not available

Gaming sector workers, expressed as a percentage of the total workforce

69,075 23.0%

80,075 24.8%

75,275 23.7%

74,500 23.6%

Gross gaming revenue in millions of MOP

83,847

109,826

120,383

86,467

Divorces

684

658

782

Not available

GDP in billions of MOP

150.21

173.55

169.34

102.74

GDP growth in real terms

26.0%

12.9%

1.3%

Not available

Per capita GDP in MOP

285,695

316,143

311,131

Not available

Per capita growth in real terms

19.7%

8.2%

2.2%

Not available

Value of exports in millions of MOP

20,431

16,025

7,673

3,624

Average residential unit price in MOP per square metre

20,729

23,316

23,235

28,891

Number of new mortgage loans

13,250

11,847

8,965

8,129

Dissolved companies

339

447

469

253

Crimes

12,921

13,864

12,406

5,686

Suicides*

Median monthly earnings in MOP

7,800

8,000

8,500

8,750

Unemployed workers searching for ﬁrst job

1,320

1,380

1,410

1,260

Median hours worked per week

46.9

46.7

46.3

46.4

Source: Adapted from data from Macau’s Statistics and Census Service * The statistics service reports “intentional self-harm” as the underlying cause of death

(first half)

•

More and more people are seeking their first job; • The number of crimes is high; • The number of dissolved companies has risen each year; and • Macau’s workers clock more hours a week than workers in the United States, Canada and every European country. As Macau’s gross gaming revenue and GDP rise, the quality of life for many citizens has declined. Many people will say they do not need numbers to prove this – they live it every day. A social fact: Macau’s quality of life is not as high as some would have us believe. Having one’s own roof over one’s head is becoming a luxury, and being able to live quietly, without fear of crime and in a stable relationship, is impossible for many. For many workers, the payout from working hard is limited. Macau’s selling out to big business has so far brought few positive returns to its citizens. Of course, it would be foolish to attribute direct causality or outcomes to the factors in the table. Causality is not that simple and any analysis must avoid the ecological fallacy of assuming that macro factors in society drive every individual’s behaviour. The table contains only crude data and takes no account of demographic factors. However, we can ask how Macau’s wealth is improving the quality of life of its citizens, with low-paid workers clearly working long hours to line the pockets of the wealthy. It is about time that big businesses in Macau took corporate social responsibility much more seriously. Good business is a stakeholder- and societyoriented. It is about more than profit and paying dividends to greedy shareholders. Returning to Durkheim’s social facts, it is hardly surprising that so many of Macau’s citizens feel demoralised, disillusioned, exploited, even duped, when they see huge profits accruing to a few while they remain poor, even though they work hard. External features of Macau’s society may be exerting a negative, yet “compelling and coercive power” on its citizens. Macau’s psychological and social health is at risk. NOVEMBER 2010

CEO Interview

“WE STILL HAVE A TON OF STUFF TO PROVE” BY PAULO A. AZEVEDO

“FROM DAY ONE, EVEN BEFORE ALTIRA OPENED, MY PHILOSOPHY WAS FOR US TO BECOME THE ENTERTAINMENT CENTRE OF MACAU AND, CERTAINLY, THE ENTERTAINMENT CENTRE OF COTAI” NOVEMBER 2010

There have been ups and downs for Melco Crown Entertainment but it is now a multibillion dollar, US-listed company. In a Macau Business exclusive, the young man at its helm says the journey has been fun and rewarding but “we still have a long road ahead”. Melco Crown chief executive Lawrence Ho says it is time to improve the results on the mass market, to generate higher cash flow and get more land in Cotai. Would his company be interested in the Macao Studio City plot if it went on the market? Definitely. et me start with City of Dreams’ entertainment crown jewel, The House of Dancing Water. Great reviews so far but a US$250 million (MOP2 billion) production does not exactly have a speedy return on investment. Was it money well spent?

Lawrence Ho, Franco Dragone and the cast of The House of Dancing Water

Lawrence Ho - Certainly money well spent. I have been working on this show for five years. From day one, even before Altira opened, my philosophy was for us to become the entertainment centre of Macau and, certainly, the entertainment centre of Cotai. Of course, at the end of the day, Macau is still a gaming town. You will never see 50 percent gaming versus 50 percent non-gaming like you do in Las Vegas. Still, what we need to do as a casino operator is to create more reasons for gamblers to effectively choose us over our competitors. US$250 million is a lot of money, NOVEMBER 2010

Photo: Carmo Correia

NOVEMBER 2010

CEO Interview probably the most expensive show ever created. [This amount] included the theatre that is a very specialised one. Ever since we opened, in midSeptember, The House of Dancing Water has already been paying off in terms of generating a ‘desire’ effect. We are still at an early stage in Cotai and we didn’t have the first mover advantage. Venetian had that. So, for us to build up our brand equity, it takes a lot more effort. Having said that, ever since the show opened, we are seeing a lot of the intangible effects, with people coming to City of Dreams and staying here. There are still people advocating that gaming operators need to invest more on non-gaming in order to transform Macau into an entertainment hub. Do you consider that by bringing in this show, you are fulfilling your commitment to Macau?

I certainly think so. We have always said that we follow the lead from the Macau government. They want to grow Macau not just as a casino town but as a real entertainment and leisure tourism city. I hope that they will agree with us, that The Bubble, The House of Dancing Water, Kids City, Cubic, all these non-gaming amenities we are trying to build, are helping to grow the multi-stay market. People did not have enough excuses to stay longer in the past because all the casinos were just casinos and hotels. What was the point of staying? But now, with the shopping we have, the shopping that Four Seasons has, One Central, with these shows, with good restaurants, I am convinced people will stay longer. Our biggest market is China and the Chinese patrons are now becoming very sophisticated and maturing very fast. Three years ago, they still wanted just to eat cup noodles at the gaming table. Now they want to enjoy the finest cuisine. It took 30 years for Las Vegas to fully develop its non-gaming and entertainment offerings. Will Macau follow the same philosophy?

I have been a believer of that for the past five years. I wish it could have developed even quicker, but I am still a big believer.

“YOU WILL NEVER SEE 50 PERCENT GAMING VERSUS 50 PERCENT NONGAMING [IN MACAU] LIKE YOU DO IN LAS VEGAS. STILL, WHAT WE NEED TO DO AS A CASINO OPERATOR IS TO CREATE MORE REASONS FOR GAMBLERS TO EFFECTIVELY CHOOSE US OVER OUR COMPETITORS” Assuming that all the infrastructure issues get fixed, this town has a great opportunity to grow the multi-stay market. At the end of this year, the gaming market, from a gross gaming revenue stand point, will probably reach US$22 billion, and that is excluding all the non-gaming stuff. Imagine when the non-gaming comes online. Forget about the 50:50 in Las Vegas. I would estimate the nongaming results [in Macau] are probably less than 10 percent right now, but it is already a US$2 billion industry. Now imagine if it grows to 20 percent, 30 percent. We are talking about a potential of US$6 to 7 billion. Hopefully the government will also appreciate the amount of capital and effort we are putting in.

“We deserve more land” By ‘appreciate’, do you mean the government should invest more in public infrastructure?

Yes. Anyway, City of Dreams is 98 percent finished. We are firm believers in Macau and we are just behind Sands China, as the second largest investor here. If you think about it, we have probably put US$3 billion into City of Dreams, US$500 million at Altira, and we bought the license for US$900

million. We certainly hope to have the opportunity, in due course, subject to the government’s pace, to further develop in Macau. We hear a lot from our competitors and their future plans. What they want to do or what they want to steal from one another. We certainly want to be considered as well, given that we have already built a showcase. You are no longer interested in a piece of land on the Macau peninsula? Is Cotai definitely the place to stay?

I have been a firm believer in Cotai from day one. Cotai is the way of the future. Also, on the Macau peninsula side, there are no decent sites and the market is already so competitive. You cannot put up a hotel on a 30,000 square feet plot, it is not competitive. Why would people want to go to a tiny little hotel and casino nowadays? I am hoping that Galaxy Macau’s opening will further drive the centre of gravity to Cotai. That way, hopefully, visitation and revenue coming from Cotai can exceed 50 percent in due course. So, you are interested in another piece of land in Cotai. Where exactly?

In the whole Cotai area. There is obviously the Cotai Strip here but when Wynn and MGM properties open up there is going to be another exciting strip further down in Cotai. Do not forget that our license is still attached to the casino in the Macao Studio City project.

Eyes on Macao Studio City If, by a miracle, the conflicts between the Macao Studio City promoters were solved [see Gaming section], would you still consider letting them manage a casino there under your license?

Yes, definitely. I think the issue right now is unfortunately out of our control, because it is between the two shareholders [New Cotai and East Asia Satellite Television] of the Macau Studio City joint venture. We have consistently passed the message to them and also to the government that we are very interested to operate on that site, using any model. We are open-minded. NOVEMBER 2010

CEO Interview

Have you said that to David Friedman, from New Cotai, or Peter Lam, from East Asia Satellite Television?

Yes, yes, we have passed the message to them that we hope they resolve their issues. Let’s talk frankly here: David Friedman does not seem interested in selling. Peter Lam’s side have not put that much money into the project and they could make a huge pile of cash by selling their share, after having pocketed already HK$1.3 billion with the selling of 40 percent to New Cotai. Why don’t they sell the rest?

I do not know. Have you made them an offer? I cannot talk too much about that issue because there are still lawsuits ongoing in Hong Kong. Sometimes it is not only about business. I think a lot of bad blood has built up and potentially they need to work it out themselves. We have been very busy with City of Dreams over the last 12 months and, ever since we opened, with The House of the Dancing Water. So, we have not had the energy or resources to go and help to facilitate on that issue. And do not forget the financial market was very bad at the end of 2008 and 2009. Even if you wanted to do something, it was not possible. If they decide to sell, would you be interested?

Yes. As with other undeveloped parcels of land in Macau, the government has threatened to take back the Macao Studio City land if there is no progress. As a businessman, do you agree that the government has that right, when no development takes place by the agreed deadlines?

I strongly, strongly support that. We paid for our land, even the City of Dreams land we bought from my father. Once you make a commitment, you should build on it. Also, it is not like these people have bought their land and are sitting on it. They did not pay for it. If we want to develop Macau, the key is really creating employment opportunities, NOVEMBER 2010

whether it is on the construction sites or in the services sector. If you are not building on it, you are not really creating any new employment opportunities.

Junket games Let’s talk about hard cash and gaming. Wynn Macau, for the first time ever, and it is probably a wakeup call, is facing challenges with super junkets like Dawei (David) and Neptune transferring part of their operations to other casinos. Initially, it was said it was because of City of Dreams.

No, no. I think people here took quite a bit of offense when it was said that MGM and Melco Crown were starting a price war and causing a disruption. For God’s sake, we were perfectly happy with our Cotai pact with Venetian, even before there was a commission cap. Yes, we opened three new junket rooms in July. We had an expansion. So we built more junket rooms and we

“WE CERTAINLY HOPE TO HAVE THE OPPORTUNITY, IN DUE COURSE, SUBJECT TO THE GOVERNMENT’S PACE, TO FURTHER DEVELOP IN MACAU. WE HEAR A LOT FROM OUR COMPETITORS AND THEIR FUTURE PLANS. WHAT THEY WANT TO DO OR WHAT THEY WANT TO STEAL FROM ONE ANOTHER. WE CERTAINLY WANT TO BE CONSIDERED AS WELL, GIVEN THAT WE HAVE ALREADY BUILT A SHOWCASE”

expanded. But by no means were we trying to go out and disrupt the pricing mechanism in the market. Our strategic plans for 2010, defined at the end of last year, were that we wanted to go high margin. I can say it categorically. We have not touched our commission fee. We have not gone nuts with the credit support to our junkets or anything. We are probably one of the most conservative. I even think the MGM thing is overblown. It is not like David and Neptune are shutting down [at Wynn Macau] and moving their business to MGM. They are merely expanding [into other properties]. It is not like the good old days where the junkets dictated where to go. Players have preferences. They say ‘I want to go to Wynn. I want to go to City of Dreams’. So, it is important for a junket to have a presence [in different casinos]. If they don’t have a presence at that new place, then the person will say: ‘Well, I will find another junket’. You should really compete on the product and the services you have to offer, rather than just be constantly saying: ‘I will give you the best prices’. You have clinched third place on the gross gaming revenue ranking in Macau, and a more stable market share. What is the next target?

We have never really cared about that market share [ranking]. We would much rather have higher cash flow and EBITDA. The easiest thing in the world is to loosen up on credit, open up a few more VIP rooms and convert a few more mass tables into VIP, then you can instantly grow the market share. Very easy. That is not really what we want. What we want is to create more value for our shareholders. If we just cared about market share and growing the VIP numbers, we wouldn’t have put together all the shows. What we really want to do is to grow the long-term sustainability of the business. So far, we have had consecutive quarters of EBITDA growth. But we look at our competitors and Wynn is probably going to do US$800 million in EBITDA this year, Sands China is probably going to do US$1.2 billion. We still have a long way to go but we have our targets in place.

Photo: Carmo Correia

NOVEMBER 2010

Photo: Carmo Correia

NOVEMBER 2010

CEO Interview Mass market is the part of the business that you are focusing on the most now?

Yes. We have done a good job on the VIP market. We have made some recent management changes, not just at top level but all the way down, in order to address some of our weaknesses. Now, we are putting more resources into those areas. The key for us is to grow on slot machines and on the mass market at City of Dreams because we have committed so much capital to this property. If you look at our return on capital, it is inferior to that of our competitors. Our goal is very clear: we need to grow this segment of the business. Will there be any announcement soon on the replacement of your chief financial officer?

We have a search firm that is looking into it for us. When Melco Crown posts results, the media report that you’ve been narrowing losses. But ‘normal’ people do not understand the losses when it is such a lucrative market.

Exactly. Why not just present the net profit and show that the company has been making a huge pile of money? Accounting principles. As I said, I spent US$900 million on the gaming license, close to US$3 billion on City of Dreams and another US$500 million on Altira. All that needs to be depreciated along with the length of the gaming license. That hits the bottom line and that is why we always like to talk about free cash flow generation. Of course we can do what Galaxy did and just simply write down the gaming license to zero and take the hit one time. Unfortunately, our US$1.7 billion project loan does not allow us that flexibility. Therefore, we will have to keep on amortising the gaming license the hard way.

‘We still need to outperform’ How many years do you need to get back all the money you have invested in Macau so far?

We cannot forecast that because we are a US-listed company. Again, as I said earlier, there is a concerted goal from an organisational

standpoint to really improve our return on investment. Analysts are probably looking at us generating US$350-400 million EBITDA this year. We hope to keep pace with the Macau market but, if it grows 20 percent next year, we need to outperform it well higher than that.

There are questions out there.

On a net profit basis, how much money are these properties generating?

No, no. That isn’t the principal driver anymore. In the past, we were more conservative and that is why we were observing what would happen over there. Our principal driver now is our business needs. More likely it is going to be just a hotel.

I can only talk about results for the first two quarters of 2010. We generated close to US$100 million per quarter in terms of EBITDA. In the past, you said you agreed with the government’s restrictions on the importation of labour. So, what can be done in order for Macau to fill all the empty job vacancies?

Macau is running out of available labour, without a doubt. I know Galaxy Macau needs to hire 7,000 people to operate that property. Can you really find 7,000? I think it is going to be difficult. On the construction side, we heard about the problems with [Venetian’s parcels] five and six and some more problems at Galaxy. But, at the same time, I also understand why the government is reacting that way. [Demonstrators are] a very small group but a very loud one. I think the government is in a difficult position but I certainly hope it will solve those issues. Even now, some of the service quality is becoming bad. People have a pretty low opinion of the service level in Macau.

Bye apartment hotel Currently, you have almost a million square feet of space available on the City of Dreams parcel, right?

Yes, for phase three. It is called the apartment hotel but more likely than not it is going to be just a hotel tower. Our view is that Grand Hyatt has ramped up very nicely since it opened, especially looking at the occupancy levels and its correlation to our gaming revenue. We were very busy opening everything in City of Dreams, so, probably next year we will consider what to build. If it is a hotel tower, will it be self-managed? It will depend.

You still have not decided if it is going to be a hotel or an apartment hotel. Is it because you are waiting on the final decision on the Four Seasons apartment hotel, namely if Sands China will be allowed by the government to sell them?

A four-star hotel instead of a five star?

We are looking at that right now. To target more mass market people that don’t have MOP2,000 to spend per night?

Those are all issues that we are looking at right now. When you decide, will it be basically in order to offer a different product to a different crowd?

That is the philosophy that we had with City of Dreams. We think it has worked out very well and that it caters to a very diverse crowd of people. We are very happy with it and we will continue to develop along those lines.

Going centenarian Your company, Melco International Development, which has a 33.4-percent stake in Melco Crown Entertainment, was created almost 100 years ago.

Yes, 100 years this year, in November. Not long ago, you, a young guy, came along and picked it up when it had faded into basically almost nothing. When you look at yourself in the mirror, what do you see?

I wish that were true but I have a lot more to prove. We need to do better than our competitors. We are doing a lot better than a year ago but we still have a long road ahead. We built something great and I am very proud of it. At the same time, it is about results and our investors. Certainly I think the journey has been fun but we still have a ton of stuff to prove. NOVEMBER 2010

Gaming | Billions Race

gaming operator finally left the bottom of the market share ranking, with a market share of about 11 percent, marginally above Galaxy Entertainment Group, also about 11 percent. Stanley Ho Hung Sun’s Sociedade de Jogos de Macau (SJM) continues to lead the ranking, with an October market share of 33 percent, followed by Las Vegas Sands, 18 percent, and Melco Crown, with a market share of about 14 percent. Wynn Macau was fourth, with a market share of about 13 percent.

Billions race

Golden Week tourism bonanza on top of already strong growth trend sets new record in casino gross gaming revenue

acau has set a new monthly casino gross gaming revenue record, buoyed by Golden Week arrivals. With total revenue of MOP18.87 billion (US$2.36 billion), last month’s casino take beat the previous record of MOP17.08 billion from May, by a comfortable margin. Macau’s casino gross gaming revenue at the end of last month was up 49.8 percent year-on-year, according to data from the Gaming Inspection and Coordination Bureau (DICJ). The total casino gross gaming rev-

VIP baccarat the king

enue for the ten months through to October is up 58.8 percent year-on-year to MOP152.11 billion. That is more than all of last year’s take of MOP119.4 billion, guaranteeing this year will set a new yearly record for casino revenue. On a quarterly basis, gross gaming revenue reached MOP47.38 billion in the third quarter, year-on-year growth of 49 percent.

MGM’s bet pays off Information compiled by Macau Business indicates that MGM Macau’s bet on the VIP market has paid off. The

It’s EBITDA that matters: Sands

ands China’s chairman Sheldon Adelson says market share of gross casino revenue is the wrong measure to understand which gaming operator is winning and who is losing. “Our strong belief is that the appropriate measure of our financial performance is EBITDA (earnings before interest, taxation, depreciation and amortisation), not market share of gross revenue,” Mr Adelson said on a conference call last month. “SJM has given out tons of sublicenses, and according to rumours MGM, Galaxy and Melco have decided to follow suit. Under these arrangements... the operator may actually receive as little as 3 percent of gross revenue but they use 100 percent of the gross revenue to determine their market share.”

Gaming Results: Gross Revenue

Looking into the detail of the quarterly figures, Macau’s VIP baccarat revenue rose 57 percent year-on-year in the third quarter to a record MOP34.05 billion, according to information from the Gaming Inspection and Coordination Bureau. VIP baccarat accounted for 72 percent of casinos’ gross gaming revenue in that period. Mass-market baccarat revenue rose 36 percent year-on-year, to MOP8.88 billion, accounting for 19 percent of all casinos’ gross gaming revenue in the third quarter. Revenue from slot machines rose 38 percent to MOP2.24 billion in the same period. The city’s 14,316 slots accounted for a share of 4.7 percent of the total gaming revenue. The outstanding figures have forced the director of the Gaming Inspection and Coordination Bureau Manuel Joaquim das Neves to raise his forecast for the year. “It is now possible to say that [gaming revenue] will increase more than 50 percent year-on-year,” Mr Neves told the Macau Daily Times. His previous estimation was an annual increase of around 30 percent.

In Million MOP (1HKD:1.03MOP)

18,869

19,000

17,075

18,000 16,000 14,000

12,600

12,215

Oct 2009

Nov 2009

12,000

13,937

13,445

13,569

Feb 2010

Mar 2010

14,186

16,310 13,642

15,773

15,302

Aug 2010

Sep 2010

11,347

10,000 8,000 6,000 4,000 2,000 0

Dec 2009

NOVEMBER 2010

Jan 2010

Apr 2010

May 2010

Jun 2010

Jul 2010

Oct 2010

Gaming Results: Market Share Per Operator 2010

2009 Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

SJM

31%

32%

31%

30%

32%

34%

32%

30%

32%

29%

30%

33%

Sands China

24%

21%

22%

20%

21%

19%

22%

19%

20%

18%

Galaxy

12%

13%

10%

11%

10%

12%

13%

12%

11%

Wynn

12%

17%

13%

15%

13%

14%

16%

17%

15%

14%

12%

13%

MPEL

13%

12%

16%

14%

13%

14%

13%

15%

17%

14%

MGM

10%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

30 20 10 0

Oct 2009

Nov 2009

Dec 2009

Jan 2010

Feb 2010

Mar 2010

Apr 2010 May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

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

The lion awakes GM Resorts International announced last month it was expecting to receive approximately US$125 million (MOP1 billion) from MGM Macau. This is a partial repayment of principal and accrued interest for interest-bearing and noninterest-bearing notes the company issued to MGM Macau. MGM Macau is expected to earn an operating profit of US$61 million

in the third quarter of 2010, including a depreciation charge of US$22 million, compared to US$50 million a year before, with a US$23-million depreciation charge, MGM Resorts International said. MGM Resorts International has received an offer for its half-share in the Borgata Hotel Casino and Spa in Atlantic City, which would bring in about US$250 million. The company is

obliged to sell its share in the property after the New Jersey regulators found MGM Resorts International’s partner in MGM Macau, businesswoman Pansy Ho Chiu King to be “unsuitable”. MGM Resorts International also said it planned to raise more than US$500 million by selling stock. The company said it planned to use the proceeds primarily to repay some of its US$13-billion debt. NOVEMBER 2010

Gaming | Billions Race

Gross revenue from different gaming activities 3Q 2010

2Q 2010

1Q 2010

47,723 47,384 34,047 8,884 2,236 884 528 255 154 52 52 52 38 33 20 23 34 8 1 n/a 0.4 n/a 107 85 134 11 1 0.001

45,219 44,902 32,368 8,310 2,028 856 541 266 161 55 52 43 41 30 24 20 22 9 0.2 0.3 0.4 n/a 110 91 102 12 1 0.001

41,248 40,951 28,761 8,024 1,948 869 594 273 135 55 48 45 39 29 28 19 19 8 2 1 0.5 n/a 124 91 52 27 2 0.0002

4Q 2009

3Q 2009

2Q 2009

1Q 2009

4Q 2008

32,036 31,781 21,742 6,536 1,616 723 473 253 161 53 39 49 45 22 36 12 23 6 2 2 0.4 n/a 70 111 60 12 1 0.000

25,619 25,408 16,287 5,898 1,533 638 432 223 125 40 32 39 42 23 37 8 20 5 2 2 0.4 n/a 71 60 68 11 1 0.001

26,252 26,019 16,828 5,804 1,533 687 489 174 150 47 32 44 18 21 52 10 24 6 3 4 0.5 n/a 90 45 72 55 2 0.000

24,358 24,078 15,616 5,186 1,478 654 503 182 177 42 20 45 1 13 49 9 25 6 2 7 0.5 n/a 126 53 83 17 1 0.001

25.0% 25.1% 33.5% 10.8% 5.4% 13.3% 9.5% 13.5% 28.8% 32.5% 21.9% 25.6% 8.4% -4.3% -2.7% 50.0% 15.0% 20.0% 0.0% 0.0% 0.0% n/a -1.4% 85.0% -11.8% 9.1% 0.0% -60.0%

-2.4% -2.3% -3.2% 1.6% 0.0% -7.1% -11.7% 28.2% -16.7% -14.9% 0.0% -11.4% 137.1% 9.5% -28.8% -20.0% -16.7% -16.7% -33.3% -50.0% -20.0% n/a -21.1% 33.3% -5.6% -56.0% -50.0% -1100.0%

7.8% 8.1% 7.8% 11.9% 3.7% 5.0% -2.8% -4.4% -15.3% 11.9% 60.0% -2.2% 1358.3% 61.5% 6.1% 11.1% -4.0% 0.0% 50.0% -42.9% 0.0% n/a -28.6% -15.1% -13.3% 47.1% 100.0% -110.0%

-7.0% -7.3% -9.5% -2.7% 3.6% -9.8% -3.3% 5.8% 24.6% -12.5% 5.3% -8.2% 20.0% -23.5% -3.9% -40.0% -7.4% 0.0% -33.3% 0.0% 25.0% -100.0% 20.0% 0.0% 59.6% 183.3% -50.0% n/a

Macau Patacas (Million)

Total Games of Fortune (total) VIP Baccarat Baccarat Slot Machines Cussec Black Jack Stud Poker Roulette 3-Card Baccarat Texas Holdem Poker Fantan Casino War 3-Card Poker Fish-Prawn-Crab PaiKao Craps Lucky Wheel Makccarat Q Poker Tombola Mini Baccarat Horse Racing Greyhound Racing Sports Lottery - Football Sports Lottery - Basketball Chinese Lottery Instant Lottery

36,476 36,161 24,976 7,259 1,820 779 509 262 257 45 42 42 37 27 28 13 26 7 1 1 0.5 n/a 102 110 80 21 1 0.001 QoQ%

Total Games of Fortune VIP Baccarat Baccarat Slot Machines Cussec Black Jack Stud Poker Roulette 3-Card Baccarat Texas Holdem Poker Fantan Casino War 3-Card Poker Fish-Prawn-Crab PaiKao Craps Lucky Wheel Makccarat Q Poker Tombola Mini Baccarat Horse Racing Greyhound Racing Sports Lottery - Football Sports Lottery - Basketball Chinese Lottery Instant Lottery

5.5% 5.5% 5.2% 6.9% 10.3% 3.3% -2.4% -4.1% -4.3% -5.5% 0.0% 20.9% -7.3% 10.0% -16.7% 15.0% 54.5% -11.1% 400.0% n/a 0.0% n/a -2.7% -6.6% 31.4% -8.3% 0.0% 0.0%

Source: Gaming Inspection and Coordination Bureau NOVEMBER 2010

9.6% 9.6% 12.5% 3.6% 4.1% -1.5% -8.9% -2.6% 19.3% 0.0% 8.3% -4.4% 5.1% 3.4% -14.3% 5.3% 15.8% 12.5% -90.0% -70.0% -20.0% n/a -11.3% 0.0% 96.2% -55.6% -50.0% 400.0%

13.1% 13.2% 15.2% 10.5% 7.0% 11.6% 16.7% 4.2% -47.5% 22.2% 14.3% 7.1% 5.4% 7.4% 0.0% 46.2% -26.9% 14.3% 100.0% 0.0% 0.0% n/a 21.6% -17.3% -35.0% 28.6% 100.0% -80.0%

13.9% 13.8% 14.9% 11.1% 12.6% 7.7% 7.6% 3.6% 59.6% -15.1% 7.7% -14.3% -17.8% 22.7% -22.2% 8.3% 13.0% 16.7% -50.0% -50.0% 25.0% n/a 45.7% -0.9% 33.3% 75.0% 0.0% 150.0%

Gaming | Stock Watch

Eye-popping results Las Vegas Sands and Galaxy post some record figures for the third quarter acau is still the hottest place to be for gaming operators, as third quarter results start to come in. Late last month, Las Vegas Sands and Galaxy Entertainment Group announced record figures for the period from July to September. With the Federal Reserve’s announcement of renewed quantitative easing, global equity markets reacted positively last month. In particular, Hong Kong’s benchmark Hang Seng Index (HSI) and Hang Seng China Enterprise Index (HSCEI) both reached record highs, the HSI up above 23,600 points, a 6.8 percent improvement month on month, and the HSCEI above 13,600 points, up 11.5 percent. Surprisingly, the leaders among the Macau casino operators covered by Macau Business, outperformed the index. As of October 25, SJM (880 HK) was up 17.7 percent month-on-month, Sands China (1928 HK) was up 23.3 percent and Wynn Macau (1128 HK) was up 25.4 percent.

Macau casino stocks performance year-to-date (Base=HK$10) 25

Venetian losing to Marina Bay Sands

19 16 13 10 7 Jan-2010

Feb-2010

Mar-2010

SJM

Apr-2010

May-2010

Galaxy

Jun-2010

Jul-2010

Wynn

Aug-2010

Sep-2010

Sands

Oct-2010

Melco

Macau casino stocks performance year-to-date vs Hang Seng Index (Base=HK$10) 25

25000

24000 23000

22000 16 21000 13

20000

10 As of October 25

Las Vegas Sands said its Macau subsidiary, Sands China, posted a net profit of US$196.6 million (MOP1.57 billion) for the third quarter of 2010, 124.9 percent more than a year before. Calculated according to GAAP rules, Sands China’s net revenue increased 27.7 percent to US$1.08 billion. Its adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) margin of 31.3 percent was a record. Las Vegas Sands posted a third quarter net profit of US$214.5 million for its operations worldwide (in the United States, Macau and Singapore), having made a loss of US$76.5 million a year before. Its CotaiJet ferry operation in Macau posted negative EBITDA of US$5.6 million. On September 30, Las Vegas Sands’ outstanding debt was US$10.14 billion. Capital expenditure in the third quarter was US$523.1 million, including US$146.9 million spent on construction

19000

18000

Jan-2010

SJM

Feb-2010

Mar-2010

Galaxy

Apr-2010

May-2010

Wynn

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Hang Seng Index (RHS)

NOVEMBER 2010

Gaming | Stock Watch

and development in Macau. Marina Bay Sands in Singapore, in its first full quarter of operations, delivered adjusted property EBITDA of US$241.6 million for the third quarter and an adjusted property EBITDA margin of 49.7 percent. Net revenue was US$485.9 million. Overall, Marina Bay Sands is already the most profitable property of Las Vegas Sands, having surpassed the Venetian Macao. The Singaporean casino posted operating profit of US$166.22 million in the third quarter of 2010, against the US$156.87 million of the Cotai property. Although Marina Bay Sands’ net revenue was 22 percent below that of the Venetian Macao for the third quarter of 2010, the huge difference in gaming tax rates helped the bottom line of the city state property. Sands China contributed 50.9 percent of Las Vegas Sands’ adjusted property EBITDA and the Singapore operation contributed 37.4 percent.

US casino stocks performance year-to-date (Base=US$10) 25 22 19 16 13 10 7 Jan-2010

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MGM Resorts

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Wynn Resorts

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Melco Crown Ent.

US casino stocks performance year-to-date vs S&P 500 Index (Base=US$10) 25

1250

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1150

16 1100 13 1050

1000

7 Jan-2010

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MGM Resorts

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Melco Crown Ent.

As of October 25

Golden chance

Oct-2010

Commenting on Sands China’s results, Morgan Stanley said the company

S&P 500 Index (RHS)

EV/EBITDA US casino stock

(x)

EV/EBITDA Macau casino stocks*

5 1-Jan 2010

31-Jan 2010

2-Mar 2010

1-Apr 2010

1-May 2010

31-May 2010

30-Jun 2010

30-Jul 2010

29-Aug 28-Sep 2010 2010

1-Jan 2010

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*excluded Melco Int’l for peer comparison purpose.

Galaxy

SJM

Sands China

US casino stocks by market capitalization Melco Crown -ADR

Intl Game Tech

Las Vegas Sands

US casino stocks by sales

Wynn Resorts Ltd

Macau casino stocks by market capitalization

MGM Resorts Inte

11%

Melco Intl Devel

Las Vegas Sands

47% MGM Resorts Inte

10% NOVEMBER 2010

Wynn Resorts Ltd.

16% Penn Natl Gaming

12%

0.8%

SLM Holdings Ltd

Las Vegas Sands

23% MGM Resorts Inte

31%

Sands China Ltd

17.9% Galaxy Entertain

42.1%

Sands China Ltd

29.6%

9.2% Wynn Macau Ltd

Penn Natl Gaming

Macau casino stocks by sales

1.7%

Intl Game Tech

Melco Crown -ADR

24% Penn Natl Gaming

Wynn Macau

Melco Intl Devel

Wynn Resorts Ltd. As of October 25

Sep-2010

29%

Wynn Macau Ltd

SLM Holdings Ltd

39.3% Galaxy Entertain

16.2%14.1%

Shining brightly Galaxy Entertainment Group’s revenue rose to HK$5.4 billion (MOP5.6 billion) in the third quarter of 2010, increasing by 88 percent over the same period last year. The group posted record EBITDA of HK$616 million, up 115 percent, according to selected unaudited financial data. StarWorld recorded its ninth consecutive quarter of EBITDA growth. Lui Che Woo, the group chairman, said: “The Macau market continues to grow very rapidly and infrastructure projects in China and Macau are expected to maintain this growth and attract a new type of visitor to Macau, who will stay longer and, as well as gaming, look to enjoy entertainment and leisure facilities. “The accelerated rollout schedule of Galaxy Macau will enable the group to fully capture this surging demand,” he said. The company said Gal-

axy Macau was “successfully transitioning from [the] construction phase to preopening” and that it “remains on budget and on schedule to open in early 2011”. However, that appears to be in doubt after Galaxy last month announced the departure of Steve Wolstenholme, Galaxy Macau’s chief operating officer, and Jeffrey King, its senior vice-president for marketing. Wells Fargo analyst Carlo Santarelli wrote in a report that the company had announced “an aggressive timeline” for the opening of Galaxy Macau. Mr Santarelli said the deadline was now “even less likely” to be met, in view of the changes at the top. He expects Galaxy Macau to open in May or June next year.

14-day Relative Strength Index SJM Holdings Ltd. 100 90 80 70 60 50 40 30 20 10 0 Dec-2009

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Sands China Ltd.

Substitutes Galaxy Entertainment Group said Mr Wolstenholme had “resigned for personal reasons”. He will remain with the group “until November to ensure a smooth transition” during which time Michael Mecca, the group president and chief operating officer, will be Galaxy Macau’s interim chief operating officer. Mr King “will also stay with Galaxy Entertainment Group until a handover has been completed”, the company said, without saying why he resigned. While Galaxy Macau looks for a new senior vicepresident for marketing, Raymond Yap, group senior vicepresident for international premium market development, will fill in. In the United States, Wynn Resorts, the parent company of Wynn Macau, is preparing to sell more shares, filing a prospectus with the Securities and Exchange Commission last month. The price of Wynn Resorts shares has more than doubled over the last 12 months. R.C.

Mar-2010

Wynn Macau Ltd. 100 90 80 70 60 50 40 30 20 10 0

100 90 80 70 60 50 40 30 20 10 0

Dec-2009

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Wynn Macau Ltd. 100 90 80 70 60 50 40 30 20 10 0

Dec-2009

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Melco International Development

As of October 25

“could outperform in the near term”. Sands China chairman Sheldon Adelson said the company expected to achieve record high monthly EBITDA in October, given the effect of Golden Week. However, Morgan Stanley considers further delay in the first phase of Sands’ project on lots five and six in Cotai, currently slated for opening in the fourth quarter of 2011, is inevitable. The investment bank also thinks it will be difficult to sell the Four Seasons serviced apartment complex any time soon. The bank said the People’s Bank of China’s recent increase in the one-year lending rate to 5.56 percent from 5.31 percent would probably not be a negative for Macau casino stocks. “We still think that the recent rate rise is manageable unless China continues to raise rates in subsequent months,” it said.

100 90 80 70 60 50 40 30 20 10 0

Dec-2009

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Overbought

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Oversold

NOVEMBER 2010

Oct-2010

Gaming

STEP BY STEP Ponte 16’s casino expansion is frozen while gaming table numbers are capped, but the owners could not be happier with the resort’s current performance

fter a rough start, business at Ponte 16 is now looking good – so good that shareholders are in no rush to begin the property’s third phase. In an exclusive interview, Hoffman Ma, deputy chairman of the Success Universe Group, a minority partner in the property, tells Macau Business things are looking up. “For now, it is difficult to justify [the go-ahead for the third phase] because in that area we have provision for the expansion of the casino, other than the retail,” he said. Plans for the property’s third phase include an entertainment, retail and recreational complex, plus a waterfront promenade. The development plans are with the government for approval.

NOVEMBER 2010

BY EMANUEL GRAÇA AND ANTÓNIO FALCÃO (PHOTOS)

“But now the government has frozen the number of tables [at 5,500 tables until 2013]. By opening just only retail, we are not as confident as if we could expand the casino and open more retail,” he said. Ponte 16 on the Inner Harbour is 49 percent owned by a subsidiary of Success Universe. The majority share is owned by SJM–Investimentos, an indirect, wholly owned subsidiary of SJM Holdings. “For us, it is still better to have [the third phase], but we are not as rushed [as before],” said Mr Ma, who is also the deputy chief executive of Ponte 16.

Rocky start Ponte 16 faced some initial challenges when it opened in February 2008. “When we first opened, it was after the financial

crisis, so it was a bit difficult. We had to scale down the opening of restaurants and VIP halls,” Mr Ma said. “After that, when the economy started to grow, we – by phases – opened more restaurants, opened more VIP halls and business started to build. I am satisfied with the improvement we are achieving.” In the first half of 2010, Ponte 16 recorded year-on-year growth of about 83 percent in gross gaming revenue, well above the average industry rate of 67 percent. According to Mr Ma, the short-term goal for the property is to continue to outperform the market. “We are doing good, by improving year-on-year, especially putting in new elements, new outlets, new events,” he said. Meanwhile, Ponte 16 is starting to do some direct VIP business, without the use of junkets. Things are going well, says Mr Ma. “We are starting to do it but we are doing it cautiously with people that we know. Success has been running VIP halls since the early 90s. So there is a group of customers that we have worked with for a long time,” he said.

In search of success T

he Success Universe Group is active in both gaming and travel in Macau. Besides its share in Ponte 16, it owns and operates Travel Success (Macau), a travel agency. The Hong Kong-based group also owns a 55 percent share in the nine-deck cruise ship Macau Success, running casino cruises out of Hong Kong. However, the group’s deputy chairman, Hoffman Ma, says the company has no plans to expand in cruising. “Gaming boats provide convenience, privacy and also higher commission because of the tax issue. So there is still room to survive but it is not a business that can achieve a lot of growth,” he said. Asked if Success was looking to enter the Cotai gaming market, perhaps in a new partnership with SJM, he said: “We are always open for discussion. We have not committed to anything”. “I really would like to concentrate on Ponte 16, unless the terms are very attractive or if the business really shifts from the Macau peninsula side to Cotai.” Mr Ma admits that not having a gaming licence of its own in Macau is a handicap with investors seeing the group “differently”. If the government were to grant new licenses, the company would be among the interested parties. “But I really doubt this is going to happen, or at least it is not going to be soon because of the approach of the government,” he said. “We can see them freezing the number of tables. So how can you afford to issue more licences if you are freezing the number of tables and if you are stopping the import of labour? It really doesn’t come together.” Besides Macau and Hong Kong, the group’s portfolio includes travel industry businesses in Canada and the United States. NOVEMBER 2010

Gaming

At the end of June, Ponte 16 had 109 gaming tables, 89 of which were mass gaming tables, eight high-limit tables and 12 VIP tables.

The Jacko factor Mr Ma says the Michael Jackson Gallery, opened in February, was one of the triggers of Ponte 16’s growth. It helped to promote the property on the mainland, a market where casino advertising is banned. “We are in very close connection with Michael Jackson’s fan clubs in China, particularly in Guangzhou and Shanghai,” he said. “These are not necessarily high-end customers but it has helped us to build a brand name and to be better known in China and even internationally. So we were able to draw more high-quality customers.” Ponte 16 initially had plans to include pachinko machines, the combination slot and pinball machines that are wildly popular in Japan, on the floor but, according to

Mr Ma, research in the Macau market indicated that the revenue per machine would be below current slot machine revenue.

Legendary auction T

he Hollywood Legends auction conducted by Julien’s Auctions at Ponte 16 last month raked in US$3.2 million (MOP25.6 million). Altogether 435 items were sold during the 11-hour auction, conducted in two sessions. The lots included stage costumes and collectibles from superstars and celebrities. Ponte 16 was the venue sponsor for the auction, the first held by Julien’s Auctions in Asia, which attracted more than 10,000 bidders from around the world. “We have committed with Julien’s Auctions to do this annually in Macau,” says Ponte 16’s deputy chief

NOVEMBER 2010

“We will consider from time to time if there is a marketing corner to put some pachinko machines [in], but in the long term we believe slot

executive Hoffman Ma. “We have worked closely together to put up a mix of celebrities that are more well known in Asia and also in the China region. I think it is probably the best time for Western companies, especially in the entertainment business, to expand in Asia.” Among the items sold were Bruce Lee’s “Game of Death” shoes, sold to a US bidder for US$12,500 including the buyer’s premium. The most stunning price was fetched by a basketball signed by Michael Jackson and Michael Jordan, which was sold for US$294,000 including buyer’s premium, 366 times the highest estimate. Mr Ma, representing Ponte 16, bought a Michael Jackson jacket and used towel for US$102,000, including buyer’s premium, and a Michael Jackson signed guitar for US$10,000. The resort is planning to place the newly acquired collectibles in its Michael Jackson Gallery.

machines will perform better than pachinko,” he said. According to several analysts, Ponte 16 could get a revenue boost with the go-ahead for an undersea pedestrian tunnel connecting Wan Chai in Zhuhai to the Inner Harbour. The Macau government project has been under consideration since 2005. Mr Ma is in favour of the tunnel but stressed that the public transport network on Zhuhai’s side needs to be able to cope with the increase in traffic. “If you don’t have this kind of support, a tunnel out there might not be necessary.” Mr Ma is critical of the labour restrictions in Macau. “There is expertise that Macau lacks. I would suggest that the government should focus on certain kinds of labour to put restraints [on], so that at least some of the specialities can still be imported. But it seems to me now that the government has stopped everything.” He warns that draconian restrictions may scare away foreign investors. “They will hesitate or they will not even come to Macau because of the labour problem. It really stops development,” he said.

Old story Another problem is that the development of old neighbourhoods in Macau is not happening, Mr Ma said. “If you see Hong Kong or even if you look to China, the government always takes an aggressive lead in doing that, a lot of times by law and by directly buying the properties or by stimulating the development of pieces of land,” he said. “I think the Macau government can also stimulate the local economy by taking such a lead in this area.” As Ponte 16 is in an old neighbourhood, Mr Ma acknowledges that successful urban renewal would have a positive effect on the property’s value.

High stake bet AERL announces deal to acquire VIP room at the Venetian Macao

IP gaming promoter Asia Entertainment & Resources Ltd. (AERL) announced last month that it has entered into a non-binding memorandum of understanding to acquire a 100 percent profit interest in the operations of King’s Gaming Promotion Limited (KGP). KGP is a Macau-based VIP room gaming promoter that currently operates one room with five tables at the Venetian Macao. AERL expects to close the transaction by November 30. “KGP has been successful in maintaining an average rolling chip turnover of approximately HK$1 billion (approximately US$129 million) per month over the past six months”, said AERL Chairman Lam Man Pou. “We believe by combining our operations and network of agents with that of King’s Gaming, we can expand our presence in the Macau VIP gaming market into the Cotai Strip.” AERL’s existing VIP gaming rooms are all located on the Macau Peninsula, namely at StarWorld and MGM Macau. The value of the deal is expected to be approximately US$9 million, but it can increase according to KGP’s results.

Michael Chen leaves Macau

GPI chosen to supply Galaxy

Michael H. Chen left his position as president for Asia for the American gaming giant Harrah’s Entertainment Inc. and started a sabbatical year on October 1. “I was offered a position in Las Vegas at Harrah’s which is great but I need some time off and they agreed to it,” Mr Chen told Macau Business in Singapore, while attending an Asian casino and gaming congress. Mr Chen has been responsible for the conceptualisation and development of Harrah’s business in Asia. He led the gaming company entry into Asia with the acquisition of Orient (Macau) Golf Club. Prior to his position as president for Asia, Mr Chen was a corporate director and executive associate to the Chairman, President and CEO, Gary Loveman.

Gaming Partners International Corporation (GPI), a leading provider of casino currency and table game equipment worldwide, announced last month that it has been chosen to supply the Galaxy Macau casino with all of its casino chips and plaques. GPI will provide approximately one million casino chips and plaques to the casino for its opening in early 2011. GPI is also providing Galaxy Macau with high-frequency RFID technology in its currency. The value of this order, which was not disclosed, represents GPI’s largest single order for a new casino opening.

MGM’s Lion Bar to close MGM Macau’s Lion Bar is set to close its doors, sources have told Macau Business. The bar will be shut down before of the end of the year. Macau Business understands the decision was partially made after pressure from the Gaming Inspection and Coordination Bureau, since the bar is located in the middle of the casino, which prevents public servants and government employees from accessing it. According to the law, public servants and government employees are not allowed to enter casinos except for special reasons and never to gamble. According to Macau Business sources, MGM Macau will however, open a new bar to be located in its main plaza, next to Rossio restaurant.

NOVEMBER 2010

Gaming

Round one

Former Sands China chief Steven Jacobs sues Las Vegas Sands, accusing Sheldon Adelson of ordering him to use “improper leverage against senior government officials of Macau” BY EMANUEL GRAÇA

adies and gentlemen, please take your seats. The fight between the former president and chief executive of Sands China, Steven Jacobs, and his former boss, Sheldon Adelson, has commenced. Those of a nervous disposition should leave now, since it is expected to be an ugly bout, with a lot of hidden dirt to be revealed. Mr Jacobs came out of his corner strongly, filing a civil action in Nevada last month against Las Vegas Sands and its Sands China subsidiary for breach of contract. The court documents, to which Macau Business has had access, are full of allegations against Mr Adelson, the Las Vegas Sands chairman and chief executive, who is described as being “notoriously bellicose”. The documents say Mr Jacobs “repaired strained relationships with local and national government officials in Macau who would no longer meet with Mr Adelson owing to his rude and ob-

NOVEMBER 2010

streperous behaviour”. Mr Jacobs alleges that he was wrongfully fired. He is demanding millions of dollars in salary, bonuses and stock options that he unsuccessfully attempted to exercise on September 24. That stock package could be worth more than MOP80 million. Mr Jacobs began working for Las Vegas Sands in March last year and was fired 18 months later. Las Vegas Sands has already reacted to the court case, “categorically” denying what it calls “baseless and inflammatory allegations”.

The haymaker Mr Jacobs’ attorney, legal heavyweight Donald Campbell, wrote in the court filings that Mr Adelson told Mr Jacobs to “use improper ‘leverage’ against senior government officials of Macau in order to obtain strata-title” to proceed with the planned sale of the Four Sea-

sons apartment hotel in Cotai. Mr Adelson also allegedly ordered Mr Jacobs to “threaten to withhold Sands China business from prominent Chinese banks unless they agreed to use influence with newly elected senior government officials of Macau in order to obtain strata-title for the Four Seasons apartments and favourable treatment with regards to labour quotas and table limits”. Mr Adelson also allegedly wanted “secret investigations [to] be performed regarding the business and financial affairs of various high-ranking members of the Macau government so that any negative information obtained could be used to exert ‘leverage’ in order to thwart government regulations/initiatives viewed as adverse” to Sands China’s interests. The Macau government says it has no comment on these allegations but admits it is following the case closely. According to a spokesperson, the government “repudiates unfounded suspicions” about its honour and impartiality, and is reserving its right to take legal proceedings of its own.

Lawyer in the corner Another alleged conflict between Mr Jacobs and Mr Adelson was regarding employing the services of Macau attorney Leonel Alves, who is a legislator and member of the Executive Council. Mr Jacobs was concerned that Mr

79 Alves’ retention could pose “serious risks under criminal provisions” of the US Foreign Corrupt Practices Act, or FCPA, which regulates relations between American companies operating abroad and foreign government officials. Mr Alves has refused to comment. The court filings also say Mr Adelson demanded that Mr Jacobs “refrain from disclosing truthful and material information to the board of directors of Sands China so that it could decide if such information relating to material financial events, corporate governance and corporate independence should be disclosed pursuant to regulations of the Hong Kong Stock Exchange. “These issues included, but were not limited to, junkets and triads, government investigations, Leonel Alves and FCPA concerns, development issues concerning parcels three, seven and eight [in Cotai], and the design, delays and cost overruns associated with the development of parcels five and six.” Mr Jacobs alleges that when he objected to or refused to carry out Mr Adelson’s “illegal demands” he was repeatedly threatened with dismissal. The court filings say Mr Jacobs’ disagreements with Mr Adelson came to a head during the grand opening of the Las Vegas Sands owned Marina Bay Sands in Singapore at the end of June. During several meetings of company executives at the time, Mr Jacobs allegedly opposed Mr Adelson’s “desire to expand the ballrooms at parcels five and six, which would add an incremental cost of approximately US$30 million (MOP240 million) to a project already significantly over budget when

concerned, given recent investigations by Reuters and others alleging Sands China involvement with Chinese organised crime groups, known as triads, connected to the junket business”. According to the court documents, Mr Jacobs was fired soon afterwards, on July 23, 2010. After his dismissal, he was allegedly immediately escorted off the property by two security personnel and was not permitted to return to his office to collect his belongings. Mr Jacobs says he was not initially informed of the reason for his dismissal. Only “nearly two weeks later, and after an unsuccessful effort to dig up any real ‘dirt’,” was he sent a letter identifying 12 reasons for dismissal. The court filings say the letter accused Mr Jacobs of exceeding his authority and failing to keep the company directors informed of important business decisions.

Steven Jacobs alleges that when he objected to or refused to carry out Sheldon Adelson’s “illegal demands” he was repeatedly threatened with dismissal Sands China’s existing facilities were already under-utilised”.

Standing count Mr Jacobs also allegedly “disagreed with Mr Adelson’s desire to aggressively grow the junket business within Macau as the margins were low, the decision carried credit risks and Mr Jacobs was

One-time champ Neither Las Vegas Sands nor Sands China has made clear the reasons for Mr Jacobs’ dismissal. “There was no single reason”, but a “package that caused the discomfort in the relationship”, Sands China’s acting chief executive Mike Leven told Macau Business in August. In the court filings, Mr Jacobs’ performance as president and acting chief executive of Sands China is described as “nothing short of remarkable” because he helped to improve Las Vegas Sands’ financial situation, which was greatly affected by the international financial crisis. “There is no question as to Steve’s performance. The Titanic hit the iceberg. He arrived and not only saved the passengers, he saved the ship,” Mr Leven is quoted as having told the Las Vegas Sands board in February.

Stalwart Chao leaves Sands board ing Chao, who was elected in July to the Las Vegas Sands board to help the company to expand in Asia, has announced he will leave the company. Las Vegas Sands said “on October 19, 2010, Wing T. Chao informed Las Vegas Sands Corp that he planned to leave the board of directors in order to become an adviser to the company on its design and development projects. “Mr Chao’s departure from the board of directors will become effective at the time he enters into a consulting contract with the company,

Wing Chao

which is expected to occur in early November.” Mr Chao is a former Walt Disney executive. While there, he oversaw the master planning, architecture and development of Disney’s land holdings in California, Florida, Paris, Tokyo and Hong Kong. Mr Chao was a key figure in the company’s negotiations with the French government to build the Paris Disneyland Resort. Subsequently he played a vital role in the negotiations with the Hong Kong government to build the Hong Kong Disneyland Resort, which opened in 2005. NOVEMBER 2010

Gaming

Cards off the table

Signing on gamblers for membership programmes is tough work in Macau, but when done right, there are benefits for both the house and the punter BY LUCIANA LEITÃO

hey are common in Las Vegas but a rarity in Macau. Membership or loyalty cards have yet to gain wide acceptance among players in the local gaming market and their struggle for adoption may be a long one. Every casino operator is trying to promote the use of membership cards. The card schemes keep profitable punters coming back for more by offering them privileges and they give operators the information they need to find out who the profitable gamblers are. When a player uses a membership card while placing a bet, the gaming industry calls it carded play. It is clearly a touchy subject for the industry. Macau Business contacted all six local casino operators but only three agreed to talk – and even they declined to give precise figures for carded play. But the fact is that the typical player in Macau comes from the mainland, and many are unfamiliar or uncomfortable with such marketing programmes. “The percentage of carded play in Macau is quite dismal (in the low twenties) compared to the mid-seventies in many US casinos,” says Sudhir Kalé, a professor of marketing at Bond University’s School of Business in Australia who is a visiting professor at the University of Macau. “Asian players are as yet unaware of the benefits of carded play and are

NOVEMBER 2010

somewhat touchy about having their gambling activity tracked. An overwhelming majority of the casino players in Macau come from mainland China. “These customers are suspicious of giving away their personal and financial information. Even the few who sign up for a player’s

card tend to discard it before crossing the border back into mainland China.”

Mine of information A gaming consultant who has worked with several local gaming concessionaires, Mr Kalé says mainland players fear the information about their finances and gambling

could be used against them. But the programmes, if well structured, can improve loyalty and can help operators gather data. “Such programmes provide insights into your patrons’ gaming and non-gaming preferences,” he says. “With a dedicated database of players, you can make

81 the right offer to the right customers at the right time. Carded play can provide useful information about the lifetime value of your customers and allows you to assess the efficacy of your promotional programmes.” There are also advantages for the player. There are benefits from: consolation, where a gambler may lose money but gets something in return by way of comps; convenience from the casinolinked players’ club card that makes it easier to deal with the casino; recognition and status; and a sense of community with other club members. “The cost of setting up a loyalty programme could be considered a disadvantage [for gaming operators], but when done properly, the benefits far outweigh the costs,” Mr Kalé says, adding there are no disadvantages for players, unless they overestimate the benefits of a programme.

Commercial return The executive vice-president for marketing operations for Sands China, Kevin Clayton, says that, on occasions, “up to 50 percent of mass gaming [revenue] is a result of gamblers who are members of the Sands Rewards Club playing on the mass gaming floor”. Mr Clayton says the advantages of Sands’ club membership are exclusive offers, promotions and discounts covering some casino services, shops, food and drink, hotels and shows. “These benefits deliver increased customer value during their stay in our properties; therefore we will invest in rewards and benefits where there’s a good commercial return,” he says. Mr Clayton says Sands Rewards Club’s active membership will soon reach the ambitious figure of one million.

He says the difference between Las Vegas and Macau in the figures for carded play is due to different levels of investment. “Las Vegas casinos invest in sophisticated customer relationship management (CRM) technologies and rewards programmes – the perceived CRM leader being Harrah’s, with its customer-centric ethos and benefits programme,” he says. Casinos enjoy several advantages when players use their membership cards. “Resorts and casinos track overall spending across a number of categories – retail, hotel, food and beverage and casino – to assess more accurately the reinvestment required to drive incremental visits or share of wallet,” Mr Clayton says. “It’s in the best interest of the business to understand customer preferences and then match offerings to suit.”

Can’t get enough At MGM Macau, senior vicepresident of casino marketing Brian Fiddis says the loyalty scheme is a tool to communicate with the customer, present interesting offers and, hopefully, create a preference for the casino. An MGM Macau loyalty cardholder has access to a range of benefits covering rooms and food, invitations to events and promotions and priority entry for venues. When asked for figures for membership and use of MGM Macau’s loyalty programme, Mr Fiddis replied simply that there was “never enough”. Many players – the majority, according to some industry insiders – refuse to join loyalty programmes, for two main reasons. “People... just can’t be bothered and they just want to gamble. Some just want privacy,” he says. Mr Clayton of Sands China agrees. “Many people

Big play I

nformation is essential when managing a casino. Typically, operators use player-rating systems to make better decisions, such as which players to keep and which to ditch because they are unprofitable for the house. These rating systems can track an individual’s play and store demographic data about players, among other things. To get such detailed statistics, casinos need to persuade players to join player-tracking programmes. These allow the operators to track the gaming and nongaming behaviour of each player, then store and analyse the information. Persuading players to use tracking cards while playing is the biggest challenge. If they do not, the information goes unrecorded. How does management encourage players to use tracking cards? The most common incentive is a reward system, in which the size of the reward reflects the amount wagered. Most casinos use a points system. The more money a player bets, the more points he accumulates. The points are converted into rewards, such as money to spend on in-house dining, shopping and entertainment facilities. Loyalty programmes are designed to appeal to a player’s aspirations to higher status. Cards come in bronze, silver and gold varieties, for instance, and players climb the ladder by accumulating points. At the top of the scale, the benefits are greater – for example, a player need not queue for certain venues, giving him face.

NOVEMBER 2010

Gaming

may not wish to join a rewards programme, either because they feel they may not visit the resort as often, or prefer not to divulge their information,” he says. And that does not apply only to mainland players. “Irrespective of the product category and world location, some people prefer to remain private and not share their personal contact details,” Mr Clayton says. The spokesperson for Galaxy Entertainment Group declined to give figures for its membership programme, saying it was a “sensitive” issue. One thing Sands China, MGM Macau and Galaxy have in common: the

NOVEMBER 2010

three operators periodically review their membership privileges to ensure they meet the expectations of players.

Familiarity with loyalty Players most commonly use loyalty

cards in the slot machines and at the gaming tables. At the slots, they insert them in the machine; at the tables they must give them to the floor manager. It presents an obstacle to measuring carded play in Macau, according to Mr Kalé. Tracking is much more difficult when gamblers are playing baccarat, a table game, than when they are playing slot machines. “Since the majority of revenue in the US casinos come from slots and the majority of revenue in Macau come from baccarat, it is more difficult to have play accurately carded on the main gaming floors of Macau casinos,” he says. The success of such programmes in Las Vegas can be explained by other factors too. “Loyalty programmes have their origin in the airline frequent flier programmes and in the retail stores’ frequent shopper cards that have been in operation in the US for several decades,” Mr Kalé says. Gamblers are already familiar with the loyalty programme concept. Mr Kalé believes City of Dreams has been the most successful local casino in carded play. “It has some executives who truly understand what constitutes a good loyalty programme and that understand the statistics behind player loyalty,” he says. “They have worked at places such as Harrah’s, which excel at loyalty initiatives and customer data analytics.” City of Dreams refused to comment on carded play. Another factor in the success of City of Dreams’ programme is that many of its players come from Hong Kong, Mr Kalé notes. “Hong Kong players are generally more willing to sign up for a loyalty programme and to have their play carded, compared to customers from mainland China,” he says.

New battle in casino war New Cotai and its affiliate New Cotai Entertainment launch two lawsuits against Macao Studio City partners, extending the legal limbo of the stalled project ew Cotai, LLC and its affiliate New Cotai Entertainment have launched a new battle in the war over the Macao Studio City project, in Cotai. Late last month, New Cotai, LLC initiated petition proceedings in the Hong Kong against East Asia Satellite Television (Holdings) Limited “for engaging in unfair and prejudicial conduct in relation to the Macao Studio City project”. Earlier last month, a lawsuit lodged in Hong Kong by New Cotai Entertainment accused eSun Holdings, CapitaLand and their jointly controlled unit East Asia Satellite Television of breach of contract, inducement of those breaches and unlawful conspiracy. In its most recent claim, New Cotai seeks “an expedited hearing and order

that East Asia be required to transfer its interest in the Macao Studio City joint venture to New Cotai at a price to be determined by the court.” According to a press release, “New Cotai believes that this outcome, in addition to being just, is in the best interest of completing the Macao Studio City project.” New Cotai and New Cotai Entertainment bought into the Macao Studio City project in December 2006, when New Cotai paid eSun about HK$1.3 billion (US$168 million) to acquire a 40 percent interest in the Macao Studio City project and the rights to develop a casino in the property. CapitaLand and eSun own East Asia Satellite Television, which in turn has a 60 percent interest in the Macao Studio City project.

‘No choice’ “We are disappointed that these legal proceedings had to be initiated,” New Cotai chief executive David Friedman told The Wall Street Journal last month, referring to New Cotai Entertainment’s lawsuit. “However, after making exhaustive efforts to resolve the situation amicably, we believe we had no choice but to take this step to protect our investment

and Macao Studio City.” Although it has initiated legal proceedings against its partners, New Cotai says it “remains fully committed to Macao Studio City and wants to see the project completed as soon as possible”. In a written response to the New Cotai Entertainment lawsuit, eSun Holdings said it “intends vigorously to defend all unmeritorious claims brought by New Cotai Entertainment and/or New Cotai whether in relation to the proposed casino lease or other matters relating to the stalled Macao Studio City project”. A statement from CapitaLand said it believes “the alleged claim is without any merit” and will “defend it vigorously”. However, the Singaporean real estate company noted that “eSun has affirmed an indemnity in favour of CapitaLand in respect of any losses which may be suffered by CapitaLand in any legal proceedings” brought by New Cotai or any linked parties in relation to the Macao Studio City project. In October last year, East Asia Satellite Television initiated legal proceedings against New Cotai for allegedly failing to cooperate and progress the Macau Studio City project. In July, the High Court of Hong Kong dismissed several of those claims. NOVEMBER 2010

Gaming

The Indochina frontier Cambodia’s mini-casinos along its borders with Vietnam and Thailand show there is money to be made beyond the mega-resorts of Macau BY MUHAMMAD COHEN

layers unable to gamble at home stream over the border to play in casinos here, creating a fastgrowing gaming industry. It sounds like Macau but we are talking about Cambodia. And apart from the predominance of border-crossing players, gambling in Cambodia is very different from gaming in Macau. Forget bright lights and billiondollar resorts, most of Cambodia’s casinos have fewer than 60 tables and perhaps 100 to 200 slot machines. They are mostly along the kingdom’s borders with Vietnam and Thailand, in frontier towns that often prefer gaming facilities over paved streets. “It’s like the Wild, Wild West there,” one insider said. “It’s a whole other world.” There are more than 20 casinos clustered around border crossings, with the biggest nodes at Bavet on the Vietnam border and Poipet across from Thailand. As little as US$1 million (MOP8 million) is enough to open a simple casino. Regulation is spotty and there is no limit on the number of licences. The resulting competition is fierce and casinos come and go quickly. Cambodia legalised casinos in 1994 as a way to attract investment and create jobs in an economy ravaged by decades of war and political turmoil. Casinos are open only to foreigners or Cambodians who hold a foreign passport. At a typical border casino, minimum bets can be as low as US$1. Wagers are accepted in greenbacks and Thai baht or Vietnamese dong. A US$10,000 bankroll that would not draw a second look in Macau wins royal treatment for players here. Analysts estimate the annual revenue averages US$24 million at these casinos. Taxes are negotiated on a case-bycase basis, with rates usually between one and two percent.

Learning experience American Michael Gore has run small casinos in Cambodia since 1998. He NOVEMBER 2010

learned about the gaming business as a New Jersey State Police detective, helping regulate casinos in Atlantic City. He learned about Asian gaming working for Genting, the Malaysian gaming group, as vice-president for casino operations at its Genting Highlands resort from 1993 to 1996. “I had a good relationship with the founder, Lim Goh Tong,” Mr Gore said. “He didn’t speak English but he recognised value.” He returned to Genting in 2005 as a consultant, writing major portions of its winning proposal for a casino licence in Singapore. He earned a US law degree from Rutgers University in 1988 and went on to add an MBA in 2006. Success in Cambodia did not come immediately for Mr Gore. In fact, his first casino there went broke. “It was a good learning experience,” Mr Gore told Macau Business. “My partner is making money today, I’m making money, so it was good for both of us.”

Baccarat bazaar Mr Gore’s current venture, Casino Royale in Bavet on the Vietnamese border, debuted in June last year. “We opened after we saw the over-concentration by

all casinos on larger customers, to the point that they neglected, ignored, or even made fun of punters not willing to risk their entire paychecks on a single baccarat coup,” he said. The gaming floor has fewer than 30 tables and no slot machines. “I enjoy running a casino on this scale,” he says. The tables are nearly all baccarat. “We’ve got every kind of baccarat known to man,” he says, including Tiger/Dragon (see box). Casino Royale includes a hotel with 15 rooms, a bar, and a restaurant offering food eight times a day. “Waitresses serve customers right over the gaming tables,” he said. “We give a very good deal. We have to motivate players to come to us.” Late last year, he opened Casino Royale 2 in Kampong Cham, north of Bavet, an establishment with about 35 tables, 100 slot machines and 105 hotel rooms. Despite the rugged ambiance, about 40 percent of the players in Poipet are female. At Bavet, which Mr Gore says is somewhat “rougher”, about one-third are female.

In charge Bigger casinos, such as Naga World in

85 Phnom Penh (see box), may use junket operators, mainly from Vietnam or Thailand but also occasionally from further afield. “Macau junket operators are not interested because the money is so big there,” he said. He has worked with junkets at some previous casinos but does not at Casino Royale. “Commission means that 80 to 90 percent of winnings go to junket operators,” he said. “I don’t give it to junket operators, I spend it on other things.” And there’s no credit in this house either. “It’s something I’d rather not get involved with,” he says. “Credit can be painful.” For a small casino, he estimates it takes US$2 million “to get the doors

erator, he takes home a retainer plus a percentage of the profits. US gaming companies cannot touch Cambodia because of its undeveloped regulatory regime but Mr Gore prefers Asian partners anyway. “US investors want 15 contracts. A prenuptial is the death of marriage. That’s the way it works here, too,” he said. “Asians understand that not everything can be written down. There has to be trust.” With four years’ experience running the Golden Crown casino in Poipet, Mr Gore sees differences between players from each country. “Vietnamese customers are very value-conscious,” he says. “They won’t play double-zero roulette.”

AMERICAN MICHAEL GORE HAS RUN SMALL CASINOS IN CAMBODIA SINCE 1998. HE LEARNED ABOUT THE GAMING BUSINESS AS A NEW JERSEY STATE POLICE DETECTIVE, HELPING REGULATE CASINOS IN ATLANTIC CITY. HE LEARNED ABOUT ASIAN GAMING WORKING FOR GENTING, THE MALAYSIAN GAMING GROUP, AS VICE-PRESIDENT FOR CASINO OPERATIONS AT ITS GENTING HIGHLANDS RESORT FROM 1993 TO 1996. open” as part of a phased development plan. Total investment ranges from US$3 million to US$10 million.

Culture clash Mr Gore always works with local partners but may have several investors in a project. Whatever the number, “it’s always best if there’s one guy in charge to make decisions”, he says. As an op-

Though they’ve improved, Thai players tended to make more unfavourable bets, such as the pair and tie in baccarat, where the house has a much bigger edge. “A Thai player would bring 10,000 baht (MOP2,485), then bet 1,000 baht per hand. In the US, a player normally bets two percent of their bankroll. In the early days of Poipet, the table win was enormous.”

Thin edge of the baccarat wedge

ven baccarat can be a different game in Cambodia. Casino Royale operator Michael Gore introduced the wildly popular Tiger/Dragon version at his Bavet establishment. “Tiger/Dragon is a fantastic game, with the smallest house edge of any game offered, anywhere in the casino world,” Mr Gore said. Like in Casino War in Macau, hands consist of a single card, in this case one for the Dragon and one for the Tiger, and highest card by rank and then suit wins. Players bet on the Tiger or Dragon. It is played with an eight-deck shoe. “My casino manager came up with the game,” he told Macau Business. “He said he’d seen it somewhere before.” The house wins only when there’s an absolute tie, by rank and suit. Mr Gore says the house advantage is 0.01 percent or one win in 10,000 chances. “Tiger/Dragon is being opened at more and more casinos as players prefer it to the typical casino games with a high house edge,” he said. “It’s fast and has a simple payout scheme. The fight between the Tiger and Dragon has some cultural history and some additional resonance with Asian customers.” Mr Gore added with a wry smile: “Wait ‘til Tiger/Dragon comes to Macau. You can’t pay commission on it, the house edge is too small. What’s everyone going to do?”

Another world

NagaWorld is the largest gaming company in Vietnam t the other end of the spectrum from the Cambodian border casinos, Phnom Penh’s NagaWorld has 158 gaming tables, 738 slot machines and 508 hotel rooms. Parent company NagaCorp is listed on the Hong Kong Stock Exchange. NagaWorld holds a 70-year gaming licence, valid until 2065, which includes a 40-year monopoly on gaming within 200 kilometres of the Cambodian capital. Last year NagaCorp reported profits of US$25.5 million on gaming revenue of US$171 million. It pays tax at a rate of a two percent. NagaWorld gets nearly two-thirds of its revenue from VIP operations. Its pays a 1.75 percent commission to junket operators, most from neighbouring Vietnam and Laos but some from as far away as South Korea. “We cater to mid-tier VIPs. That takes out some of the volatility,” NagaCorp chairman Timothy McNally explained during a recent presentation in Macau. “Our strategy is not to compete head-on with Macau or Singapore.” Casino operations began on a rented barge and moved to a modest permanent structure in 2003. With overall capital investment of US$150 million, NagaWorld has grown to about 110,800 square metres including 11 food and beverage outlets, a karaoke lounge, spa, and Cambodia’s biggest convention facility. “We’re the largest building in the country,” he says. It is an honour that may not last much longer. South Korea’s Intercity Group is building a US$400 million integrated resort in Siem Reap, about 20 kilometres from Angkor Wat, the ancient temple complex that is Cambodia’s top tourist destination and enjoys UN World Heritage listing. The plans for Bellus Angkor Resort and City include 1,500 hotel rooms, an 18-hole golf course, a shopping mall and entertainment facilities, along with a casino. Phase one is scheduled to open early in 2012.

NOVEMBER 2010

Gaming

Back in business

Seoul’s Seven Luck Casino has reopened after refurbishment

he tourist-only Seven Luck Casino at the Millennium Hilton in central Seoul has opened after a refresh that includes the remodelling of the interior and an increase in the number of games and seats. The casino now offers a variety of games, such as roulette, blackjack, baccarat and slot machines. It is a 10-minute-walk from famous tourist at-

NOVEMBER 2010

tractions including Myeong-dong, Namsan Tower, Namdaemun, and Namsangol Hanok Village. The refurbished entrance is decorated with ginkgo nut trees. Entering the gaming floor, a super-sized video wall made of 25, 46-inch LCD monitors attracts the eye. Decorating the ceiling is a six-metre-high crystal chandelier. The casino is operated by Grand

Korea Leisure, a subsidiary of Korea National Tour Organisation. Seven Luck has three different, city-centre locations in South Korea, two in Seoul at Seoul Gangnam and the Millennium Hilton, and one at the Busan Lotte in Busan. Byung-hun Lee, a famous Korean star has represented the brand since 2008. He has featured in Korean soap operas and Hollywood movies such as “G. I. Joe”.

Business

The Eastern Starbucks Comebuy takes a leaf from the Starbucks’ playbook to build an empire that stretches from Taipei to Taipa to the Border Gate and beyond

BY GRACE GAN

aiwanese-style iced tea; a simple business idea that has proven to be a rocking success in Macau’s hot and humid weather. Since opening in 2006, the Comebuy takeaway teashop chain has opened 15plus stores that employ more than 500 staff. The company plans to continue to grow here, until it reaches between 20 and 25 stores. Right from the beginning, Comebuy planned to use Macau as the home base for expansion into bigger markets, such as Zhuhai and beyond. The first shop in Macau’s nearest neighbouring city was opened in 2007. The company now plans to expand its franchise stores there to about ten before the end of the year. “We targeted Macau not only because of its market share but because we want to use it as a springboard to expand our operations into the Pearl River Delta Region,” deputy general manager of Long Ho International, Comebuy’s mother company, Chen Helu told Macau Business. In seven years, the Taiwanese company has set up more than 150 stores throughout Greater China and continues to open stores at a rate of more than 15 a year. The chain has spread through Hong Kong, Guangzhou and Shanghai, and its success has spawned copycat enterprises.

Growing at pace Comebuy also expanded its footprint by opening a bak-

ery chain in 2008, Café Free. Little more than a year later and there were already four shops in Macau. The company’s business plan includes opening more shops soon, with the market saturation point estimated at 10 to 15 shops. Management attributes the success of the business to the buying power of its young clientele. Modelling itself after the Starbucks’ expansion model, Comebuy is also targeting other Asian markets such as Singapore, the Philippines, Vietnam, Thailand, Japan and Korea. Outside Asia, the company is assessing opportunities in the United States and Canada. The brand owns most of its outlets operating in Taiwan but mainly operates franchises in Macau. Potential franchise partners are selected from the pool of employees who have worked for the company for between six months and a year. Comebuy’s success is evident in the way it has altered consumption behaviours, introducing a takeaway drink culture that didn’t previously exist in Macau. Drink delivery was a service that also turned into an “unexpected success”, says Mr Chen.

Trial and triumph Comebuy was established in Taiwan in 2002. Both founders came from traditional fishing villages and were raised with a Japanese-style education. When naming the brand, they chose Comebuy. The name challenged the tradi-

tional habits of fishing families, where it was usual for men to drink wine in their leisure time. They aimed at replacing wine with a tea-drinking culture and the name was born. Comebuy is supposed to sound similar to the Japanese word for cheers, “kampai”. Although tapioca milk tea has become one of the company’s most successful products in Macau, it was not new to Taiwanese consumers. Comebuy created

new product profiles that have since proven to be more appealing to young professionals. Comebuy’s success in Macau was not as simple as transplanting the idea, Mr Chen says. While establishing itself in Macau there were losses as the brand worked out the local market and how to introduce economies of scale. There were also subtle changes to the flavours and packaging of many of its products to suit Macau consumers. NOVEMBER 2010

Meetings & Conventions

Fair quantity, mixed quality The Macau International Trade and Investment Fair attracted a record attendance but exhibitors have mixed feelings about the event’s usefulness BY LUCIANA LEITÃO

he numbers were good. A total of 81,000 people attended the 15th Macau International Trade and Investment Fair last month. During the four-day event, 62 cooperation and investment deals were inked. However, in the end not everybody was happy, with some exhibitors complaining about the lack of highlevel customers.

According to the organising committee, there were 8,200 trade visitors, four percent more than the year before. There were 1,151 business-matching sessions and 35 forums, conferences, seminars and presentations. Measuring the exhibitors’ level of satisfaction with Macau’s biggest annual trade fair is more complex. While some were quite content with sales, there were

More MICE-friendly policies T

he government will soon announce new policies to promote the development of the meetings, incentives, conventions and exhibitions (MICE) industry in Macau. “The government will continue to support MICE. Up to now, we have achieved positive results, but of course there is room for improvement,” said Secretary for Social Affairs and Culture Cheong U. “By the end of this year, [the government] will be announcing new information on the development plans for this area.” Mr Cheong said the results of the promotion of the development of Macau’s MICE industry would start to be seen within one to two years. In 2009, Macau only had 20 companies dedicated to conference and exhibition organizing services, engaging a total of 85 people. According to official data, last year total receipts of the sector grew by 45.7 percent year-on-year to MOP76.79 million. Total expenditure increased by 53.5 percent year-on-year to MOP74.76 million. The sector’s gross value added stood at MOP14.96 million, up by 44.0 percent.

NOVEMBER 2010

others that said their goals had not been reached. Clara Chan, a health consultant at Poly Health International, took part in the fair for the first time. She was after sales and the results were highly favourable. “We sold many goods,” she said, adding that health food was the most sought-after item. Her customers came mostly from Macau.

Coffee, anyone? As for Carlos Mondlane, commercial director of the African Arts Centre, he came from Mozambique to seek a local partner to sell his products. He had not found a partner by the end of the fair but he was satisfied with the sales volume. Jack Hua, representing the Taiwan company Splendid Marketing, wanted to promote coffee from Taiwan. “We expect more people outside Taiwan to realise we produce coffee,” he said, explaining that consumers typically only know about Taiwan’s tea. He was satisfied with the number of customers that showed up at his stand and with the business opportunities generated. “It’s good, because we also had the chance to do business with other retailers,” he said. Most of Foriede Anhui Arts and Crafts’ customers came from Europe, Japan and Malaysia – not Macau. According to vice-president Chen Yiming this was neither surprising nor disappointing. His purpose was “to build a bridge between Macau and Anhui”.

Too normal Tina Liao of Taiwan’s Gallery Chuan is used to participating in international exhibitions, but this was her first time in Macau. She was not unhappy with the result. The opening day was good, she said, because more professionals were at

Clara Chan, a health consultant at Poly Health International, was after sales and the results were highly favourable. “We sold many goods,” she says

John Xiang, from Ruide Furniture, was a “little bit disappointed” with the type of buyers. ”We were looking for professional buyers, not just general citizens”

The next big thing T

he third Ministerial Conference of the Forum for Economic and Trade Cooperation between China and Portuguesespeaking Countries will take place in Macau on November 13-14, it was officially announced. Under the main theme “Diversified Cooperation, Harmonious Development”, various activities will be held during the conference. Although it hasn’t been officially announced yet, it is widely expected that Premier Wen Jiabao will join the opening session of the conference. The Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries was created in October 2003 in Macau, sponsored by the Ministry of Commerce of China. It is hosted by the Macau government and involves the joint participation of seven Portuguese-speaking countries: Angola, Brazil, Cape Verde, Guinea Bissau, Mozambique, Portugal and East Timor. The two previous ministerial conferences of the forum were held in Macau in October 2003 and September 2006.

the fair, while the following days were less profitable with “normal” consumers dropping by. “We were looking for some collaboration in Macau and for an opportunity to sell our products here,” she said. Only one hotel showed potential interest in the company’s art works, she said. “It was not as good as expected. The purchase level was not as high as expected,” said Xena, from Taiwan Glory, a company specialising in pottery. She was keen to find a partner and boost sales. As for John Xiang, from Ruide Furniture, he was also a “little bit disappointed” with the type of buyers. ”We were looking for professional buyers, not just general citizens,” he said. “People from Macau just buy one or two sets but we are looking for buyers who will buy lots of them.” The fair occupied an area of 30,000 square metres at The Venetian Macao, with 760 exhibitors and 1,400 booths. Jointly organised by the Macau Trade and Investment Promotion Institute, four government departments and 10 other bodies, this year’s theme was “Co-operation – Key to Business Opportunities”. NOVEMBER 2010

January

November

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

October 31 – November 5th

WTA 2010

Brisbane Convention and Exhibition Centre Tatts Lotteries | WLA (617) 3877 1032 | (617) 3255 1002 www.wla2010.com wla2010@tattslotteries.com

Date: 15th – 18th Event: Global Gaming Expo (G2E) Venue: Las Vegas Convention Center Organiser: AGA | Reed Expo Address: 1299 Pennsylvania Ave., NW, Suite 1175, Washington, D.C. 20004 Tel: +1 203 840 5626 Fax: +1 203 840 9626 Website: www.globalgamingexpo.com E-mail: info@globalgamingexpo.com\ Date: Event: Venue: Organiser: Address:

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

24th

Gaming Awards 2011

Jumeirah Carlton Tower, Knightsbridge, London Clever Duck Media Ltd Suite 105 Park Plaza, Point South, Hayes Way, Cannock, WS12 2DB, UK (44) 01543 57 86 89 www.gaming-awards.com colin@gaming-awards.com 25th - 27th

IGE 2011

Earls Court, London Clarion Gaming Warwick Road, London, SW5 9TA, UK (44) 020 7370 8182 www.clarionevents.com info@clarionevents.com

24 – 26th

6th International Hotel Expo

The Venetian Macao Coastal International Exhibition Co., Ltd. Room 2106, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong Tel: (852) 2827 6766 Fax: (852) 2827 6870 Web Site: www.coastal.com.hk E-mail: general@coastal.com.hk NOVEMBER 2010

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

: A Macau Business partner event

Tourism

Growing weight Macau hotels contribute more for local economy he local hotel sector’s gross value added, that measures the sector’s contribution to the economy, rose by 18.6 percent year-on-year in 2009 to MOP5.19 billion (US$650 million), according to official figures. Meanwhile, gross fixed capital formation dropped by 65.2 percent to MOP2.56 billion. Total receipts of the hotel sector in 2009 increased by 6.1 percent year-on-year to MOP11.02 billion in 2009. Analyzed by item, receipts from room sales amounted to MOP4.76 billion (43.1 percent of the total), while sales of food and beverages amounted to MOP2.39 billion. Operating expenses (MOP4.45

billion) and compensation of employees (MOP3.73 billion) decreased by 5.3 percent and 2.7 percent from 2008; however, purchase of goods and commission paid (MOP1.37 billion) increased by 2.9 percent. Last year, there were a total of 60 hotels and 31 guest-houses in Macau. With the opening of five new hotels in 2009, total number of guest rooms grew by 12.0 percent from 19,697 in 2009. Despite of the opening of new properties, under the influence of the global financial crisis, the hotel sector had 26,337 persons engaged at the end of 2009, down slightly by 0.6 percent from a year earlier.

More hotel guests

Tourists paying more

A total of 696,013 guests checked into the local hotels and guest-houses in August 2010, up by 10.2 percent year-on-year. The majority came from mainland China (52.0 percent of total) and Hong Kong (23.6 percent). The average occupancy rates of hotels and guest-houses increased by 2.2 percentage points year-on-year to 82.4 percent. The average length of stay of guests went up by 0.03 nights to 1.5 nights. The cumulative number of guests reached 5.15 million in the first eight months of 2010, an increase of 20.9 percent over the same period of 2009.

The Tourist Price Index (TPI) for the third quarter of 2010 rose by 11.16 percent year-on-year to 164.15 points. The increase was attributable to dearer prices of gold jewellery and airfares, as well as higher hotel room rates and charges for restaurant services, according to official data. For the third quarter of 2010, the TPI went up slightly by 0.07 percent quarter-to-quarter. The average TPI for the last four quarters ended the third quarter of 2010 rose by 10.52 percent from the preceding period. The TPI reflects the price changes of goods and services purchased by visitors, which is compiled according to the consumption pattern of visitors.

Almost 90 illegal inns shut down Since the law on “Prohibition of Providing Illegal Accommodation” took effect on August 13 and until mid-last month, a total of 89 premises suspected of providing accommodation illegally had been detected, the government announced. To date, a total of 12 operators, 10 touts, 10 persons who managed the premises that provide accommodation illegally and four occupants who failed to fulfil their duty of cooperation have been seized.

New man on board Mandarin Oriental, Macau has announced the appointment of Samson Woo as Director of Sales and Marketing. Mr Woo brings to Mandarin Oriental, Macau more than 20 years of hospitality and sales and marketing experience in the Asia Pacific and China region. In his new role, Mr Woo will be responsible for positioning Mandarin Oriental, Macau “as the best luxury hotel in Macau, and will oversee the entire hotel’s sales and marketing operations”, the company said.

Visitors increase on Golden Week

Preliminary figures for the National Day Golden Week (October 1-7) show that visitor arrivals to Macau surpassed 680,000, an increase of nearly 13 percent compared to the same period last year. Among the total arrivals, more than 470,000 were from the mainland, a surge of 12.38 percent. International visitors surpassed 480,000, with a slight increase of 0.32 percent. The average occupancy rate of three-to-five-star hotels during the National Day Golden Week holiday reached 90 percent, a 2.7 percentage points increase compared to the same period last year. The average room rate of three-to-five-star hotels for this period was MOP1,422 (US$178), up 16 percent on the Golden Week period last year. NOVEMBER 2010

Technology

Opportunity knocks E-commerce is making inroads among consumers but local pioneer William Ku says there’s still big potential BY YUCI TAI

etailing online is a growing trend around the world and Macau consumers are starting to seize the opportunity. Shoppers are beginning to use the Internet to buy items that are scarce or that are available elsewhere at cheaper prices. For most companies based in Macau however, it is a new way of doing business. While there are still relatively few people buying online in Macau, the number is increasing fast. According to a study released last month by the Asia Pacific Internet Research Alliance, the proportion of people using the Internet to buy goods or services jumped to 6.3 percent in 2008 from 3.8 percent two years before. While online shopping is commonplace in a handful of countries, it is far from routine in most parts of the world, according to recent findings by the World Internet Project, a global partnership of research institutions that compiles data on the behaviour and views of

NOVEMBER 2010

Internet users and non-users. In Macau, 61 percent of residents are Internet users, the third highest proportion in the countries surveyed, but 72 percent of users said they never bought online. In contrast, only 13 percent of Internet users in the United States and 22 percent in Sweden reported never buying online. One possible reason for the reluctance to buy online in Macau is concern about the security of credit card information. Just over half of Internet users here said they were very concerned or extremely concerned about the security of credit card information when buying online, according to the World Internet Project survey.

Look north There are other plausible explanations for the poor take up. One is that the region is small and densely populated, says William Ku, one of the founders of the E-commerce Association of Macau

and chief executive of Netelis Asia, an online payment company. Mr Ku says the city’s compact size makes it easier for people to shop locally, meaning that the e-commerce industry cannot offer to bridge the geographical distance between buyers and sellers, as it can in big countries. “Macau is not a good place for the development of an e-commerce industry,” Mr Ku says. But he believes that the city has potential – if e-commerce companies look beyond its borders. “Our advantage is our proximity to the mainland,” he says. “We are familiar with the Chinese market. We can help those international companies which are interested in doing business in China but are incapable of dealing with mainland enterprises.” Mr Ku’s company has been doing just that for nine years, operating in the online payment processing market in mainland China, with offices in Macau, Hong Kong and Malaysia. In the

93 mainland, Netelis Asia has established partnerships with big national players such as China Post, which has more than 84,000 post offices. Locally, e-commerce has been greeted most warmly by the hospitality and financial services industries. Online ticketing is also expanding. The latest information available from the Statistics and Census Service indicates that the rate of usage of information technology in the Macau business sector reached 47 percent in 2008, up by four percentage points from 2007. Among those companies making use of IT, 80 percent had connected to the Internet and the major purposes of accessing the web included information search (39%), purchasing (17%), selling (13%) and advertising and product promotion (10%).

The big questions What is e-commerce?

The buying and selling of goods and services online. Simply put, it is doing business on the Internet. E-commerce enables companies to make inexpensive and speedy transactions with other businesses around the world, and maintain a global network of customers.

What does B2B stand for?

B2B stands for business-to-business e-commerce. This is the exchange of products, services or information between businesses. Electronic communication and transactions mean upstream and downstream businesses in supply chains can collaborate to enhance the overall competitiveness of their industries.

What does B2C stand for?

B2C stands for business-to-consumer e-commerce. This is the electronic sale of products, services or information by businesses to end-users. It enables the businesses to deal directly with customers.

Look lively However, the city’s main industry, gaming, is mainly offline, since online gambling is illegal. There are some exceptions. MacauSlot is a subsidiary of Sociedade de Turismo e Diversões de Macau (STDM), which also controls casino operator Sociedade de Jogos de Macau (SJM). MacauSlot operates football and basketball online betting. It is possible to place bets online for the greyhound races at the Canidrome, in an operation run by another company under STDM. Internet betting is also available at the Macau Jockey Club, also part of the STDM stable. In Mr Ku’s opinion, the e-commerce industry still has a lot of room for improvement, even in the tourism industry, where most operators fail to use e-commerce for logistics. Mr Ku says hotels could rapidly sell their rooms online by offering 50 percent discounts after noon, for example, thereby boosting occupancy. Currently, online business only represents around one percent of the local travel agencies’ total sales, according to official data. Across the border, there are good business examples from which Macau can learn. For instance, companies in Guangzhou now take online orders for meals for home delivery. Mr Ku says this could be successfully copied in Macau, where a lot of people work on shifts and have little time to cook. Additional reporting by Emanuel Graça

“Macau is not a good place for the development of an e-commerce industry,” says William Ku, from the E-commerce Association of Macau. But he believes that the city has potential – if e-commerce companies look beyond its borders”

Official support T

he Macao Trade and Investment Promotion Institute has been promoting e-commerce as a way to enable small and medium enterprises to enhance their competitiveness and explore new business areas. The institute has taken several promotion measures and organised a series of workshops to encourage e-commerce among the industrial and commercial sectors. For instance, enterprises may use designated services provided by eligible e-commerce operators or websites for business promotion, and receive subsidies from the government equivalent to a maximum of 70 percent of the cost, up to an annual limit of MOP20,000 for each enterprise. Local higher education institutions are also gearing up to prepare professionals for e-commerce. The Macao Polytechnic Institute offers a higher diploma and a bachelor’s degree programme in e-commerce. The University of Macau has a master’s degree programme in e-commerce technology.

NOVEMBER 2010

Technology

Clueless about wireless

The government’s free wireless Internet network has been switched on but poor publicity means few people know it is there BY ALEXANDRA LAGES

he Hall of Carmo is one of the most visited attractions in Taipa. It is always packed with tourists taking photos and visiting The Taipa Houses Museum. But unless your smart phone alerted you, you would not know that the area is covered by the free wireless Internet access service launched by the government in September. The WiFi GO hotspot network, www.wifi.gov.mo, offers free wireless Internet access in 34 locations, including government premises, public facilities and tourist attractions. “It aims to promote the development of information and communications technology in Macau, as well as to broaden its use,” a spokesperson for the Bureau of Telecommunications Regulation told Macau Business. But there is no sign in Senado Square announcing the location of a hotspot. It is the same in Tap Seac Square. Angus Cheong, a leading Internet researcher at the University of Macau, points out that there is a publicity gap that the government should fill. “We don’t see much more promotion,” he says. The telecommunications bureau says it has used the media and other means to promote the service. However, the “eye-catching posters” and leaflets mentioned by the bureau were nowhere to be seen in several of the outdoor WiFi GO hotspots visited by Macau Business.

Blissful ignorance An investigation by Macau Business found staff at the city’s prime tourism office were unaware of the new service.

Hooking up T

he WiFi GO service uses WiFi technology, a short-range wireless communication technology allowing WiFi-enabled equipment within the service coverage area, known as a hotspot, to connect to the Internet wirelessly. The user must first be within a WiFi GO hotspot. There are two types of connection: unencrypted and encrypted. Both can be detected within a WiFi GO hotspot once the user activates a suitable device. After choosing the unencrypted or encrypted service and accepting the terms of use, the user can connect right away. Access is available for only 45 minutes at a time.

NOVEMBER 2010

WHERE TO FIND WI-FI GO MUSEUMS Communications Museum Outdoor Café of the Maritime Museum Grand Prix Museum Wine Museum Macau Museum Coffee Shop The Macau Museum of Art The Handover Gifts Museum of Macau Museum of Taipa and Coloane History The Taipa House Museum Macau Tea Culture House Hall of Carmo

LIBRARIES

Macau Central Library Sir Robert Ho Tung Library Ilha Verde Library Mong Há Library IACM Building Library Library of Coloane Library of the Macau Museum of Art Library of Comendador Ho Yin Garden Wong Ieng Kuan Library in Dr Sun Yat-Sen Municipal Garden Wong Ieng Kuan Public Library in Luis de Camões Garden Wong Ieng Kuan Public Library in Areia Preta Municipal Park Wong Ieng Kuan Public Library in Taipa

PARKS Guia Hill Municipal Park Flora Garden Triangle Garden of Friends Flower City Garden Hác-Sá Park Cheoc Van BBQ Park

GOVERNMENT PREMISES Bureau of Telecommunications Regulation Macau Culture Centre Auditoria Building

SQUARES Friendship Plaza (Sintra Plaza) Senado Square Tap Seac Plaza

At the Senado Square Tourist and Business Centre, a reporter was told tourists could use the centre’s computer if they wanted to access the Internet. Staff at the centre said there was access available “outside” but when pressed for details, our reporter was told there were no more leaflets outlining the service. WiFi GO is a three-year project with a MOP17 million budget. During trials of the new service, between June and September, the government recorded around 65,000 successful log-ins. Users can easily connect to the service with a laptop or mobile phone. Speeds are adequate enough to download videos but there have been complaints about problems in accessing social networking and instant messaging services. The telecommunications bureau said access was not deliberately blocked. “It is more a technical issue than a content-blocking issue,” it says. The bureau acknowledges that there are some problems in getting Facebook on a laptop, but says that there is no problem when using a mobile phone. Pornographic and violent content is blocked to ensure “fair and proper usage of Internet bandwidth”.

Plentiful and cheap According to a report recently released by International Telecommunications Union, Macau has the cheapest broadband access in the world, the cost being just 0.3 percent of a citizen’s average monthly income last year. Macau has a broadband penetration rate of about 23 percent. Mr Cheong believes WiFi GO will add to Macau’s growing reputation as an Internet-friendly place. “If it runs properly and if they invest in promotion and improvement of the service, it will increase the Internet penetration year by year,” the researcher says. The government plans to establish another 49 Wi-Fi GO hotspots by the end of this year, with the sites still to be decided. “It is expected that more governmental sports facilities and tourist information counters will be added to the list,” the telecommunications bureau spokesperson said. NOVEMBER 2010

EJAZ GHANI ECONOMIC ADVISER ON SOUTH ASIA POVERTY REDUCTION AND ECONOMIC MANAGEMENT AT THE WORLD BANK

The other Asia A LOT OF ATTENTION HAS BEEN GIVEN TO THE ‘SHINING ASIA,’ WHILE THE ‘SUFFERING ASIA’ HAS BEEN FORGOTTEN outh Asia presents a depressing paradox. It is among the fastest growing regions in the world, but it is also home to the largest concentration of people living in debilitating poverty, conflict, and human misery. While South Asia is far more developed than Sub-Saharan Africa, and India (the largest country in the region) has achieved lower middle-income status, South Asia has many more poor people than Sub-Saharan Africa. This raises the big question of whether the best escape from poverty comes from general economic growth or from a direct attack on poverty. The answer depends on where one looks. Stupendous growth hides deep pockets of poverty. For the countries of South Asia, poverty has morphed from a national to a sub-national problem. Although economic growth has reduced South Asia’s poverty rate, it has not fallen fast enough to reduce the total number of poor people. The number of people living on less than US$1.25 (MOP10) a day increased from 549 million in 1981 to 595 million in 2005. In India, which accounts for almost three-quarters of this population, the numbers increased from 420 million to 455 million during this period. Besides the slow pace of poverty reduction, human development has not kept up with the pace of income growth, either. There are more than 250 million children in South Asia who are undernourished, and more than 30 million children who do not go to school. Over one-third of adult women are anaemic. The share of female employment in total employment is among the lowest in the world.

One South Asia, two realities Indeed, South Asia, with deeper regional disparities than the rest of the world, is really two South Asia’s. A lot of attention has been given to the ‘Shining Asia,’ while the ‘Suffering Asia’ has been forgotten. The gap between them is so wide that they seem to be anchored in two different centuries. Worse still, it continues to increase. The leading regions have experienced rapid growth. They have acted as gateways connecting South Asia to the developed world, and have benefited from globalization, education, capital accumulation, and technological advancement. This is sustainable as there is huge room for South Asia to catch up to rich countries’ productivity levels. This transformation has become a virtuous circle where initial growth has spiralled into greater growth, leading to more growth. Some leading regions in India are now the envy of other middle-income countries. Indeed growth can eliminate poverty in leading regions in a generation. But the lagging regions are doing no better than many Sub-Saharan African countries. Indeed, their social and human development indicators are worse than in Sub-Saharan Africa. South Asia’s worst problems – poverty, conflict, hunger, and gender inequalities – are largely concentrated in its lagging regions, where there are limits to growth, because geography, institutions, and globalization will continue to favour the NOVEMBER 2010

concentration of economic activity in the leading regions. With migration to leading regions low, poverty remains concentrated in the lagging regions.

Searching for solutions What can be done? There is no universal ‘fix’ in economic development, and pluralism of approaches has great value. The challenge is to find what works best in which setting. While economic growth is critical for poverty reduction, reviving growth in lagging regions will take time. Rather than wait for a rising tide to lift all boats, policymakers should consider direct policy interventions to reduce poverty. A direct attack on poverty can yield a double dividend: in reducing human misery, it could spark growth, thereby creating more political space for direct poverty reduction. A high priority should be given to increasing pro-poor fiscal transfers. Lagging states spend considerably less than leading states on social services, including education and health care. Poor regions have a low base of economic activity to tax, which prevents them from investing in human and physical capital. Achieving equity through fiscal transfers can ensure a level playing field. But simply directing financial resources to lagging regions will not be enough to solve their problems. For example, the gains from labour mobility have not been equally shared between educated and uneducated migrants. The gains are much higher for skilled workers, so the mobility rate increases with education. The mobility of university graduates is much higher than the mobility of unskilled workers. Removing barriers to human mobility – such as labour laws, state-specific social-welfare programs, and housing-market distortions – should be an integral part of development. Human mobility promotes growth and reduces poverty. It also empowers traditionally disadvantaged groups, particularly women. Likewise, slow agricultural growth has constrained economic opportunities for the vast majority of poor people in lagging regions. Policymakers should recast agriculture in the new environment of globalization, supply chains, and growing domestic demand. The food-price crisis of two years ago served as a wake-up call, and has created an opportunity to revisit existing agricultural policies. Regional development policies to promote so-called “equitable growth” are not a solution, for two reasons. First, empirical evidence shows that convergence of per capita income between lagging and leading regions is neither a necessary nor a sufficient condition for achieving poverty reduction and social convergence. Second, regional policies that promote “balanced” growth could lower overall growth, thereby impeding poverty reduction. South Asia is at a critical stage in its historical transformation, when deepening economic disparities could stifle growth itself. If not addressed through direct measures, all of Asia will suffer.

NOVEMBER 2010

THE FINEST DIM SUM

A tour around the hot spots for yum cha SMART DRINKING

The best aperitifs and digestifs in town THE OSCAR GOES TO…

Take a look at Don Alfonso 1890, Macau’s Wine Spectator Award for this year

BREAKDOWN BY THE NUMBERS

ALL SORTS OF TRIVIA, DISCOVERED ONLINE, ABOUT EATING AND DRINKING IN MACAU

90,000

The number of crystals of Wing Lei restaurant’s iconic crystal flying dragon, at Wynn Macau

The ranking of the Italian restaurant Il Teatro, at Wynn Macau, on the top ten chart of the most expensive restaurants in the world, according to several North American and Australian magazines

219 metres

The height you’ll be fine dining at in the revolving restaurant 360º, in Macau Tower. If you want go to the very top of the tower, then you’ll be at a 388.8m height. And don’t think the numbers were chosen by chance. Three, eight, six and nine, in Cantonese, are considered auspicious

1903

The year in which the Fat Siu Lau restaurant opened, apparently the oldest establishment of its kind in Macau. It is known for its roasted pigeon

200

The number of different types of tea that can be tasted at the Sands Macao bar

322

1815

The year of one of the oldest wines in the world, which is on display at the Wine Museum. It’s a Port 98

The number of pages of the wine list shared by the 15 fine dining restaurants of the Lisboa Hotels Complex, in Macau, including Robuchon a Galera, Don Alfonso 1890 and The Eight

It’s a hard job, but someone has to do it. We think we’ve said this before right? Well, here we are again, discovering the finest things in life - be it wines, spirits or food. We’ve done our homework and looked for everything related to elegant dining options, and we’ve searched deep throughout Macau, the region, and the world. Yum cha is a dining experience that involves dim sum dishes and Chinese tea. Traditionally taken during lunch hours – although this tradition isn’t really what it used to be – in this Essential Fine Dining issue, we search for the most stylish yum cha options in town. And, yes, there are some great ones. We take a peek at the menu of The Eight, Tung Yee Heen, Wing Lei and Treasure Palace and we talk to their chefs. So, if you want to really know the yum cha hot spots and their recommended dishes, just keep on reading. During yum cha we always drink tea. But if you want to drink something before or after the meal – the so-called aperitifs and digestifs - do you know what to drink and where to go? We speak with some local critics who offer some great suggestions. While we’re talking about alcohol, we could not forget Don Alfonso 1890, with its amazing wine list helping it to be chosen as one of this year’s Wine Spectator Award winners. We show you just a little bit of what you can find at this Italian fine dining restaurant – the sumptuous interior, the enormous wine list and other singularities. Ah... And another thing... Do you know what the most expensive wine available from the Lisboa Hotel wine cellar is (probably, the most expensive wine in Macau), the same cellar that ensured the Wine Spectator’s Award for Robuchon a Galera (2005) and for Don Alfonso 1890? Well just read on... It wouldn’t be any fun if we told you everything in advance, right?

White wine It is white (or, better yet, it has no colour). Yes, you already know that. But do you know why? It’s because it is made without skins or seeds. In the end, it’s only what’s inside that counts. Contrary to what one usually thinks, red grapes can also produce white wine. Red wines are only red because of the grape’s skin. For the same reason, green grapes can only produce white wine. Being fermented without the skins, it has much less tannin than red wines. So what? It leaves a smoother taste in the mouth after drinking. Since it has less tannin, it also contains less phenolic antioxidants. These are the ones that keep the LDL (the so-called bad cholesterol levels) healthy and help to reduce the clotting ability of blood.

Red wine It is red. Yes, you already know that. But do you know why? The fleshy interior of the grape, together with the pulpy skins and the seeds are all used to make it. Red wine can only be made from red grapes. Isn’t that what makes it special?

Being fermented with the skins, it has much more tannin than white wines. So what? It leaves a rougher taste in the mouth after drinking. Since it has more tannin, it also contains more phenolic antioxidants. But don’t take this literally. The LDL rises proportionally to the level of alcohol you drink.

It should be served chilled, but don’t put it in the freezer. Frost can severely alter some of the main properties of the wine. And we want it slightly fresh, but not frozen and acid.

It should be served at a natural environment temperature. If it’s too cold, it will lose its flavours.

Specialists have a rule: delicate food, such as white meat, fish and pasta should go with whites. They say it’s a way to give the food the highlight it deserves.

Specialists have a rule: because its taste is complex and full-flavoured, it stands up well with full-bodied food, such as steak, lamb chops or roasts.

They have a light, crisp, fruity flavour and aroma. Because of this, specialists often say they are inferior wines.

They have rich, bitter and spicy flavours. Because of this, specialists often say they are superior wines.

White wines usually contain slightly fewer calories than red wines. Most whites shouldn’t exceed three years. Let’s try to keep them young and fresh.

It usually contains more calories. Most reds shouldn’t exceed 15 years. We want them older and more complex. That’s the trick.

SEVEN DEADLY (AND UNHEALTHY) SINS Gluttony – Eating too much. Not choosing carefully what you eat. Usually ends badly with a hard belly, difficult digestion and heartburn. Not to mention an empty wallet.

Greed – If you drink one or two glasses of red wine a day,

you’ll become healthier. That’s what the specialists say. But try drinking three, four, five, six or seven glasses a day and see what happens. Health becomes hell.

Lust – Are you craving too much for any particular food? Are you craving it so much that you think you’ll go insane? Then, be alert. It may be one of three things: an eating disorder, pregnancy or just plain insanity.

Sloth – You like to chew your food very slowly, in order to

enjoy it more. Great. And it’s healthy. But choose your lunch partners carefully. If you’re eating with a stressed-out eater, a crash will be inevitable.

Envy – What are you having? Oh, I want it too. The envious eater is the one who just copies the other person’s order, because they’re afraid of not choosing the best thing. But if you are the other person, try to change your order after a few minutes of waiting. Your friend will be so stressed that he will spend the whole meal thinking your new choice is better. Wrath – You’ve been waiting all day for your favourite chocolate cake. Your girlfriend baked it just for you. But when you finally get to taste it, it’s different. And you end up spending the night in the bathroom. Ah, revenge... Next time... Don’t forget her birthday! Pride – You’re on a date and you want to impress a potential girlfriend. You know you have to be right about the wine. And you’re so proud of yourself when you order it. But one bit of advice: try tasting it first. If it’s off, it can cause you pain in your stomach so intense, that the meal may be shorter than you expect. And, yes, you’ll have a night to remember, but it probably won’t be a happy one. 99

FEATURE

Don Alfonso 1890 restaurant, in Grand Lisboa, was honoured this year with the Grand Award by Wine Spectator magazine. Just look at its wine list and you immediately understand the tribute. The more than 7,000 labels, compiled in a file with hundreds of pages that needs an index, really did the trick. The decoration is luxurious and ostentatious, with its dark red and the Venetian glass chandeliers. The dining area does not have windows, featuring instead scenes of Italian landscapes. For larger groups, there are private banquet rooms. Italian Chef Alfonso Iaccarino is responsible for the delicacies that have granted the restaurant two stars in the Michelin Guide. Many of the ingredients he uses come from his farm, in Italy. And his handmade pasta is prepared without eggs, Southern Italian style. It may be a good option for special occasions, business lunches or just to have a fine dining experience. His signature dishes include a composition of lobster, Buffalo mozzarella and tomato and Gragnano linguini pasta with clams and zucchini. Out of 75 restaurants, this year, it was one of only two restaurants in Asia to receive the Grand Award from Wine Spectator. The other one was Lâ&#x20AC;&#x2122;Atelier de JoĂŤl Robuchon, in Hong Kong, also part of the Lisboa Hotel group, and sharing the same wine list.

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BIG SPENDER

Mon dieu de la France! The 1847 Château d’Yquem is one of the most expensive wines that can be tasted in Macau. It costs MOP680,000 (US$85,000) and is included in the Lisboa Hotels Complex wine cellar. You can get it, for instance, at Robuchon a Galera, in Hotel Lisboa, or Don Alfonso 1890, in Grand Lisboa. Château d’Yquem is one of the most ancient vineyards, and wines from the greatest vintages, like 1847, are achieving outrageous prices. With more than a century-long history, this complex dessert wine has a scent of camphor and cloves. In the Bordeaux Classification of 1855, Château d’Yquem was given the rank of Premier Cru ‘Supérieur’, which means it may be sold at the highest prices. The vineyard extends to 113 hectares between the villages of Sauternes and Fargues, but only around 100 hectares are in production at any time. The site has been a vineyard since 1711. At that time, the estate was owned by Léon de Sauvage d’Yquem and, 74 years later, was transferred to the Lur-Saluces family when Françoise-Joséphine de Sauvage d’Yquem married Count Louis-Amédée de Lur-Saluces, the godson of Louis XV and Lady Victoire de France. D’Yquem is not produced every year and it is usual for a bottle to age for 20, 50 or 100 years. During the 20th century, nine vintages – 1910, 1915, 1951, 1952, 1964, 1972, 1974 and 1992 – were considered poor and could not bare its name. In 2006, a bulk of vintage wines, from 1860 to 2003, were sold at an auction in London for US$1.5 million (MOP12 million), one of the highest prices ever paid. This dessert wine is thick, dark-brown and has honeyed fruit dominating its flavour. Rumour has it that Danish fairy tale writer, Hans Christian Andersen, was a fan of the Yquem wines and took a sip of the 1847 from the original barrel. True or not – some things are hard to confirm – the fact of the matter is that this is an historical wine from one of the most acclaimed vineyards of the world. In the Lisboa Hotel wine cellar, there is only one bottle of this wine and, up to now, no one has requested it. In fact, now that we think of it, MOP680,000 doesn’t seem so extraordinary after all.

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REVIEWS

The best yum cha

Ideal for business, family or friend’s meetings, yum cha is a traditional Chinese meal where you eat, talk and talk some more, sitting around a big round table. What if the meal isn’t good? Or the place isn’t nice enough? Or the tables just aren’t big enough? Business can go wrong and the family can get upset. We help you find the most elegant dim sum options in Macau.

RECOMMENDATIONS

The Eight ONE MICHELIN STAR It’s always a good introduction when you say that The Eight was awarded one Michelin Star in 2009 and the same again in 2010. Located at the Grand Lisboa Hotel since 2007, it offers dim sum alongside contemporary Cantonese and Huaiyang cuisine. If you’re doing yum cha, then you’ll be having lunch at The Eight, surrounded by a group of people. Its interior is carefully thought out in order to follow Chinese traditions and to create an elegant environment. Conceived by Hong Kong designer Alan Chan, it recreates some traditional Chinese elements, like the goldfish (energy) as well as the number “eight” (wealth). The name of the restaurant itself is already auspicious and the entrance that leads to the restaurant, filled with goldfish, is exquisite and exuberant. At The Eight, a dim sum meal starts with a cup of one of the ten different Chinese teas, followed by some steamed dim sums, deep-fried dim sums, barbecue items (like pork), vegetables, noodle or fried rice. In the end, comes the sweet dim sum. There are more than 50 different types of dim sum at lunch – yes, don’t forget, yum cha is traditionally at lunch. Chef Ng Chi Kai states that all kinds of customers come to The Eight, but there are some differences in their preferences. For instance, Chinese prefer traditional steamed dim sum, while westerners order deep-fried. No worries! He cooks for all and deliciously... Grand Lisboa, Macau Tel: 853 8803 7788 Yum Cha: 11:30 am ~ 2:30 pm (Monday to Saturday) 10:00am ~ 3:00 pm (Sunday and public holidays)

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Steamed superior river shrimp dumplings shaped as a fish Vietnamese spring rolls with crabmeat and black fungus Grilled shrimp mousse on a stick of sugar cane Steamed pork dumplings with crab roe, topped with crispy conpoy flavoured with black beans

RECOMMENDATIONS

Shark’s fin, scallop and tofu soup served in a teapot Dumplings filled with pork and shrimp Stir-fried rice flour rolls with XO sauce Pork liver and mixed meat Shanghai hairy crab roe dumplings with Golden-Hill hooked shark’s fin soup

Tung Yee Heen ONE MICHELIN STAR If you want to taste a more traditional yum cha, then this is it. Even the design follows a more traditional line than any of the other local dim sum restaurants, maximizing natural sunlight. It has three private rooms – Lotus, Bamboo and Peony – being able to accommodate up to 400 guests in the restaurant. The environment itself may not be that cosy, but Tung Yee Heen follows tradition and that awarded it one Michelin star. It features contemporary Cantonese cuisine and dim sum at lunch, from the hands of Chinese Kitchen Executive Chef Vong Kuai Iu, who has more than 46 years of cooking experience. At Tung Yee Heen, states the chef, taken at lunchtime, dim sum is usually mixed with other types of food. And periodically, the

chef changes the menu, especially when the season changes – lighter dishes for summertime and heavier ones for wintertime. However, when asked about what makes this restaurant special, he claims it’s the “more traditional recipes”, which are not being used anywhere else. It is a very good option for those who wish to follow (or learn, if you don’t know it) tradition. Grand Lapa, Macau Tel: 853 8793 3821 Yum Cha: From 11 am until 2.30 pm

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REVIEWS

RECOMMENDATIONS

Treasure Palace Red is the colour. The design is elegant and uses crystal lights and lotus patterned carpets creating a stylish environment, perfect for any kind of meal. The windows with a view to the fountain outside let the restaurant breathe and create a very airy atmosphere. Overall, it’s a very enjoyable decoration. Specializing in traditional Cantonese cuisine and dim sum, Treasure Palace is considered one of the most luxurious places for those who wish to have yum cha in Macau. With starters such as marinated jellyfish as well as poached free-range chicken and shark’s fin soup with fish maw, there are many different options for customers. The Dim Sum menu includes the usual and traditional dishes, as well as signature dishes such as wood-oven-roasted pork belly, classic superior soup dumplings, wood-oven-roasted pork belly, bird’s nest egg tarts, Iberico barbecue pork buns, truffle and root vegetable dumplings as well as crystal shrimp dumplings. To accompany this meal, Treasure Palace provides a wide selection of organic and floral teas at the tea counter near the entrance. Also specializing in Dim Sum from the North of China, the menu contains more than 40 items. And, with the different seasons, according to the Chinese Executive Chef, Tam Kwok Fung, it is always changing. For instance, in summertime, this Michelin star chef uses more seasonal ingredients, such as lychees, which are perfect to help bare the heat. Even the teas change, with Treasure Palace using more green tea or lotus tea during summer. Surrounded by the water fountain of City of Dreams, this restaurant has huge windows that offer panoramic views over Cotai. It’s definitely a breath of fresh air. City of Dreams, Macau Tel: 853 8868 1930 Yum Cha: 11:00 am - 2:30 pm (Monday to Friday) 10:00 am - 4:30 pm (Saturday, Sunday and public holidays)

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Bird’s nest egg tarts Wood-oven-roasted pork belly Iberico Barbecue pork buns Truffle and root vegetable dumpling Crystal shrimp dumpling

RECOMMENDATIONS

Baked barbecued pork buns capped with sweetened crust Supreme shark’s fin dumplings in soup Steamed prawn dumplings

Wing Lei ONE MICHELIN STAR As soon as you enter Wing Lei at Wynn Macau, you’re immediately dazzled by the luxurious, but not ostentatious (well, maybe a little bit...) design. Inspired by a traditional moon gate shape, the entrance of the restaurant immediately reminds you of the traditional houses in ancient China. The centrepiece of the restaurant is a huge dragon made from 90,000 crystals – a Chinese element that always is well appreciated by the Chinese and that symbolizes happiness, luck and energy. Very small lights illuminate the sculpture, just so you really can’t miss seeing the dragon, as if that was possible. The main room has 134 seats suitable for accommodating families, work colleagues or just friends. But if you prefer something more intimate, then you may rent one of five private rooms: the small private room (MOP1,500 for lunch; MOP3,000 for dinner) or a regular private room (MOP2,500 for lunch; MOP5,000 for dinner), with a view over the garden as well as the river and equipped with a wide screen television. Stepping away from the design, the chandeliers and the beautifully decorated red carpets, you have the food. Executive Chef Peter Chan leads a team of over 30 chefs, carefully preparing each of the dishes that go to the tables. With so many different people coming inside the restaurant, Peter Chan tries to accommodate all tastes accordingly. He also tries to innovate the traditional dim sum meal. For instance, when cooking traditional barbecue pork dumplings

he uses western-style bread, making them smoother than in the traditional recipe. Yum cha is a meal accompanied by Wing Lei’s teas, during lunchtime. As for the usual customers, at Wing Lei they are locals and tourists. But Peter Chan sees a difference in their behaviour and requests. Macau residents are more relaxed and only worried about enjoying their food, while tourists want to eat, taste the food and leave quickly to go sightseeing. But what is a good dim sum meal? For this executive chef, certain requirements have to be fulfilled beforehand: there has to be enough distance between the tables; the tea has to be exquisite; the service has to be good and the employees have to interact with the customers. As for the dim sums themselves, it is a matter of personal taste. Dim sum is to be enjoyed and shared with other people, while discussing the daily agenda – usually it may take a little bit longer to finish than a regular meal. But when you do finish, you’ll feel completely satisfied. Wynn Macau, Macau Tel: 853 8986 3663 Yum Cha: 11:30 am to 3 pm (Monday to Saturday) 10:30 am to 3:30 pm (Sundays and public holidays)

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AHEAD OF MEAL

Aperitifs

Wondering what’s the best option to drink before a fine dining meal? We asked the critics and here’s the result. Enjoy

Louis Roederer 1999 If you intend to drink wine during dinner, and you want to try a different aperitif, lower in alcohol, then you may want to try a Louis Roederer champagne. Famous for the celebrated Cristal, it has been in the spotlight because it is associated with footballers and the hip-hop crowd. You can taste three from 1999: Brut Vintage, Blanc de Blancs and Brut Rosé. Recommended by F&B Director of Hotel Lisboa, Paul Lo Available at Lisboa Hotels

Martini Extra-Dry A brand of Italian vermouth, named after the Martini & Rossi Distilleria Nazionale di Spirito di Vino, in Turin this liquor is made from wine, with a number of different herbs added for flavour. It is usually considered aromatized liquor or a fortified wine. Usually it is served fresh or with ice and lime. Add gin/vodka and one olive and it becomes the famous cocktail, Sex and the City style. Actually, if you simply want vermouth, it’s better to specify at the bar. Recommended by F&B Director of Hotel Lisboa, Paul Lo Available at Lisboa Hotels

Campari Is a well-known Italian bitters, made from 68 ingredients. The main agent is bitter orange, rhubarb and cinchon. It comes in a distinctive crimson red colour and can be served as an aperitif neat or on ice with a slice of orange, as a long drink with Tonic. To this day, the original recipe is still a secret – the Gruppo Campari claims there is only one person in the world who knows the entire formula. Marketing strategy? Recommended by MGM Sommelier, Adolphus Foo Available at MGM Macau

Montenisa Franciacorta Brut The intense aromas include hints of white peaches and apples, and its yeasty, toasty notes make it ideal for those who prefer to save themselves for wine during dinner. The typical liveliness of this sparkling white is enhanced on the palate by ripe fruit aromas adding depth and balance. It contains all three kinds of grapes: Chardonnay, Pinot bianco and a little percentage of Pinot nero. Produced in Montenisa estate, situated in Franciacorta, in Italy, this wine seemingly transports us to that fair country. Recommended by Head Sommelier of Altira Macau, Keith Lam Available at Altira

Dubonnet 1846 It is a wine-based aperitif, a blend of fortified wine, herbs, spices and quinine. It dates back to 1846, when Joseph Dubonnet entered a contest, run by the French authorities to persuade the French Foreign Legionnaires in North Africa, to drink quinine. It is commonly mixed with lemonade or bitter lemon, forming several types of cocktails. And you’ll be interested to know it is the favourite drink of the French Foreign Legion (obviously) and Queen Elizabeth II. Recommended by F&B Director of Hotel Lisboa, Paul Lo Available at Lisboa Hotels

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Hendricks Gin Produced by William Grant & Sons, in Girvan, Scotland, in addition to the traditional juniper infusion, it mixes Bulgarian Rose with a mash of cucumber. Served with lemon and a dash of tonic over ice? Sounds great! One for me, please. Recommended by David Wong, F&B expert, IFT Available at Vasco Bar, Grand Lapa Hotel

Digestifs

AT THE END OF MEAL

After a good meal is finished, nothing is better than a great digestif. The critics in town have made a list of the best options available

Glenmorangie Quarter Century Highland Single Malt Scotch Whisky In Gaelic, its name means “Glen of Tranquillity”. For those who feel a good meal isn’t finished until you’ve had that high-dosage of alcohol filled character called whisky, Glenmorangie really ensures tranquillity. David Sutherland founded this Highland Scotland distillery in the early 1820s. Matured over 25 years in a selection of oak casks grants it a minty, thick, creamy honey, with a touch of almonds flavour. On the rocks, please! Recommended by David Wong, F&B expert, IFT Available at Whisky Bar, Galaxy StarWorld

Taylor Vintage Port 1945 Considering a digestif as any drink that can conclude a wonderful dinner, then this is a good option. It also goes well if you want to taste a little bit of cheese. Producers officially declared it a vintage because it was made from grapes grown, harvested and vinified in that specific year. Recommended by F&B Director of Hotel Lisboa, Paul Lo Available at Lisboa Hotels

Trockenbeerenauslese Rheingau Steinberger Cabinet Naturrein 1921 Don’t be fooled by the big words and difficult spelling. This German dessert wine is very easy to savour. It is fine, well balanced and has a subtle sweetness. Perfect for those who believe a digestif does not need to have a high degree of alcohol and prefer to think of it as a complement to the meal. Sipped over a chat and petit fours after dinner, this wine was given 100 points in Wine Spectator magazine. Recommended by F&B Director of Hotel Lisboa, Paul Lo Available at Lisboa Hotels

Jägermeister You hunt, you eat and then you drink. Jägermeister means hunt-master and the term was applied to foresters in the German civil service. Invented by Curt Mast, who as an enthusiastic hunter, this drink is a German digestif, made from herbs, spices and fruit including star anise, poppy seeds and juniper. Recommended by MGM Sommelier Adolphus Foo Available at MGM Macau

Grand Marnier Cordon Rouge For those who think digestifs should be high alcoholic content drinks that can sooth the overwhelming full feeling after a long meal or dinner, then a glass of Grand Marnier is perfect. Louis-Alexandre Marnier Lapostolle created it in 1880. It possesses some bitter orange flavours with nuances of orange marmalade and hazelnuts. Recommended by F&B Director of Hotel Lisboa, Paul Lo Available at Lisboa Hotels

Jacopo Poli - Grappa di Torcolato “Amorosa di dicembre” After a meal, why not try a glass of Limoncello? It is a lemon liqueur produced in Southern Italy, mainly in the region around the Gulf of Naples, the Sorrentine Peninsula and the coast of Amalfi and islands of Procida, Ischia and Capri, but also in Sicily, Sardinia, Menton in France and the Maltese island of Gozo. It is made from lemon rinds, alcohol, water, and sugar. It is bright yellow in colour, sweet and lemony, but not sour since it contains no lemon juice. Grappa is a fragrant grape-based pomace brandy from Italy of between 35 percent and 60 percent alcohol by volume. Recommended by Keith Lam, Head Sommelier of Altira Macau Available at Altira

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SHOW OFF

Host with the most

You’re preparing a fine dining meal at your home. But do you have everything you need to host with elegance? Don’t despair! We have some suggestions for you...

Bamboo collection by Alessi Alessi and the Campana brothers have joined forces to present a new collection made of hand-finished natural material. Made of bamboo wood, this Italian brand presents the citrus basket, the centerpiece, a small table with base in bamboo and glass top as well as a magazine holder. Considering the country where you’re living, bamboo is almost mandatory material. If you want to stay in fashion, this is it. At Lane Crawford, Pacific Place Home Store, Canton Road, Times Square, all in Hong Kong For additional information: www.alessi.it

TWIST salt and pepper mill set by Georg Jensen It looks like two musical instruments but it’s not. Made with silk matte stainless steel, it’s a salt and pepper mill set, inspired by the maracas. It’s definitely a stylish addition to the kitchen or dining room. It is comfortable, but at the same time elegant. The silk matte stainless steel is cool and soft to the touch. With such a musical shape, one can only guess it is Scandinavian humour at work. At Lane Crawford, Central Retail Store - IFC Mall, Central Retail Store - Prince’s Building, Harbour City - Kowloon Retail Store, Kowloon Tong Retail Store, all in Hong Kong For additional information: www.georgjensen.com/global.aspx

Vista Alegre’s Casablanca set It’s one of the most traditional and ancient Portuguese porcelain houses and it’s easy to find in Macau. This new Casablanca set, with its tea pot, sugar pot, tea cups, dinner, dessert and bread and butter plates, will fit quite nicely in your elegant house. Alegre, in Portuguese, means cheerful. It probably means that your guests will become more cheerful just by looking at them. At Vista Alegre Atlantis Crystal, in Macau For additional information: www.vistaalegreatlantis.com

The Factory by Seletti The concept is in the name. Picture a factory, how it looks from the outside and how it can contain several individuals doing different and coordinated functions. Well, that’s the idea of this fine porcelain tray. It may be in the living room just for you to empty your pockets as soon as you arrive home. You’ll be surprised to see how much it can store. At Lane Crawford, Ovo, Homeless, Aluminium Urban Living, Id Store, all in Hong Kong For additional information: www.seletti.it

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Ritzenhoff Emotion coffee mug and coaster Each mug has a different emotion. Either it is happy, sad, surprised or just confused. Ritzenhoff always does it. With a touch of humour, it manages to combine the formal with the informal. It’s impossible not to love them.

Ottagonale by Alessi They were first designed in the mid-thirties, but they have been re-edited. Although they matured several years ago, these eight surface pieces (or “ottagonale”, in Italian) in stainless steel, are still a success and may dazzle your hosts when you’re about to pour them coffee or tea. Just try.

At Dora Tam Design Gifts and Jewelry, Macau For additional information: www.ritzenhoff.com

At Lane Crawford, IFC Mall, Pacific Place Home Store, Canton Road, Times Square, all in Hong Kong For additional information: www.alessi.it

Ritzenhoff Champus Different champagne glasses, elegant, but with a funky touch that immediately make you smile. That’s the idea behind Champus. Each glass of the collection has a different design – the bubbly one, the party one and so on. If you have these at home, you’ll definitely impress your guests. At Dora Tam Design Gifts and Jewelry, Macau For additional information: www.ritzenhoff.com

Bugatti Vita Electric Juicer Ok, it’s not a car, but it is a Bugatti. You’ll have it in your kitchen. And who can resist an electric juicer, with simple, elegant lines and bright colours? After juicing, you can immediately pour it into its class jug. True, it’s not for serving hosts – but the kitchen cannot be closed all the time. And if they do get in, they will not be disappointed. At New Yaohan Department Store, Macau; Exclusivités - Central, in Hong Kong For additional information: www.casabugatti.it

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ON THE TABLE

Cutlery

We neglect them. We ignore them. But we shouldn’t. They are always there for us when we are in need. Take a look at the most exquisite knives, forks and spoons available in the region. And start cutting with style...

Cutipol Goa The Goa set includes all you need to host a dinner party at your house. This set was inspired by the historical connection that existed between Goa and Macau for more than 450 years. Gathering the expertise of traditional craftsmanship with modern technology, this cutlery set is elegant and simple. At Dora Tam Design Gifts and Jewelry, Vista Alegre Atlantis Crystal, Macau For additional information: www.cutipol.pt

Georg Jensen’s “My favorite baby spoon, curved” It’s cute and fashionable. Perfect for your baby. Designer Vivianna Torun Bülow-Hübe was inspired by her great-grandmother’s christening spoon, given to her as a gift. Made of sterling silver, you will want to give your baby the cutlery he or she deserves. At least, that’s what you’ll be thinking right before they throw the soup at you.

Zwilling J.A. Henckels Vintage 1876 flatware When you hear the word vintage you immediately associate it with high quality from the past. And that’s certainly true of this cutlery set. Filled with curves, but at the same time with a square head, it has a pattern that really seems like something from the past. And in fact it is. This pattern was selected from the Henckels archives, in Germany, to celebrate 275 years of manufacturing. Maybe a piece of history will fit nicely in your home. At New Yaohan Department Store, Macau; Cheong Hing Store Ltd, Hong Kong For additional information: www. zwilling.com

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At Lane Crawford, Central Retail Store - IFC Mall, Central Retail Store - Prince’s Building, Harbour City - Kowloon Retail Store, Kowloon Tong Retail Store, all in Hong Kong For additional information: www.georgjensen.com/global.aspx

FOOD AND SEX

Forma all round cheese knife by Georg Jensen Don’t be frightened by its difficult figure. As if it were a woman, with all her shapes defined, this knife accompanies all the movements of the cheese. Made from stainless steel and able to cut through any type cheese soft or hard, it is a great accessory for dining. At Lane Crawford, Central Retail Store IFC Mall, Central Retail Store - Prince’s Building, Harbour City - Kowloon Retail Store, Kowloon Tong Retail Store, all in Hong Kong For additional information: www. georgjensen.com

Seletti Midas cutlery He touched it and it became gold. As if it were really touched by King Midas himself, this set of knives, forks and spoons are golden treasures that can be used to slice away through your meals. Exquisite meals deserve nothing less than gold. At Lane Crawford, Ovo, Homeless, Aluminium Urban Living, Id Store, all in Hong Kong For additional information: www.seletti.it

Eating in the bedroom Picture this: a romantic candlelit dinner, a little jazz in the background and a glass of red wine. You are both starting to get in the mood until the food starts coming out. It’s just not sexy enough. And then you end up having a night to remember, but for all the wrong reasons. That’s why we want to tell you what food you should include in a romantic meal, for all the right reasons. First thing’s first. Whatever you decide to eat, you have to find a way to put garlic on it. Granted you’ll need some mints afterwards, but garlic contains allicin – and this increases blood flow to the sexual organs. And if the smell is just too unbearable, garlic capsules may do the trick. Pepper is also very important for spicing up your food and preparing you for the night ahead. Alongside the strong flavour and scent, it increases the cardiac rhythm, putting you in the mood for love. To drink, you may choose one of two things: green tea or wine. The first one truly increases your energy and physical strength. As for the latter, alongside the flavonoides from the grapes that increase the blood flow, when consumed moderately, it loosens you up of course. For the entrée, oysters are the classic aphrodisiac. The mere act of eating them, accompanied by a glass of white wine, is already erotic and you can even try to put them to use in your foreplay. And their nutrients are also scientifically effective for getting you into the mood. They are high in zinc, which increases sperm and testosterone production. Also, they contain dopamine, a hormone that increases libido. Just clean the shells to remove any sand and dirt, open them on ice and squeeze on some lemon juice. Now, let’s think about the main course. OK, granted they are not as sexy as the oysters, but eggs are rich in vitamins B6 and B5 – not only do these balance hormone levels, but they also fight stress. You can also think of liver, since it is a good source of glutamine and can increase your libido. So, if you can get over the taste, it will do wonders for your sex life. If eggs and liver are not to your liking, then you can choose salmon or tuna. They are both rich in fatty acids essential for hormones, and omega 3, which works as a heater for a night of passion. For the fruit part, think bananas. They contain the bromelain enzyme, which increases libido and can cure impotence in men. Just leave them lying in a bowl and undress them when you need them. Last but not least, chocolate… It contains theobromine, an alkaloid similar to caffeine. It also has phenylethylamine, which is considered responsible for the feeling of “being in love”. And, apart from that, who doesn’t get immediately loose after eating chocolates? So, with the right bite, everything else will follow.

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

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

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

DFS Galleria, The Four Seasons

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

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Arts & Culture 113

Artistic foundation The government-backed Macau Foundation is gearing up to launch a programme to buy works from local artists BY PAULO A. AZEVEDO AND EMANUEL GRAÇA | PHOTOS BY CARMO CORREIA

ttention all artists: the Macau Foundation is preparing a programme of acquisition of local contemporary artworks. In an exclusive interview with Macau Business, the new president of the foundation, Wu Zhiliang, announced the programme might be launched as soon as next year. “We always stress the need to protect Macau’s identity but what is it made of? We have the buildings in the historical centre but we also have the socalled intangible heritage. Our goal is to systematically collect local artworks in several areas, in order to make up a collection that represents Macau culture,” Mr Wu said. However, the foundation has no plans to build a museum to hold its future collection. “It is unnecessary. Macau already has so many museums. We will work hand-in-hand with them,” he says, adding that discussions are already underway. To select which works to buy, the foundation will create a special committee, mostly made up of artists, Mr Wu said.

The foundation already owns a collection which includes about 1,100 pieces. However, most are gifts from outside artists that have held exhibitions in Macau. “Over the years, we have bought some art pieces, but very few,” he said.

New image The foundation is also creating an internal research centre, composed of about 10 people. According to Mr Wu, one of its fields of study will be “Macaology”, the study of Macau’s rich culture and history, which is Mr Wu’s field of expertise. “We will study and translate more sources. The final goal is to create a new cultural image of Macau, by stressing its cultural and historical heritage,” he said. At the helm of the Macau Foundation since mid-July, Mr Wu replaced Victor Ng, who declined to stay in office for a new term for “personal reasons”. Mr Ng had been the foundation’s president since 2001. However, Mr Wu is no newcomer to the foundation. He has been part of

its administrative council for almost 20 years. “Mr Ng consolidated the foundation and contributed a lot to its development,” Mr Wu stressed. Rather than talking about big changes, he says that the new projects, with more focus on culture and education, are needed “because society has changed”.

Going it alone The Macau Foundation is a corporate public body autonomous in administration, finance and asset management, which comes under the supervision of the chief executive. It was established in 1984. Since major reforms in 2001 that included amalgamation with the Foundation for Cooperation and Development of Macau, the foundation’s scope has included facilitating the development of culture, the economy and science, and promoting Macau. However, the foundation is known chiefly for the grants it gives to support local associations. This is something Mr Wu wants to change. NOVEMBER 2010

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Arts & Culture “The Macau Foundation has very few activities of its own,” he said. “Only around five percent of our budget goes to activities organised by us, which is very little. In the future we will invest more in culture and education, with projects of our own, but also through partnerships with the institutions and associations we already support.” Mr Wu says there is a need for the foundation to be more project-focused, instead of just handing out money. He adds that the reasons for its grants need to be better explained to the public, making better use of the media. Last year, a programme set up by the foundation to sponsor activities to celebrate the 60th anniversary of People’s Republic of China and the 10th anniversary of the Macau SAR led to some criticism of alleged misuse of public funds. Eventually, most of the sponsored activities were celebratory dinners and the final bill reached MOP100 million.

Too much dinner

Solid base S

everal foundations worldwide took a big hit from the international financial crisis, with their assets suffering huge drops in value but not the Macau Foundation. Of the foundation’s MOP8 billion in assets, most are long-term deposits with annual returns ranging from 3.0 percent to 3.8 percent, according to its president, Wu Zhiliang. Mr Wu expects to spend less than MOP2 billion this year, although the foundation’s official budget is MOP2.6 billion. At present, casinos must pay a tax of 1.6 percent on gross gaming revenue to the foundation for “cultural, social, economic, educational, scientifi c, academic or philanthropic actions” in Macau. This means that, for the fi rst nine months of this year alone, the foundation raked in more

NOVEMBER 2010

than MOP2.1 billion. Some gaming operators are lobbying for a decrease in this tax. In September, Sociedade de Jogos de Macau’s chief executive, Ambrose So, suggested a refund of part of the tax. Mr So said the gaming operators should invest the money refunded in cultural, recreational and educational activities for their employees. Mr Wu disagrees, although he stresses that any change in the tax would be a political decision. “All the associations, including the gaming workers’ associations, are welcome to present projects to the Macau Foundation,” he said. “There were also cultural activities held in the past in partnership between the foundation and gaming operators. We are open to similar projects.”

“We did an internal evaluation on the programme. The criticism was strong, but the initiative reached its goal: to create a cheerful environment and to improve the relationship between local associations and their members, while also boosting inter-association cooperation,” he said. However, Mr Wu says it is unlikely that any similar programme will be launched in the future. “We have achieved a consensus: we should not sponsor too many celebration dinners. We need to promote the local associations’ imagination and creativity instead.” One of the major projects supported by the foundation is the Science Centre, built to celebrate the Macau SAR’s tenth birthday. The foundation invested MOP300 million in equipment to furnish the facilities, besides putting up the annual operating budget of MOP80 million. “The Science Centre has already transformed itself into a Macau icon, which is very positive,” Mr Wu says. The centre opened less than a year ago and there are already some structural problems, namely peeling paint and mould. Mr Wu said the foundation was not responsible for the construction. “But those problems were unavoidable, since there was so very little time for construction. They are minor issues and easy to fix,” he said.

115

Sarah Brightman dazzles fans with performance at Venetian

he world-renowned best-selling soprano, top classical artist, songwriter and dancer, Sarah Brightman, was in town last month for her debut in Macau. And what a performance it was: the British soprano showed why she is considered one of the best “classical crossover” performers, with more than 150 gold and platinum awards in 34 countries. The number “Time to Say Goodbye”, of course, was one of the highlights of the night. Ms Brightman avoided a big arena production in Macau, preferring a more intimate performance. This allows her to connect better with her audience, she said before the show. “I myself really enjoy it,” she said.

Although this was her first performance in Macau, Ms Brightman is no stranger to the city, which she first visited in the early 1990s. “Things have changed dramatically,” she said. “I was actually in Macau not very long ago, scouting places for a movie I am producing,” she said. Although no final choices have been made yet, Ms Brightman was impressed with some of the spots she checked out. But she gave no details, stressing that the project is still in its early stages.

No more musicals Early in her career, Ms Brightman starred in several Broadway musicals, including “The Phantom of the Opera” and “Cats”, both being the work of her former hus-

Double treat I

f the name “Twins” conjures up a 1988 comedy featuring Arnold Schwarzenegger and Danny DeVito, you must be a complete stranger to the local Chinese pop scene. For the average Macau resident, it means Charlene Choi Cheuk-Yin and Gillian Chung Yan-Tung, arguably the most successful female Cantopop duo in Asia. Twins will make their return to the Cotai Arena on November 13, having performed there in August for the Venetian Macao birthday concert. In their joint musical career, the Hong Kong duo have released over 30 albums and sold more than 10 million copies worldwide. Many Twins songs have topped the regional pop charts, including “After School”, “Back to School”, “Next Station Queen”, “Kite and Wind” and “Love Bigger than Sky”. The duo split in 2008 after Ms Chung was among the people involved in a sex photo scandal involving several Hong Kong starlets and actor and singer Edison Chen. However, Twins announced their reunion earlier this year.

band, Andrew Lloyd Webber. She is now long retired from that genre, describing her retirement as “a huge relief”. She does not go to musicals any more. “Before, I felt I was more, like, working rather than enjoying myself,” she said. Ms Brightman believes that after she decided to go solo, she really started finding herself as an artist. Looking at showbiz nowadays, Ms Brightman thinks a lot has changed. “With so many talent shows, everything is very fast and rapid. The main goal is fame, while when I started, the goal was to be very good at what you were doing.” Although critical of talent shows, Ms Brightman sang in one recently. The soprano performed a duet in September with “America’s Got Talent” finalist Jackie Evancho. Ms Brightman said she had decided to accept the invitation to do the duet because it came from a very talented 10-year-old singer. Ms Brightman sang the Olympic theme song “You and Me” with Chinese superstar Liu Huan in both Mandarin and English at the 2008 Beijing Olympics opening ceremony. The song was broadcast to over five billion viewers. In the 26 hours after the performance, “You and Me” was downloaded 5.7 million times. Unlike some Western artists, Ms Brightman feels no difference when singing to an Asian audience. “They are people, too, and I don’t know many people in the world that don’t enjoy music,” she says. NOVEMBER 2010

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Arts & Culture

A trio of Macau talent lines up in an experimental dance theatre performance next month and asks ‘What does manhood mean?’ he acclaimed career of Hong Kong choreographer Yuri Ng has a twist in the tale. For two years running, he has brought explorations of femininity to the Macau Cultural Centre through his

Macau Tales series. The third instalment of his Macau Tales series shifts the focus from the fairer sex and in “THE Living ROOM”, he asks what it means to be a modern male. It is a piece that questions stere-

Talented trio The three men who take centre stage in “THE Living ROOM” at the cultural centre bring experience from overseas back to Macau

Lok Ian San

aking part in the third part of the Macau Tale offers Lok Ian San an opportunity to get his body moving again. Lok compares himself to the newly adapted nostalgic kung-fu movie “Gallants”. “As a dancer and artist, I should make use of different forms and re-make myself,” he said. Lok emigrated to Macau at a young age before winning a scholarship to study at The Hong Kong Academy for Performing Arts. It was there, he says, that the four years of study constituted the “biggest challenge in his life”. He says he learnt that “dancing is more than dancing”. He toured, including Berlin and Singapore, and in 2000, “The NOVEMBER 2010

otypes. Throughout China’s history, men have been regarded as the foundation of the family, taught to be tough and responsible. As progress challenges old roles, men’s real desires and wider responsibilities to their families and

Current”, a work in which he performed, won the grand prize at the Prague Dance Festival. After graduating from the school’s Chinese Dance Department in 2002, he joined the Hong Kong Dance Company and has appeared in “The Border Town” and “Angel Falls” – the former a co-production between his company and the Actors’ Family.

Popeye Hong

n a short space of time, Popeye Hong has established a significant reputation. Hong was the first Macau resident to study at the Beijing Dance Academy, majoring in Contemporary Dance, before taking a full scholarship to study at Case Western Reserve University in the United States. He graduated last year with a Masters in Contemporary Dance. In between completing his studies, Hong has returned to his roots, teaching contemporary dance at the Macau Conservatory. He has now established his own dance studio in Macau, hoping to bring dance into people’s lives and to “make it more popular”. “The ideal in life certainly is to continue to have collisions

reographic Meetings of Seine-St-Denis in France with his choreography for “Boy Story”.

Developmental experimental

with other people, keep trying and assimilating. When you have done that, you can expand your horizons, by not being restricted to the narrow view,” he says. Hong has participated in dance performances at the Lisbon World Expo, Beijing Dance Festival and Istanbul International Theatre Festival. He performed in “Confrontation”, a dance work in collaboration with the Istanbul Dance Theatre Company of Turkey which was invited to feature at the Macau Cultural Centre’s Black Box Theatre Series 2009.

Leung Heng Un

Two years ago, Mr Ng began the Macau Tale trilogy. He collaborated with the next generation of Macau dancers in “Dress, Up to Dance” and then “Have Steps, Will Travel” last year. Both performances won an over-

whelming response from audiences and the dancers. Both works stayed true to Chinese culture, using traditional Chinese and ethnic dances as their starting point before moving into experimental dance. And both works investigate the basic elements in life. The cornerstone of the collaboration has been hosting workshops for Macau’s young dancers. The experience became the Macau Tale dance theatre series. It is a series aimed at exploring experimental dance theatre, featuring several Macauborn dancers who were invited to return to take part in the choreography and performances. Mr Ng stays true to the formula in “THE living ROOM”, featuring the city’s male talent and the exploration of what manhood means. “THE living ROOM” is a dance-theatre play set together by brainstorming between the cast and Mr Ng, which will provoke the audience. The third piece of the Macau Tale trilogy, “THE living ROOM” runs for two nights, on December 18 and 19, at the Small Auditorium of the Macau Cultural Centre. Tickets cost MOP100. See the centre’s website www.ccm.gov.mo for more details.

Popeye Hong

Lok Ian San

society have shifted. Mr Ng directs a trio of Macau dancers, each pursuing a career on the international stage. There is Popeye Hung, who danced in “Confrontation” by the Istanbul Dance Theatre Company at last year’s Macau Cultural Centre Black Box series; Lok Ian San, who has danced with the Hong Kong Dance Company; and Leong Heng Un, a professional dancer in Hong Kong and recent Chinese Dance graduate. For more than 20 years, Mr Ng has travelled the world, building a substantial international reputation. He trained in Hong Kong, Canada and Britain, winning the Adeline Genée Gold Medal from the Royal Academy of Dance in 1983, before joining The National Ballet of Canada. He returned to Asia in 1993 and has choreographed various performances by the Hong Kong Ballet, Hong Kong Dance Company, Zuni Icosahedron, Taiwan’s Cloud Gate Dance Theatre 2, Singapore Dance Theatre and Japan’s Architanz. Mr Ng received the Artist of the Year Award – Choreographer, from the Hong Kong Artists’ Guild in 1997 and just one year later he won the Author Prize at the Sixth International Cho-

Yuri Ng

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he handover in 1999 was a time for renewal and change. It was also a pivotal moment in Leung Heng Un’s life. He traces his relationship with dance back to joining his school dance group for the opening performance at the handover. After completing high school he studied at the Hong Kong

Academy of Performing Arts, majoring in Chinese Dance between 2002 and 2006, before going to work for Hong Kong Disneyland. Between 2008 and into this year he pursued a bachelor’s degree under a full scholarship back at the academy. He won the second award in choreography and performance at the 7th Tao Li Cup National Dance Competition in Sichuan and has performed in several larger productions with the Hong Kong Dance Company, including “Eagle Companions”, “Lingnan Impressions” and “Qingming Riverside”. It is Leung’s first time performing in Macau since leaving for Hong Kong. He treasures the rare opportunity to share his views on dance. “During the creative process Yuri often raises questions with me, which are great challenges and inspire ideas,” he says. NOVEMBER 2010

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GEORGE SOROS CHAIRMAN OF SOROS FUND MANAGEMENT

Premature virtue THE ARGUMENT THAT STIMULUS SPENDING IS INEVITABLY WASTED IS PATENTLY FALSE he Obama administration’s insistence on fiscal rectitude is dictated not by financial necessity, but by political considerations. The United States is not one of Europe’s heavily indebted countries, which must pay hefty premiums over the price at which Germany can borrow. Interest rates on US government bonds have been falling and are near record lows, which means that financial markets anticipate deflation, not inflation. Nevertheless, Obama is under political pressure. The US public is deeply troubled by the accumulation of public debt, and the Republican opposition has been extremely successful in blaming the Crash of 2008 – and the subsequent recession and high unemployment – on government ineptitude, as well as in claiming that the stimulus package was largely wasted. There is an element of truth in this, but it is one-sided. The Crash of 2008 was primarily a market failure, for which US (and other) regulators should be faulted for failing to regulate. But, without a bailout, the financial system would have remained paralyzed, making the subsequent recession much deeper and longer. True, the US stimulus package was largely wasted, but that was because most of it went to sustaining consumption rather than to correcting the underlying imbalances.

Obama’s mistake

Where the Obama administration went wrong was in how it bailed out the banking system: it helped banks earn their way out of a hole by purchasing some of their bad assets and supplying them with cheap money. This, too, was guided by political considerations: it would have been more efficient to inject new equity into the banks, but Obama feared accusations of nationalization and socialism. That decision backfired, with serious political repercussions. The public, facing a jump in credit card charges from eight percent to nearly 30 percent, saw banks earning bumper profits and paying large bonuses. The Tea Party movement exploited this resentment, and Obama is now on the defensive. The Republicans campaign against any further stimulus, and the administration now pays lip service to fiscal rectitude, even if it recognizes that deficit reduction may be premature. I believe that there is a strong case for further stimulus. Admittedly, consumption cannot be sustained indefinitely by running up the national debt; the imbalance between consumption and investment must be corrected. But to cut government spending at a time of large-scale unemployment would be to ignore the lessons of history.

A better stimulus

The obvious solution is to distinguish between investments and current consumption, and increase the former while reducing the latter. But that seems politically untenable. Most Americans are convinced that government is incapable of efficiently managing investments aimed at improving the country’s physical and human capital. Again, this belief is not without justification: a quarterNOVEMBER 2010

century of calling the government bad has resulted in bad government. But the argument that stimulus spending is inevitably wasted is patently false: the New Deal produced the Tennessee Valley Authority, the Triborough Bridge in New York, and many other public utilities still in use today. Moreover, the simple truth is that the private sector is not employing available resources. Obama has been very friendly to business, and corporations are operating very profitably. But, instead of investing, they are building up liquidity. Perhaps a Republican victory will boost their confidence, but in the meantime investment and employment require fiscal stimulus (monetary stimulus, by contrast, would be more likely to stimulate corporations to devour each other than to hire workers). How much government debt is too much is an open question, because tolerance for public debt is highly dependent on prevailing perceptions. The risk premium attached to the interest rate is the critical variable: once it starts rising, the existing rate of deficit financing becomes unsustainable. But the tipping point is indeterminate.

The Japanese case

Consider Japan, with a debt-to-GDP ratio approaching 200 percent – one of the highest in the world. Yet ten-year bonds yield little more than one percent. Japan once had a high savings rate, but its current savings rate is about the same as in the US, thanks to an aging and shrinking population. The big difference – that Japan has a trade surplus and the US has a deficit – is not important as long as China’s currency policy obliges it to accumulate dollar assets in one form or another. The real reason why Japanese interest rates are so low is that Japan’s private sector has little appetite for investing abroad and prefers ten-year government bonds at one percent to cash at zero percent. With the price level falling and the population aging, the Japanese consider the real return attractive. As long as US banks can borrow at near zero and buy government bonds without having to commit equity, and the dollar does not depreciate against the renminbi, interest rates on US government bonds may well be heading in the same direction. That does not mean that the US should maintain the discount rate close to zero and run up government debt indefinitely. Once the economy starts growing again, interest rates will rise – perhaps precipitously, if the accumulated debt is too large. But, while that would choke off the recovery, premature fiscal tightening would do so sooner. The right policy is to reduce imbalances as quickly as possible while minimizing the increase in the debt burden. This can be done in several ways, but the Obama administration’s stated goal – halving the budget deficit by 2013 while the economy is operating far below capacity – is not one of them. Investing in infrastructure and education makes more sense. So does engineering a moderate rate of inflation by depreciating the dollar against the renminbi. What stands in the way of this agenda is not economics, but misconceptions about budget deficits that are being exploited for partisan and ideological purposes.

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Corporate Social Responsibility

Swinging success

Wynn A and Sands I teams take the big prizes at the fourth Annual Macau Business Charity Golf Tournament - charity the real winner he fourth Annual Macau Business Charity Golf Tournament was a huge success. Organisers were forced to postpone the event for a week as Typhoon Megi threatened, but played out the second round at the end of October. The contest lasted until the last hole of the second round, but eventually team Wynn A, made up of Dave Williamson, Nathan Fisher and Ryan Beauregard, was the net score tournament winner. They won the right to nominate a charity to forward their HK$100,000 winnings to and chose the Cradle of Hope Association. An ecstatic Marjory Vendramini received the check from the hands of the winners. The gross score tournament winners were Gunther Hatt, Cliff Chan and Ben Toh, of the Sands I team. They nominated Caritas’ Lar de Nossa Senhora da Penha as their beneficiaries. The Cradle of Hope Association and Caritas’ Lar de Nossa Senhora da Penha both care for children who have been abandoned, neglected or are at risk from physical or psychological abuse.

Team Asian Game Eagles going strong

Supporting partners While long-term partner Melco Crown Entertainment continued its support as an event partner in this year’s tournament, they were also joined by Star City, owned by the Australian gaming and entertainment operator Tabcorp. Another event supporter was the host of the first round of the tournament, Caesars Golf, and The Westin Resort, Macau, the venue sponsor for the gala dinner and awards after the second round. Trophy and prize sponsors included East Executive Search, Galaxy Entertainment, MGM Macau, Sands China and SJM Grand Lisboa. Beer Tech, Coca-Cola and Seapower Trading were counted among the event supporters. Team Silver Heritage looking good!

Terry Clifton and Jonathan Lam, from the SKSupport team NOVEMBER 2010

The Helping Hand Group team seems to be in need of a hand

165 Round One | Caesars Golf Macau | 165

José Carlos Angeja, from Macau Business I team. See that big abyss over there? Try to avoid it

The Business II team having fun

No cheating, FaFaFa boys!

Hey, where did all the players go?!

Chatting on job, Grand Lisboa team boys?! Let’s play ball!

Hey, where are Wynn B team’s clubs?!

Players try to putt using an umbrella or a tennis ball

That’s a driver! NOVEMBER 2010

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Corporate Social Responsibility

Record numbers Thirty teams representing the cream of Macau’s socially responsible corporate citizens took part. Player count wise, the event registered a growth of around 250 percent. This year’s patrons came from all corners of the business community, from banking institutions to gaming and entertainment operators and suppliers, and from professional service providers to building contractors. Aristocrat, Aruze, BNU, Caesars Golf Macau, Coca Cola, DogOneLife, Helping Hand Group, IGT Asia, Leighton, MBSK Events, MGM Macau, Melco Crown Entertainment, Galaxy Entertainment Group, Sands China, Star City, SJM, Shuffle Master, Silver Heritage, SKSupport, Walker Digital Gaming, and Wynn Macau were among the socially responsible corporate patrons who wielded their clubs for charity. For the first time, the tournament was divided into two rounds. The first leg took place on the fairways of Caesars Golf Macau on October 15, while the second round took place a fortnight later at the Macau Golf and Country Club. The golf at Caesars’ was more about entertainment and having fun, building the players’ competitive spirit for the second round. Challenges such as teeing off and putting with a tennis ball or an umbrella, and teeing off with an ice hockey stick kept things lively.

James Geere, from IGT Asia team, concentrates before a great shot

Everyone is a winner Besides the two monetary awards, there were several trophies handed out. With this year’s two rounds system there were double the number of winners. The Asian Game Eagles’ team won the Caesars’ round, getting their hands on the trophy presented by Sofitel. Johnny Senna Fernandes, Eason Lee and Jacky Cheang were the best team that day, with a total gross score of 66. The Star City team were the most consistent on the greens, as William Eaton, Ng Chi Un and Ip Wai Peng claimed the Sands China Best Performance Team Trophy. Iain Carlyle, from DogOneLife won the StarWorld Longest Drive Trophy for the first round. Jonathan Lee, from Greatest Caesars’ team, was awarded the StarWorld Nearest to the Pin Trophy. Last but not least, team SJM, composed of Jack Ung, Timmy Tang and Bernard Yip, won the Sands China Putting Contest Award. Going into the second round results, the day’s winners were Gunther Hatt, Cliff Chan and Ben Toh, from Sands I team, grabbing the Four Seasons Trophy. That performance eventually helped them to claim the gross score tournament title. Curiously enough, the Grand Lisboa boys – Alastair Dick, Lindsay Stewart and Denis McDowell – grabbed the SJM Best Performance Team Trophy. In the second leg, the putting kings were Coca-Cola’s Pedro Cortés, Lino Carcoforo and William Eaton. They claimed the SJM Putting Contest Trophy. Still on putting, the StarWorld II team of Elmen Lee, Johnny Xue and Y. M. Choong and the FaFaFa team of Dave Punter, Terry Jursa and Ian Wood landed each of their players a spot in a putting clinic. Shuffle Master’s Kamilah Wong hit the longest drive and was all smiles when she received her MGM Macau Longest Drive Trophy. Jacky Cheang, from the Asian Game Eagles team, took the MGM Macau Nearest to the Pin Trophy for the second round. Macau Business I, with José Angeja, Larry Pretyk and Paulo A. Azevedo on the team, grabbed the tournament’s Macau Business SK Events Best Overall Performance Trophy.

The Coca Cola team showing their good mood

Macau Business II team in action

That’s it boys: team effort does the trick! NOVEMBER 2010

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Looking good, Shuffle Master team IGT Asia team getting pumped up

Alice Costa, from MBSK team, judging the best sentence for the ball

The Macau Business I team

Wynn B team

The Grand Lisboa team

Laughs were a constant during the tournament

Coca Cola team’s Pedro Cortés waiting for some inspiration David Punter, from Team FaFaFa. Which way to the fairway?

Hitting like a pro! NOVEMBER 2010

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Corporate Social Responsibility

Open hearts

Charities are almost half a million patacas better off after the fourth Annual Macau Business Charity Golf Tournament Gala Dinner

roving to be more than just a golf event, the fourth Annual Macau Business Charity Golf Tournament continued its charity fund-raising activities at the gala dinner that closed the event. Golfers and non-golfers alike bid for memorabilia from the world of sport and music, including a Rafael Nadal’s signed tennis racquet and a FIFA World Cup champions Spain football jersey signed by all players. Other highlights included a 2008 F1 World Champion Lewis Hamilton-signed helmet, a Bruce Springsteen signed Fender guitar and a two-piece photo set signed by Lady Gaga. According to preliminary figures, the total amount of money raised this year is likely to be about MOP500,000. The evening was crowned by a lucky draw of prizes from supporters such as Sands China, Sofitel, Wynn Macau, Mandarin Oriental, MGM Macau, The Westin Resort, Galaxy – Starworld, Grand Lapa Hotel, Caesars Golf, SJM Grand Lisboa – Don Alfonso, and Melco Crown Entertainment.

Team Wynn A turns over their HK$100,000 winnings to the Cradle of Hope Association

Sands I team forwards their HK$100,000 winnings to Caritas’ Lar de Nossa Senhora da Penha

Eason Lee, Ben Toh, Luis Pereira, Gunther Hatt and friend The event’s pre dinner cocktail

NOVEMBER 2010

Paulo A. Azevedo welcomes guests: Mary Ho, Cristina Lobo, Li Wei and Fátima Hung

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Michael Au delivers the SJM Best Performance Team Trophy (second round) to the Grand Lisboa team

Lindsay Stewart delivers the SJM Putting Contest Trophy (second round) to the Coca Cola Team

Luis Pereira delivers the Macau Business SK Events Best Overall Performance Trophy to the Macau Business I team

Gunther Hatt delivers the Sands China Best Performance Team Trophy (round one) to the Star City team

Gunther Hatt delivers the Sands China Putting Contest Trophy (round one) to the SJM team

Lytton Ao delivers the MGM Macau Nearest to the Pin Trophy (second round) to Jacky Cheang, from the Asian Game Eagles

Stefan Kuehn delivers the StarWorld Longest Drive Trophy (round one) to Iain Carlyle, from DogOneLife team

Team Asian Game Eagles wins the first round of the tournament, getting their hands to a trophy presented by Sofitel

Lytton Ao delivers the MGM Macau Longest Drive Trophy (second round) to Kamilah Wong, from the Shuffle Master team

Jonathan Lee, from Greatest Caesars team, wins the StarWorld Nearest to the Pin Trophy (round one)

Tessa Carruthers, her mother-in-law and David Punter The Telford Macau/Hong Kong representatives

Stefan Kuehn, on behalf of Four Seasons, delivers the trophy to Sands I team, which won the second round NOVEMBER 2010

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Corporate Social Responsibility

Glenn McCartney tells a joke about golfers

Team Wynn A celebrating their victory with friends

The Shuffle Master patrons getting ready for a good time

SJMâ&#x20AC;&#x2122;s Michael Au wins Melco Crownâ&#x20AC;&#x2122;s Culinary Delight prize

Luis Pereira, on behalf of Mandarin Oriental, delivers the award to Gary Wadsworth NOVEMBER 2010

The Asian Game Eagles table

Luis Pereira, on behalf of Grand Lapa, delivers a Spa treatment to David Punter

Ada Chan delivers the Westin Resort prize to Rafael Gama

James Geere wins a weekend foursome round at Caesars Golf Macau from Li Wei

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A Nelson Mandela signed piece was among the items auctioned for charity

Faye Ho gets a special surprise: a birthday cake Feeling the thrill of the live auction!!

The crew from Walker Digital Gaming poses for the shot

Paulo Barbosa wins a fine dining experience at Grand Lisboaâ&#x20AC;&#x2122;s Don Alfonso

JosĂŠ I. Duarte wins the Galaxy prize

The ladies at the Aristocrat table brighten the evening

Luis Pereira, on behalf of Sofitel, delivers the prize to a lucky winner

Katherine Liu delivers the Wynn Macau award to Xenia Choi

Davidoff was the cigar patron of the evening

Lytton Ao delivers the MGM Macau award to Willy Eaton

Gunther Hatt delivers the Sands China prize to Reddy Leong NOVEMBER 2010

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Entertainment

GOLFING CALLING CARD After holding golf tournaments in Argentina, Portugal, Spain and Switzerland, the Swiss town of Lugano chose Macau to start its China Golf Challenge. The event is a great way to promote this beautiful city of 55,000 inhabitants in the Italian-speaking canton of Ticino. According to organiser Ricardo Pedrini, the tournament held on September 29 also showed Lugano and Macau “are working hard for a stronger involvement in the future”.

The winning team will participate at the international final at the Golf Club Lugano in September next year NOVEMBER 2010

The team of runners-up won a three-night stay at the Hotel Palácio Estoril and a further two nights at Hotel Dom Henrique Porto, both in Portugal

173 RICARDO ANDORINHO BUSINESS DEVELOPER | MB INTELLIGENCE CONSULTANCY LIMITED (“MBI”) andorinho@mb-intelligence.com

Pulling a MacGyver ccording to the website cracked.com, the Portuguese word ‘desenrascanço’ is one of the ten coolest foreign words the English language needs, and it means “pulling a MacGyver”. If you have ever seen an episode of the 80s-TV adventure series named MacGyver, you already have a clear picture of what ‘desenrascanço’ is. In this American TV series, we have the opportunity to see how effortlessly MacGyver fishes car keys out of the toilet with a coat hanger, or how rapidly he takes down a helicopter with a fan, a dough-scraper, and some duct tape. In fact, this miracle man seems to be able to handle any kind of situation with just what he has around him and his Swiss army knife. Generally speaking, ‘desenrascanço’ is the art or ability to, at the last possible minute, strike out a solution to an urgent problem with scarce, or no resources at all. Portuguese people are known to be able to find these kind of last-minute solutions. So, what do you need to ‘pull a MacGyver’ or, to use the Portuguese term, what do you need to be known as “desenrascado”, someone who has the ability to find solutions to difficult problems at the last minute? In our opinion, you don’t need real weapons, but you certainly need to make use of your mind, your creative imagination and, perhaps… a Swiss army knife. If ‘Swiss army knife’ plus ‘use of your mind’ plus ‘use of creative imagination’ equals ‘pulling a MacGyver’, and assuming that you have, or you know where to buy a Swiss army knife, and that you use your mind on a regular basis, creative imagination should work as the unknown factor of the equation.

How to be ‘desenrascado’? Some might say that creativity or creative imagination is an inborn ability usually found in people that use the right side of their brain more. It is a fact that right-brained people think and learn in visual terms and that they don’t memorize well and need to visualize a picture so that they can recall facts. But we tend to disagree that creative ability is exclusive to right-brained individuals, or at least that it is an inborn ability. Recent medical research proves that neurons can be created at any time and that the human brain can be reprogrammed at any age. Therefore, we believe that you can start to develop your mind and abilities, including your creative imagination, whenever you want to. But how can we define this ability? Or, more importantly, how can we develop creative imagination? Creative imagination is the power to envision a future result, to create something in your mind and to solve problems in a synergistic way. Creative imagination enables you to write your personal mission statements, goals, or simply plan a meeting without the conditionings that ground people to think small.

Consequently, this endowment empowers you to pursue your wildest dreams and goals and to fully realize your personal mission, even in the most challenging circumstances.

A word of advice Since creativity is directly linked to positive thinking, psycho cybernetics, the magic of believing and neurolinguistic programming, we would like to challenge you to exercise your mind according to the so-called “Blue-Sky thinking”. The aim is to imagine that there are no obstacles, that there is nothing clouding your mind or conditioning you to follow a particular dream or goal. So, visualize yourself as the master of your own destiny, or as someone that was born to be the happiest person on Earth. Then, just write down the things you envision. As to enhancing creativity in your family or within your organization, here are some tips: 1) Think ahead; 2) Ask “why” and “what if” more often; 3) Value different views from others; 4) Disentangle yourself from your conditionings; 5) Motivate discussion; 6) Suspend judgment: sometimes the most absurd idea is the one that leads you to the most adequate solution or moves you beyond the attainable; 7) Be optimistic; 8) Laugh as it lifts enthusiasm and improves communication and openness; 9) Invest your time and energy until you reach your goal. If you are a MacGyver enthusiast, or if you just admire the Portuguese people for their ability to be ‘desenrascados’, just follow our tips! With the formidable power of creative imagination and through visualization, you will start to conceive possibilities way beyond your direct experience that will help you reaffirm and realize your goals. NOVEMBER 2010

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FLAGGING REVOLUTION The monarchy made a comeback in Portugal on October 5, the day marking the centenary of the founding of the Portuguese Republic. Somebody, or some bodies, replaced the Portuguese national flag in the Macau consulate’s garden with the old flag of the Portuguese royalty. The switch was made under the cover of darkness and it is unclear who was responsible, although we hope investigations are ongoing. Frozen Spy is worried. Does this mean Macau is overrun with Portuguese revolutionaries? Will they extend their action to politics here? Is our much talked about social harmony at risk?

CHUI: MAN OF THE PEOPLE Chief Executive Fernando Chui Sai On visited the northern portion of the Macau Peninsula last month to collect views on how to improve residents’ quality of life. It was part of the consultation activities held in the lead-up to drafting the Policy Address for 2011. The address will be delivered later this month. Quite possibly the last people Mr Chui wanted to consult were a handful of Macau’s most outspoken political activists. They gave their views openly too, chanting “Down with Chui Sai On”. We can report, however, there was not much of a dialogue, as Mr Chui’s security staff immediately took control of the situation. Frozen Spy would like to know if Mr Chui took note of the vociferous opinions and put them to good use.

CHUI: MAN OF THE (VERY FEW) PEOPLE The chief executive is far from being a natural when it comes to mingling with Joe Average from Macau’s poorer districts. That may have had something to do with his decision to hold several consultation sessions in the lead-up to drafting the Policy Address for 2011 in five-star hotels. The sessions were cosy affairs, with more than the usual political chitchat – meals and wine were included. Where else would you discuss rising inflation, skyrocketing property prices and the widening income gap than over an expensive meal at a luxury hotel? The consultations were for the elites only. Frozen Spy, unfortunately, wasn’t invited.

NOVEMBER 2010

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PRESS FIGHTS Just last month, a government-appointed workgroup offered several suggestions on changes needed at public broadcaster TDM. The group was set up following complaints that TDM news reports were biased towards the government. The same freedom fighters who called out TDM were silent on the (lack of) coverage given to jailed pro-democracy activist Liu Xiaobo winning the Nobel Peace Prize. Macau’s Chinese-language media largely ignored the win. The story made headlines in Hong Kong. Coverage in Macau’s biggest-selling daily newspaper, Macau Daily News, consisted of the official Xinhua news agency report, which stressed Beijing’s opposition to the award. In 2007, the Macau government granted a valuable piece of city land to Macau Daily News at a very low price – MOP28.5 million for a 2,000 squaremetre plot. A new headquarters is being built there. One of the reasons given to justify the grant was “to increase the quality of services provided to readers and to increase the competitiveness of Macau’s informative media”. China Daily, be careful!

WE HATE TO SAY WE TOLD YOU SO In the last issue of Macau Business, Frozen Spy stressed the need to improve civic-mindedness among police officers. It has since been alleged that an off-duty officer drove a police car without permission last month and crashed it into the rocky shore near the Sai Van Bridge. One detail: It has been alleged he was drunk at the time

JOIN THE FORCE

DOUBLE HARMONY

It seems Macau’s security forces are in need of hundreds of extra cops. We don’t doubt it, since the only ones easily found on the beat are parking ticket inspectors. Being so highly visible and hard working, perhaps they are paid more than their colleagues? Any candidates eager to join the elite of the penand-paper brigade?

Macau is predominantly a Chinese society and harmony is a treasured feature of the social landscape. Frozen Spy has no problem with that but sometimes the emphasis on harmony is ridiculous. A government press release last month began with the Secretary for Security “harmoniously” welcoming representatives from the construction machinery sector to a meeting. Frozen Spy wonders what happens to those who are not “harmoniously” welcomed.

A MAN OF MANY TALENTS

HERITAGE RUBBISH

The artistic director of the Macau International Music Festival is a good artist and an even better businessman. According to Portugueselanguage daily Hoje Macau, Warren Mok has hired himself as a festival artist ten times in the past decade. His agency, Bel Canto Global Arts, headquartered in New York, has sent artists to the festival 29 times in the same period. That is sweet music, indeed!

Macau is so unique that its rubbish might soon make it onto a UNESCO list. Stuck for locations for its waste collection huts, the always scientific Civic and Municipal Affairs Bureau chose the Mandarin’s House as the best spot. Just when you thought nothing else could surprise you...

NOVEMBER 2010

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November 2010

index

7 Luck Casino

www.7luck.com

Aristocrat

Page 12

www.aristocratgaming.com

Aruze Gaming

Page 07

www.aruzegaming.com

Bally

Page 09

www.ballytech.com

BNU

Page 23

www.bnu.com.mo

CEM

Page 82

www.cem-macau.com

Galaxy Entertainment

Page 21

www.galaxyentertainment.com

Macau Cultural Centre

Page 139

www.ccm.org.mo

Macau Daily Times

Page 149

www.macaudailytimes.com.mo

Macau Post Office

Page 86

www.macaupost.gov.mo

Melco Crown Entertainment

Page 19

www.melco-crown.com

MGM Macau

Page 15

www.mgmmacau.com

MGTO

Page IBC

www.macautourism.gov.mo

Morton’s The Steakhouse

Page 27

www.mortons.com

Our Dental Clinic

Page 29

www.ooioc.com

PokerStars Macau

Page 02

www.pokerstarsmacau.com

Sands China

Pages 04-05

www.sandschinaltd.com

Shuffle Master Asia Ltd

Page 01

www.shufflemaster.com

SJM

Page 33

www.sjmholdings.com

Sports Development Board

Page 141

www.sport.gov.mo

Star City Hotel & Casino

Page IFC

www.starcity.com.au

University of Macau

Page 53

www.umac.mo

Zung Fu Motors – Mercedes

Page 03

www.zungfu.com.mo

NOVEMBER 2010