MB 81 | January 2011 by Macau Business

JANUARY 2011

Economy & Finance 24 At the feet of giants Europe’s banks are losing their toehold in Macau 26 Revised, still rising Anomalies in the way the GDP is calculated reviewed 28 Tightening the net Macau has a new social security system 30 The neighbour’s backyard Hengqin Island may provide a solution to Macau’s lack of land

Transport 36 Rail rolls out Mitsubishi Heavy Industries wins tender for the city’s light rail network

Politics 39 Memories are made of this General Vasco Rocha Vieira publishes his memoirs

Property 42 Market watch Macau’s housing market enjoyed a golden 2010 47 Rate flip on flats Government drops plan to tax leased and unleased apartments at the same rate

JANUARY 2011

MB Report 50 All in good health The private healthcare sector is growing at a clip

CEO Interview 60 James Murren MGM Resorts International’s boss talks about the future and the obstacles the company must overcome

Gaming 68 Billions race A year of record revenues ends with a new monthly record 71 Stock watch Casino stocks listed in Hong Kong were among the top performers last year 73 Strategic plan Stanley Ho seems to be finally preparing to retire 74 Mud-slinging and missteps Challenging December for Las Vegas Sands and its Macau subsidiary 75 There’s no holding ’em High-stakes poker in Macau is skyrocketing 76 ‘Wii, not Tetris’ Slot manufacturers are boosting their budgets for research and development 80 Raising an eyebrow Singapore exclusion requests arouse concerns

JANUARY 2011

Business 84 Unconventional wisdom Hovione appoints Macau resident to head its operations in the city 85 Sales on tap Kohler opens a showroom in Taipa

Technology 88 Not-so-tech savvy More than half of all local companies make no use of IT

Lifestyle 90 Zhuhai Ho! Zhuhai relaxes restrictions on Macau yachts 92 No ordinary 19th Caesars Golf’s new clubhouse opened last month 93 Star struck Macau got two fresh stars in the 2011 edition of the Michelin guide

Essential 97 Chinese New Year Your guide to indulgence

Memory 116 In Babylon Half a century ago, thousands of Macanese were working in the financial sector in Hong Kong

Corporate Social Responsibility 120 The gift of giving How generous are we? JANUARY 2011

Entertainment 124 Three... Two... One... Macau welcomes 2011 in style

Opinion 8 From the publisher’s desk Paulo A. Azevedo 11 Editorial Emanuel Graça 27 The Dutch curse José I. Duarte 38 Missed connections Keith Morrison 48 Le défi chinois Karl P. Sauvant and Ken Davies 78 Conversations between Macau and Singapore: planning, gambling and government Lee Kah-Wee 83 The risk tsunami Michael Spence 87 A survival strategy for the eurozone Nouriel Roubini 96 New Year’s hope against hope Joseph Stiglitz 115 The fallen heroes of the financial crisis Jean-Paul Fitoussi 123 Urbanizing China Fan Gang 125 The emerging-market growth engine Nirupama Rao 126 Last Christmas I gave you my heart Ricardo Andorinho

JANUARY 2011

All that’s missing now is how to govern FINALLY FREE FROM EDMUND HO HAU WAH’S shadow, the current chief executive has run out of excuses as to why he cannot govern. The reconfirmation of his power by Beijing last month leaves no room for doubt. This government can no longer be one of continuity, despite the fact that there is little to change in regards to defining a political strategy. The intention is for gaming to promote economic diversification around itself. In other words, proceeds from gambling should continue to power the economy and also provide for the development of a healthy, integrated tourism industry. So far, as we all know, there’s nothing new in that. Only the most optimistic observer would dream it was possible to take economic diversification any further. The manufacturing sector is dead and buried. The finance sector will never really be ours and will grow ever more dependent on our neighbours. However, Fernando Chui Sai On and his new strongman for gaming, the Secretary for Economy and Finance Francis Tam Pak Yuen, have shown that the way agreements were once reached is no longer valid. In other words, no more “build first and we will take care of the details and sign the contracts later”. This is a new reality, and the first message that more restraint in action and behaviour is needed was sent to Sheldon Adelson, who lost lots 7 and 8. There are even some who say that the same should happen to lot 3, which is still in the pipeline, despite the memory lapses that many people seem to be suffering from. JANUARY 2011

In the best Chinese tradition, the government took with one hand and gave with the other, coming closer to allow the sale of the Four Seasons apartments under a co-operative management scheme. Most of the media failed to realise what that meant. The apartments will not be sold individually, something to which the government had never agreed. Instead, investors will be able to buy shares in the company that owns the apartments and the shareholders can then use the flats. It is a different legal framework with the same practical result: an injection of capital for Mr Adelson, using a route so typical in Macau politics to overcome an impasse, by going around the denial and any legal obstacles. Still, the message was delivered through the limits imposed on table numbers and the commissions to be paid to junkets, all to satisfy Beijing’s wish for some sort of control over gaming growth. Perhaps Mr Chui wants investors to understand something else; that restraint is welcome in both words and actions, and that payback will be swift and decisive for those who stray from the path. There is no doubt in my mind that the chief executive will manage to impose this new behaviour on foreign investors but what about the local tribe leaders? I believe a quite different tune will be played here. Even if he wanted to impose his will, the chief executive does not have a capable government. For something to be done, the entire public service structure would have to be swept up by a revolution in thought. Within this administration there is deficient ethical and moral formation, which prevents

It is not for a lack of money that Macau is not being developed. Obviously, there has never been as much money as there is now. It is not being spent because there is an absence of ideas, insight and competence

any good policy from achieving its desired results. It is made worse by the fact there are some officials who are still part of the administration despite having proven themselves to be incompetent on countless occasions. Naturally, that leads us to ask: why have they not been replaced? It is here where the chief executive loses points. This is the old Macau, with lots of rhetoric and little action. The results are in plain sight. Macau still relies on the performance of the gaming sector and on the galloping revenues that make the world turn to watch in amazement. However, seldom do we see measures to match these successes with the integrated development of the city. Until last September, nine departments had not spent a single cent of their annual investment budgets. There could not be a worse sign. It is not for a lack of money that Macau is not being developed. Obviously, there has never been as much money as there is now. It is not being spent because there is an absence of ideas, insight and competence. You need look no further than the city’s traffic management. What really affects traffic is the lousy training that drivers get and their awful driving habits. There is no driving in Macau, just people in cars, buses and motorbikes trying to get from one point to another. It is just people going. Driving in the right lane, not signalling and drivers doing the worst things possible without anyone bothering to stop this general stupidity. What are the traffic police doing? Nothing. Or rather, they keep busy issuing parking fines as if they worked for the private company that holds the monopoly on parking. Since they are unable to spawn any decent ideas or muster the will to terminate this endemic bad training, the authorities choose to install radars and cameras. Let the atrocities continue, just at low speed. It is utterly laughable. And that’s the way Macau goes; without profound measures that might promote the city’s development as a whole but that would require inter-departmental coordination. Since there is no resolve to recognise the fragility and limits of our capabilities by bringing

experts in from abroad, taskforces are renewed with the same old faces. What remains constant is the eternal hope that these same faces will be able to finally make a decision once they have moved to a new taskforce. It is a game of musical chairs that will keep us all entertained until the day when an illuminated and powerful soul arrives and says “enough”. Someone who will disband the hindrances and terminate the privileges of cousins and friends. Who will execute such a task, which deserves to be performed well?

And speaking of pressure... We understand the aspirations of Angela Leong On Kei, Stanley Ho Hung Sun’s fourth wife, to start construction of her amusement park as soon as possible. During the press conference to introduce the project, she appealed to the press and the wider population to pressure the government so that work could begin as soon as possible. While it is an understandable tactic, I cannot help but disagree. If there is a need for pressure, it should be directed towards understanding the full details of all the strange steps that have been involved in this enormous plot of land. We should know the whole story since those 200,000 square meters were given to Macau Thematic Park and Resort SA, a company with strong ties to the brother of the current chief executive, and how – without the land ever being used – the firm came to rest in the hands of Ms Leong. These details are yet to be explained. They should be. It is not to suggest that there was any irregularity, but if Mr Chui wants his will to prevail and to create a more transparent government, there is nothing like practicing in your own “house”. By the way, how is it possible for the government to provide land to the Macau Airport Company and that for that company to then sell it, swapping its planned expansion for a billionaire’s residential project? And why on Earth did Steve Wynn pay US$50 million (MOP400 million) to middlemen for a plot in Cotai that was bought from the government? These and many other stories that are linked to the real treasure of Macau – its land – should be explained. Only then will we all be in favour of pressing for development, as soon as possible. JANUARY 2011

JANUARY 2011

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

Sleeping through the alarm

The government needs to be more businessfriendly and transparent when dealing with casino operators’ requests. For a business, the bigger problem is not a swift “no” but an interminable “maybe”

ANOTHER YEAR HAS PASSED AND, ONCE AGAIN, a new casino gross gaming revenue record has been set in Macau. The city posted a spectacular growth rate above 50 percent, showing strong resilience in the face of continuing global economic ructions. More importantly, Macau demonstrated that the liberalisation of gaming in Singapore was not a threat to its success. Both cities were able to thrive, without a significant negative impact here. As noted by several analysts, the trend is set to continue in the years to come. For instance, PricewaterhouseCoopers estimates that Macau’s casino gross gaming revenue will double in the next four years. With more and more mainland tourists flocking to Macau, that is the way things seem to be going. However, size is not the only thing that matters. One must not forget that in its first full quarter in operation, Marina Bay Sands in Singapore was already the most profitable property of Las Vegas Sands, having surpassed The Venetian Macao. For any company, that is what matters in the end. There are two major reasons why Singapore is more profitable than Macau: lower taxation and less – or officially, no – junket VIP business. Having been an established gaming market for decades, Macau might not be expected to change its fundamentals easily. There is no doubt that VIP business will still be a major source of casino revenue in the years to come. Junkets will also maintain their essential role, as they allow casinos to reduce bad credit risk and are needed to facilitate the money flows in and out of the mainland. On the other hand, although it would not adversely affect the government’s finances much, a cut on gaming taxes is unlikely. While inflation persists and a significant part of the population has yet to feel the benefits of the gaming boom, such a measure would be political hara-kiri. But Macau’s basic business model is the same as it was five years ago. Of course, slots have expanded, as has the

mass market, and some casinos are chasing direct VIP business. But overall, things are still pretty much the same.

New reality

That is not good. Singapore’s entry should have been a wake-up call and the first to react should have been the government. From an operator’s standpoint, Singapore is a much better bet. Look at the benefits it gives Sands: higher profit per property and nobody taking back land in which it has already been allowed to invest more than US$100 million (MOP800 million). The Macau government needs to wake up fast to this new reality, as it is the major net beneficiary from gaming here. First, it needs to be more businessfriendly and transparent when dealing with casino operators’ requests. For a business, the bigger problem is not a swift “no” but an interminable “maybe”. Second, casinos are entitled to ask where all their tax money has gone. If part of the population can complain that the liberalisation of the casino industry has made them no better off, the gaming operators can ask what has happened to the light railway system they were promised, or the international airlines that were supposed to be flying to Macau, or the pedestrian tunnel to Zhuhai. For the time being the Macau government has the upper hand because the territory holds a quasi-monopoly on the supply of Chinese players. Even if casino profit margins are lower than in Singapore, the high volume of business offsets this and still makes the market here very attractive. But Chief Executive Fernando Chui Sai On and his team should look ahead and search for more sustainable longterm solutions that will please all parties. Otherwise, with more Asian jurisdictions considering legalising casinos, gaming operators here will start thinking twice before pouring more money into Macau, especially into the non-gaming assets that the government wants them to invest in. JANUARY 2011

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VOL.1 Nº81

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JANUARY 2011

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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 MOP 8 to US$1 for the purposes of illustration only.

JANUARY 2011

We Deliver Decision Makers

JANUARY 2011

Edmund Ho gets medal Former chief executive to receive Macau’s highest award he Macau government has announced the conferment of the Grand Lotus Medal of Honour to former Chief Executive Edmund Ho Hau Wah. The award giving ceremony will be held later this year. Mr Ho, who is currently the vice chairman of the National Committee of the Chinese People’s Political Consultative Conference, said that the award was not only his, but for all those who contributed to the development of the Macau SAR during its first ten years. He stressed that he will continue to keep an eye on the progress of the territory and to support his successor at the helm of the SAR, Fernando Chui Sai On. Besides Mr Ho, 37 other individuals and entities have been awarded several other decorations, in recognition of their outstanding achievements, contributions and distinguished services rendered to the Macau SAR. Businessman António Ferreira received Macau’s second highest award, the Golden Lotus Medal.

New rules for MICE incentives The Macau Trade and Investment Promotion Institute (IPIM) has revised the regulations of incentives for local companies and non-profit making organisations to participate in exhibitions and trade fairs. The goal is to enable applicants to have a better understanding of the application procedures, their respective rights and obligations as well as getting the approval results in a timely manner, IPIM announced. The new regulation is already in place and introduces a series of facilitation measures, according to IPIM.

Traffic jam ahead At the current pace, Macau will have 310,000 vehicles in 2020, compared to the 190,000-plus currently, Taiwanese consulting firm THI Consultants estimates. According to the company’s projections, the average speed during rush hours on Macau Peninsula will drop from the current 15 km/h to 10 km/h, reaching an astonishing 5 km/h on some of the most used roads, which is almost the same as going by foot. Greenhouse gases emissions will jump to 407,000 tons by 2020, more than double that registered in 2005. The THI Consultants study was ordered by the government to help Fernando Chui Sai On’s team draft a new policy for transport in Macau.

Panda house over-budget The 3,000 square-metre pavilion at Seac Pai Van Park built to host the pair of giant pandas offered to Macau by the central government cost MOP10 million (US$1.25 million) more than planned. The final bill was MOP90 million and the price increase was justified with a 60-metre relocation, suggested by panda specialists. The pair of giant pandas, named “Hoi Hoi” and “Sam Sam” in Cantonese, were delivered to Macau last month from Chengdu. The price of the ticket to the panda pavilion, which is expected to open to public in the coming weeks, will be set at no more than MOP50, according to the government. JANUARY 2011

JANUARY 2011

Fernando Chui Sai On and Zhi Shuping

Price pressure Fernando Chui Sai On seeks to expand commodity supply from mainland to tackle inflation he government will work closely with relevant departments of China’s central government in order to expand and stabilise Macau’s commodity supply from the mainland, the Chief Executive

Fernando Chui Sai On said last month. With an expanded and steady commodity supply, the government can further adopt measures that help stabilise the wholesale and retail prices of various commodities, Mr Chui said.

Last month, Mr Chui visited several central government agencies to discuss this issue. He also met with the Minister of the General Administration of Quality Supervision, Inspection and Quarantine, Zhi Shuping. Mr Zhi said that minimising the number of intermediary agencies could lower the price of imported food, besides expanding the network of food exporters. Mr Chui stressed that the government was seriously concerned about the impact of inflation hikes on local residents. The Composite Consumer Price Index for November 2010, Macau’s main indicator for inflation, increased by 3.93 percent year-on-year. For the 12 months ended November 2010, the average Composite CPI rose by 2.54 percent from the preceding period.

Google it

Macau and Russia closer

Google Maps has been added to the Consumer Council’s website as a function to help consumers when checking information about its “Certified Shops” and “Adherents”. Consumers are able to see the type of business, location and other information by clicking on the list on the website. As of December 2010, there were 1,379 adherent shops covering most types of businesses in Macau, among which 1,261 shops have already been awarded the “Certified Shop” emblem.

Macau and the Russian Federation are expected to sign a visa exemption agreement later this year. A discussion on the issue was held last month in Macau. Currently, Macau has visa exemption agreements with a total of 86 jurisdictions.

New ferry connection to Hong Kong Ferry services between Macau and Hong Kong’s Tuen Mun terminal are expected to start before mid-April, the neighbouring city’s Marine Department has announced. It will be the third terminal in Hong Kong after Sheung Wan and Tsim Sha Tsui, to provide ferry services between the two SARs. A seven-year tenancy agreement has been already signed with North West Express for Tuen Mun Ferry Terminal. The company will operate a minimum of 14 round trips per week. North West Express still has to obtain operating rights and route permits from the Macau Maritime Administration. Tuen Mun is a town near the mouth of Tuen Mun River and Castle Peak Bay in the New Territories.

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JANUARY 2011

In and out

Thousands of smugglers commute in-between customs in Zhuhai and Macau ore than 8,000 smugglers commute in-between the customs areas in Gongbei (Zhuhai) and Shenzhen and Macau and Hong Kong, according to the General Administration of Customs of China (GACC).

GACC estimates that the smugglers cross the border from three to more than 50 times a day. Goods smuggled are mainly high-tech products small in size and expensive products in short supply. GACC launched a campaign against smuggling in Gongbei and Shenzhen customs in the middle of September. The ministry detected 939 cases in the first month of the campaign, in which goods worth RMB49.88 million and RMB5.01 million in taxes were detected.

Bad reading skills Macau students’ reading skills rank below the international average, according to the results of the 2009 Program for International Student Assessment (PISA), organized by the Organisation for Economic Co-Operation and Development (OECD). Local students ranked between 27th and 30th, scoring 487 points (on a scale from 0 and 600), while the OECD average is 493. The results were better on maths and science: Macau students were above average in these two subjects. The territory ranked between 10th and 12th on the mathematical literacy scale and between 16th and 19th on the scientific literacy scale. A total of 65 countries and regions participated in this study.

Enough taxis

New shopping paradise Macau tourists to Hainan province are now eligible for a tax rebate on purchases. The policy, approved by the State Council, also applies to foreign travellers and tourists from Taiwan and Hong Kong. To be eligible, buyers must buy goods worth more than RMB800 in one day at a single department store in Hainan. Tourists can then apply for a tax rebate of 11 percent of the total price of their purchases. Refunds can be obtained at the island’s two airports. The policy covers the purchase of 21 categories of goods, including garments, footwear, headwear, electronic appliances, and cosmetics.

JANUARY 2011

The Macau government has no plans to authorize more taxis in the city. “We have been monitoring the rate of vacant and occupied taxis on duty for the past two years but there has been no significant change that would show a need for more taxis,” the head of the Transport Bureau, Wong Wan said. Nevertheless, Mr Wong admitted that there are still problems in getting a taxi in some areas of Macau and during rush hours.

JANUARY 2011

Banks highly international

Trade with the mainland up... Trade between the mainland and Macau increased 9.6 percent year-on-year in the first eleven months of 2010, totalling US$2.07 billion (MOP16.56 billion). According to the latest statistics from the Chinese Ministry of Commerce, the mainland’s exports to Macau jumped 18.6 percent to US$1.96 billion. On the other hand, Macau sold goods worth US$110 million to the mainland, a year-onyear percentage drop of 53.5 percent.

... but investment down In the first eleven months of 2010, the Chinese government approved 240 investment projects from Macau in the mainland. The number reflects a year-on-year drop of 7.3 percent. According to official data, the mainland’s utilised direct investment from Macau fell 17.7 percent year-on-year to US$620 million (MOP4.96 billion) during that period.

JANUARY 2011

The proportion of international business in the local banking sector remained high during the third quarter of 2010. At end-September 2010, the share of international assets in total banking assets rose to 85.4 percent from 84.8 percent at end-June 2010, whereas the share of international liabilities in total banking liabilities dropped to 77.1 percent from 78.1 percent. Foreign currencies remained the dominant denomination in international banking transactions. At endSeptember 2010, the share of patacas in total international assets and total international liabilities was 0.4 percent and 1.0 percent respectively.

Forex reserves keep increasing Macau’s foreign exchange reserves amounted to MOP182.2 billion (US$22.78 billion) at the end of November 2010. The reserves rose by 4.1 percent from the revised value of MOP175.1 billion for the previous month. When compared to a year earlier, the reserves increased 25.0 percent. Macau’s foreign exchange reserves at endNovember 2010 represented 35 times the currency in circulation.

Low public investment plan execution In the first eleven months of 2010, the rate of execution of the public investment plan was below 30 percent – just 28.6 percent, according to official data. Recently, the government promised to improve the rate of execution of the public investment plan in the future. From 2007 to 2009, the rates of execution stood at 46.9 percent, 41.3 percent and 46.1 percent, respectively.

Unemployment rate drops slightly Public revenue still rising From January to November 2010, Macau’s total public revenue (not including autonomous agencies) rose by 38.2 percent year-on-year to MOP72.6 billion (US$9.1 billion). The increment was attributable to a notable increase in direct taxes from gaming, up by 56.9 percent. Direct taxes from gaming totalled MOP58.8 billion. Total public expenditure for the same period was MOP30.1 billion, with a year-onyear increase of 15.7 percent. A fiscal surplus of MOP42.5 billion was recorded in the first eleven months of 2010, up by 60.4 percent as compared to the same period last year.

Macau’s unemployment rate for SeptemberNovember 2010 was 2.8 percent, down by 0.1 percentage point over the previous period (AugustOctober 2010). However, the underemployment rate went up by 0.1 percentage point to 1.7 percent. The number of unemployed decreased by about 300 from the previous period to 9,200. Almost 15 percent of unemployed were fresh labour force entrants searching for their first job.

More imported workers Following a trend which started in June, the number of imported workers continued to increase in October 2010. By that time, the total number of non-resident workers in Macau stood at 74,780, up slightly by 255 people in comparison with the previous month. In September 2008, Macau had a total of 104,281 imported workers, but since then the number continually fell month-to-month until it rose back again for the first time in June 2010.

More illegal workers arrested A total of 107 illegal workers were caught in Macau in November 2010, double the number arrested in the previous month. A total of 400 sites and companies where raided by the local authorities, according to a press release from the government.

JANUARY 2011

Economy & Finance

AT THE FEET OF GIANTS Buffeted by difficult economic conditions and the rising might of Chinese banks, Europe’s financial giants are losing their toehold in Macau BY JOSÉ CARLOS MATIAS

JANUARY 2011

25 he influence of European banks in Macau has declined under a twin attack from trying market conditions and financial heavyweights from the mainland, according to a report commissioned by the European Union Business Information Programme and the European Chamber of Commerce in Hong Kong. The biggest loss of ground for Europe’s finance houses was in the commercial and investment banking sectors, while insurers have done well to improve their market share, according to the white paper from consultancy Asian Banker Research. Asian Banker senior director Chris Kapfer said “although asset size remains stable, European commercial and investment banks now face an increasingly uphill battle against mainland Chinese banks”. “They are increasingly marginalised in Macau with diminishing revenue generation, despite a superior performance in productivity and profitability.” Perhaps unsurprisingly, the report says 2008’s global financial crisis had an impact on European financial institutions in both Hong Kong and Macau. In Macau, banks and insurers saw “significant downsizing of their employment pool due to the financial crisis”.

In a market dominated by American giant AIA – with a 30.1 percent market share in 2009 – France’s AXA, ING from the Netherlands, UK’s HSBC Life and Portuguese Fidelidade Mundial have recorded greater revenue growth than their competitors during the past five years. AXA is ranked second in terms of gross revenue with about 12 percent of market share. European insurers’ profit tax contribution declined by 56 percent in 2008 but bounced back the following year. Working back from tax paid, their revenues accounted for 15 percent of market revenue in 2009. Their combined headcount represented 11 percent of the total workforce in the insurance sector. “If we look at insurers, it’s a good play. They are small, very small, but they are doing better as they have been growing steadily over the last five years,” said Mr Kapfer. He says there is room for further growth, particularly as the economy grows. “If Macau really wants to have its strong part as a financial centre next to Hong Kong, why is the industry not growing in terms of employee numbers and asset size?,” he asked.

Profits slump

Good to be king

Between 2005 and 2009, there were six European commercial and investment banks operating in Macau: France’s BNP Paribas, Standard Chartered Bank and HSBC from Britain and Portugal’s Millennium BCP, Banco Espírito Santo Asia and Caixa Geral de Despósitos. The offshore branch of Banco Português de Investimento (BPI) was not included in the list. Between 2005 and 2007, their profits rose steadily, with the combined tax on their profits increasing from MOP23 million to MOP32 million. By 2009, a sharp drop in profits between 2008 and 2009 saw taxes paid to the government plunge to just MOP5 million. In spite of falling profits, European banks increased their headcount. The report explained the seemingly counterintuitive move as a “need to evaluate their business models in anticipation of severe competition in the Macau commercial and investment banking industry”.

Within the report’s analysis of the Hong Kong financial sector, there is a wider scope of financial activities: commercial and investment banking, insurance, hedge funds, private banking, fund management, private equity and brokerages. Hong Kong has offices for 73 of the world’s top 100 biggest banks. In the wake of the 2008 crisis, the bigger European banks became stronger at the expense of their smaller peers. They now yield 47 percent of the market share in terms of assets and 36 percent of all revenue. Of the top 10 commercial and investment banks operating in Hong Kong, HSBC widened its leadership position, while French heavyweights such as Societé General, BNP Paribas and Crédit Agricole emerged as key players. European insurers now account for about 53 percent of industry revenue. Among private bankers it is a similar story. European firms contribute 56 percent of revenues and 60 percent of taxes. In other financial businesses in Hong Kong, such as hedge funds, private equity and brokerages, European companies rank second to United States organisations.

Niche is nice European insurers have had an easier time than the banks. Just four of the 23 insurance companies operating in Macau are European but their influence has grown since 2007.

JANUARY 2011

Economy & Finance acau’s Gross Domestic Product for the third quarter of last year grew 27.1 percent in real terms, spurred “by favourable performance of the tourism and gaming sector,” the Statistics and Census Service said. Meanwhile, following criticism from several quarters, the bureau has revised the way it calculates GDP. It has adopted the chain volume measures in calculating the volume change of GDP, begun using the Composite Consumer Price Index to deflate exports of gaming services and is using the Reference Interest Rate to compile and allocate Financial Intermediation Services Indirectly Measured to different user sectors. The changes have led to revised real growth rates for the first and second quarters of last year, and for all figures from 2000 onwards. The first quarter’s revised figure is 17.2 percent, it was 31.4 percent previously, and the result from the second quarter is now 31.5 percent, not 49.1 percent.

Revised, M still rising The government’s statistics service has revised anomalies in the way it calculates GDP that take some of the heat out of last year’s extraordinary numbers

Double-digit growth

Deposit security plan extended

he government has decided to extend the deposit protection arrangement for an unspecified period. The major provisions remain unchanged, except the maximum amount under protection has been adjusted to MOP500,000 to each depositor in any individual bank. Among a number of measures to tackle the effects of the global financial crisis and maintain the stability of the financial system, the government announced in October 2008 the full protection of all deposits placed by customers with banks operating in Macau until the end of 2010. The deposit protection arrangements cover 95 percent of depositors, according to the Monetary Authority of Macau. The measures exclude offshore banks, structured deposits, pledged deposits, bearer commercial papers and other financial products, such as bonds, stocks and investment funds. JANUARY 2011

Despite the shrinking figures, this year’s growth is still likely to reach a heady 16.3 percent, followed by a 14.5 percent increase in 2012, according to a report by the Economist Intelligence Unit. The December report singles out investment inflows as one of the main drivers. The report also predicts a steady increase in the inflation rate. The report estimates inflation is likely to have reached 2.9 percent for the 12 months just ended, rising to 3.4 percent this year and then stabilising to 3.2 percent in 2012. The estimates do not change the over-riding trend that Macau’s economy will become increasingly dependent on gaming, even as the government says it is trying to push hard to promote economic diversification. Recent data shows an increase in the gaming industry’s contribution to the city’s GDP; from 29.55 percent in 2008 to 32.26 percent in 2009. The increase confirms the gaming sector has the greatest relative importance in calculating Macau’s GDP. In tandem with the gaming sector, the relative importance of the wholesale and retail sector rose 1.5 percentage points to 6.1 percent in 2009, while the hotel sector rose by 0.7 percentage points from 3.7 percent in 2008 to 4.3 percent in 2009.

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

The Dutch curse TOO MUCH MONEY CAN EVENTUALLY BE A BAD THING FOR A CITY OR COUNTRY, AS UNFORTUNATELY SEEMS TO BE HAPPENING TO MACAU ometimes, when thinking about the income generated by gambling and related activities, one is bound to ask: when does a lot of a good thing becomes too much? Those familiar with the field of natural resource economics will know about the so-called Dutch curse or disease. Without going into much detail, let us put it this way: getting great wealth (too fast, too easily) may not always be as desirable as it might sound. Surely, plentiful natural resources from which a high income can be obtained, should afford everyone an increasing wellbeing. But, as the story goes, the existence of such a rich endowment may sometimes (often?) lead to slower than expected development, increased inequality, diminished governance, not to mention increasing levels of sleaze and favouritism. That is what the Dutch are supposed to have learned from the exploitation of their natural gas resources. It comes to mind that there are abundant alternatives and, possibly, more appropriate examples from around the world other than the Dutch, to illustrate such a situation, but that’s how this somewhat paradoxical predicament has come to be known. In fact, one might think of some oil sultanates as good examples of that curse, not too mention bigger and more complex economies. Of course, I’m not implying that Macau is becoming a “rentier” economy, a kind of Sultanate of Baccarat. Certainly, gambling is not an exhaustible natural resource and Macau is not what some cynically might define as a family business with a state flag. And yet...

The abundant money issue

And yet, we may risk contracting some kind of variation of that “disease”. Public revenues are now so abundant that society, in general, and the administration, in particular, both seem to be at pains to decide how to use those resources wisely. As the source appears to be boundless, the temptation for many may be to believe that (almost) all fancies can be accommodated and that all (or most) desires may somehow be satisfied. That is, one may be led to believe and act as if abundant money can in some way dispel the need for careful thought and prudent action. If such a belief was to turn, in practice, into the accepted “gospel”, the administration would become inclined to favour actions and policies that pleased specific social sectors, especially those which might have stronger means for making their voices heard, and give less consideration to the intrinsic merits of any proposals or projects. Admittedly, such an approach might buy some social peace, albeit at times more illusory than real. But that would mean, in plainer terms, that populist approaches to social and economic issues would be increasingly the order of the day, and that government action would come to focus almost exclusively on the current management of the various and sometimes conflicting interests involved. Should that happen, then the levels of wasted efforts

and resources would be likely to increase. In fact, it is the abundance of resources that suggests the need and affords us the privilege of being able to bring in deeper reflection and care into policy making. When the available resources are scarce, urgent and critical matters over which we may have little control, will make use of most of them and leave few opportunities to invest in longer term or more socially significant applications. It is precisely when we become richer that it makes all the more sense to think carefully about the alternative uses of that newly found wealth. But this is an endeavour that requires the willingness to set economic and social objectives that are clearly identified and appropriately weighted, so that reasoned decisions can be made, and sustainable and stable courses of action can be carried on.

New Year wishes

Having these concerns in mind, please allow some modest wishes for the coming year(s) to be spelt here. According to a tradition followed in some parts of the world, at midnight, on the last day of the year, one should eat raisins (twelve as a rule, to be precise) and make one wish with each one. Here are just half-a-dozen wishes for 2011: 1. A strategic analysis will be carried out that identifies various growth scenarios - with their different social and environmental impacts, their expected costs and benefits and highlights the alternative courses of action that each of them will entail; 2. The demographic and labour market policies will be explicitly reassessed based on the findings of the strategic review mentioned above; 3. The overall social security system will be re-evaluated based on expected economic growth and population aging trends, and taking into account alternative migration policies. That resolve for change will extend into the public healthcare domain; 4. The education system will be re-designed from its foundations upward, and will also comprise the issues pertaining to the training and continuous education of the labour force; 5. The rationale(s) for the urban and traffic management policies will be clearly elucidated; 6. Someone will succeed in explaining why it is that any discussion about the evolution of the political system cannot start before some indefinite point in the future. The windfall in our public coffers should allow us to develop a broader and more ambitious vision to deal confidently with these many and complex issues. Now, one may ask, is it likely that we, as a society, will use the available resources sensibly? Or will we become victims of some kind of variant of the Dutch disease? Well, sorry if that disappoints you, but this one here is not about predictions... Meanwhile, for all the readers, regular or occasional, a simple wish on a final lighter note: Happy New Year! JANUARY 2011

Economy & Finance

Tightening the net The new social security system is little different from its former incarnation but is a small step towards defusing a pension time bomb

JANUARY 2011

29 acau has had a new social security system since the beginning of the month. The changes are limited, with no increases in contributions from either employers or employees. But the new system is an improvement on the old one. It covers more people and allows for one-off retroactive payments, so workers are entitled to a full pension when they retire. It also allows the 28,500 people aged 65 or over who were excluded from the system because they had made no contributions during their working lives, to make a one-off retroactive payment, entitling them to a pension from now on. The social security system is compulsory for most employees but not the self-employed or those employed by close relatives. It also does not cover imported workers. At the end of 2009, the social security system had about 260,000 active contributors and 55,500 people received some kind of pension or allowance during the year, most of them retirees. Residents aged 65 and over and those that cannot be gainfully employed because of disability for example, can get a MOP1,700 payment each month from the new system, the same amount as before. The system continues to offer unemployment pay, sickness pay, marriage allowances, maternity allowances and funeral allowances. The system’s primary objective is the alleviation of poverty and the government has always been the main contributor, furnishing more than 80 percent of the system’s income. The government allocates around one percent of its total revenue to the system, plus ad hoc transfers from gambling tax revenue. Employees contribute MOP15 per month and employers MOP30. The government has said this will remain unchanged until at least next year. But it has

acknowledged that there may eventually be increases to ensure the system’s sustainability. According to a report by Watson Wyatt Worldwide, if no changes are made the system’s assets will run out in less than 30 years.

Tiers for fears Sustainability of the system is a major issue, because of the rapid ageing of the population. The United Nations projects that by 2050 Macau will have the oldest population in the world, with 44 percent aged 60 or over – and around a third of these over 80. The retirement age is 65 but people can keep working if they wish to, and there is an option to take early retirement at 60. The new social security system is part of what the government calls the two-tier social security scheme, combining the social security system with a new voluntary central savings scheme, which will be the cornerstone. When the central savings scheme began last year, the government gave each permanent resident aged 22 or over an account with MOP10,000 in it. The owners can make withdrawals only when they reach 65. The aim is to persuade employees and employers to make regular voluntary contributions to these accounts. The government is also considering putting money paid to permanent residents through the cash handout programme into the central savings scheme. This year, the cash handout will be reduced by one third, but an extra MOP6,000 will be injected in each account of the central savings scheme. The scheme is to be managed by the Social Security Fund, which also manages the social security system. The government is set to introduce legislation this year to regulate the central savings scheme’s operations. At the moment, details of the rate of return of the scheme are still sketchy. JANUARY 2011

Economy & Finance

The neighbour’s backyard The government and businesses are increasingly looking to Hengqin Island as a solution to Macau’s lack of land BY FILIPA QUEIROZ

acau and Hengqin Island, which at 106 square kilometres in length is the biggest of the 146 islands in neighbouring Zhuhai, seem to be growing closer and closer, even though a bridge has linked Macau to Hengqin for several years already. First came the announcement that the new University of Macau campus would be built there. Then, the government and its Zhuhai counterpart announced the establishment of the joint Chinese Medical Technology Industrial Park on the island, with construction due to start this year. Now there are plans for further joint projects by Macau and Zhuhai, in the meetings, incentives convention and exhibitions industry and in cultural industries. Several Macau businessmen have

JANUARY 2011

shown interest in investing there. In early 2009, about one third of the more than 100 proposals received by Zhuhai officials for projects to develop Hengqin had come from Macau. Can Hengqin solve Macau’s two biggest problems: a lack of land and the need to diversify its economy? The answer is still unclear but several academics and entrepreneurs, not to mention the government, seem to be bullish. Hengqin has been regarded as an area that Macau could expand into since the days of Portuguese rule. In 2005, the decision was taken to forge closer links between Macau and the island, when Guangdong began encouraging investment from Hong Kong and Macau. But it was not until 2009, after a Las

Vegas Sands project for the island was put on ice, that things began to happen.

Into the jungle First, in June 2009, the Macau government officially announced that the new campus of the University of Macau was going to be built in there. The campus, still under construction, will be connected to Macau by a tunnel. Significantly, the campus will be under the Macau SAR’s jurisdiction and everyone from Macau will be allowed to access it without having to pass through any border controls. Macau’s lease on the land runs until 2049. Then, in August 2009, the central government made Hengqin China’s third “state-level strategic new zone”, after Pudong in Shanghai and Binhai in Tianjin.

“Hengqin Island marks the beginning of a new kind of cooperation between Macau and Zhuhai, with coordinated direction,” says economist Henry Lei “Hengqin Island marks the beginning of a new kind of cooperation between Macau and Zhuhai, with coordinated direction. That matches the development strategy of the country, as well as helping Macau to diversify its economic structure,” says economist Henry Lei. Macau investment in Hengqin “helps the territory to overcome the constraint of insufficient land and human resources” and “construct the future growth engine for the economy,” he says. Plans to develop Hengqin Island envisage investment of at least RMB100 billion (MOP121 billion or US$15 billion) by 2020, with RMB70 billion being invested in the next three years. The construction of the new campus of the University of Macau alone entails investment of RMB6 billion.

Macau businessman Lionel Leong Vai Tac says the island offers good prospects for small and medium enterprises (SMEs) which “have become very important for Macau’s development”. He says that the government should use public funds to help SMEs to invest there. If the government lets SMEs invest individually, “they will definitely be beaten” by the competition. “It’s a jungle out there,” he says.

Different focus By becoming “a pioneer or even a guardian angel for Macau’s SMEs” the government would help diversify the economy and improve the city’s competitiveness, according to Mr Leong. “Regional cooperation is something new to us but if we don’t start now we will never start.”

He says the government should not allow the big casino companies to snap up all the business opportunities on Hengqin. “What is the meaning of ‘diversify’ if it goes back to gaming again, right?” Legislator Ng Kuok Cheong says Hengqin is “a gift and a very important opportunity for economic development”. Projects mooted for the island include a high technology park, a creative industries park, a power station, a water park, a new business centre and housing. Investing in Hengqin Island is also “a chance for Macau to provide economic feedback to Zhuhai, Guangdong and the mainland, in order to maintain support from them,” Mr Ng says. Will investors be discouraged by the failure of the Zhuhai-Macau JANUARY 2011

Economy & Finance Cross-Border Industrial Park, officially inaugurated in 2006? “The projects in Hengqin Island are different from the Zhuhai-Macau CrossBorder Industrial Park in terms of their focus,” says Mr Lei. “The new cooperation emphasises creative industries, high-tech sectors and high value-added areas, which are not exactly labour intensive.”

Freedom of movement

In June 2009, the Macau government announced that the new campus of the University of Macau was going to be built in there. The campus is still under construction JANUARY 2011

He concedes that the projects mooted for Hengqin may be less competitive in the short term, entail a much longer investment period and probably higher risk. “It may be too early to comment on the chance of success for these projects since we do not know the details of them. However, it still makes sense, as they are not duplicating the existing cross-border industrial zone.” Political analyst Larry So says there is potential on Hengqin for property development and the establishment of creative industries. “In terms of residential properties, we need more space to live in and we have been waiting for a very long time for housing,” he says. Mr So suggests Macau could join hands with Chinese investors to seize the real estate opportunities on the island. “Our middle class is rising. They want better housing and they’re relying on the government.” Mr So believes creative industries have potential because they are related to academia, which already has a foothold on Hengqin. Mr Lei adds that low rents on the islands may also help creative industries. But Mr So says these opportunities come with a caveat: “Hengqin is a good place but we do have a very basic assumption that we will be able to move there freely. And if we don’t provide the proper infrastructure to support the traffic and all, we can forget about efficiency.” Zhuhai and Macau have already asked Beijing to allow the MacauHengqin border crossing to stay open 24 hours a day, without the kind of restrictions that handicap the Cross-Border Industrial Park. Chief Executive Fernando Chui Sai On said last month that Macau and Guangdong had reached consensus on gradually lengthening the working hours of customs services. The ultimate goal is to provide round-the-clock services, he said, but no timetable has been set.

Economic Trends by JosĂŠ I. Duarte

Output and expenditure (**) 2009 GDP current (in MOP)

165,576

million

Consumption (in MOP)

46,087 32,104 16,100 - 35,249 106,535 164,094

million

Investment (in MOP)

Economic Activity

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

million million million million million

% var

2.5 4.2 - 37.7 14.1 - 13.6 15.2 1.5

Latest (in MOP)

54,608

million

13,059 6,914 4,321 - 11,133 41,448 52,066

million million million million million million

Notes

% var

31.3 11.0 - 8.3 12.9 20.7 49.7 27.1

Q3 Q3 Q3 Q3 Q3 Q3 Q3

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

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

Notes

% var

34,132 million 236,970 million 119,790 million 231,506 million 105.07 base - 2008 0.5 %

18.8 13.7 24 13.7 3.95 --

Latest

% var

September September September September October November

Population/Labour force

Labour force Median wage rate (in MOP) Unemployment

542,200 329,200 8,500

% var

3.0 %

- 1.3 - 1.5 6.3 - 0.1

2009

% var

549,500 329,000 9,000

1.5 1.5 5.9

2.9 %

- 0.6

Notes Q3 Q3 Q3 September

Construction

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

- 57.1 40.7 - 56.9 - 1.9 - 27.7

Latest

25,920 0 18,342 657 3,421

m2 m2 tons million million

Notes

% var

564.5 -- 16.6 108.10 60.6

October October October October October

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

18,869 33 4,838 14,316

% var million

49.2 0 1.4 - 0.3

Notes October 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

2,093,000 1,648 0.90 days 19,846 74.2 % 1.50 nights

% var

Notes

October 7.5 Q3 1.7 - 0.20 days Q3 September 1.1 Q3 2.01 September 0.02

%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) (**) Important note: Values for 2009 revised. The reference period for the real GDP calculation has changed. New JANUARY base: 2008) 2011

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

2009 Population

Economic Trends by José I. Duarte Public housing then...

GRAPH 1 - Social housing construction (housing units)

Cumulative

New

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000

Housing was one of the most topical subjects on the public agenda last year. The government has promised to build an additional 19,000 units of public housing before next year and has even seemed to hint that more homes would be built, allowing everyone to own an apartment. Putting aside the political and ethical issues involved in housing in Macau, an analysis of the plausibility of the objective needs perspective. This assessment takes into account statistics up to the end of 2009, the last year when complete details were available, and consequently these comments do not include any housing built last year. GRAPH 1

0 1971/80

1981/90

1991/00

2001/05

2006

2007

2008

2009

GRAPH 2 - Economic housing construction (housing units)

Cumulative

New

25,000

20,000

15,000

10,000

By looking at the existing supply of social housing – which are meant to be leased to low-income families – a first feature of the housing debate is immediately apparent. The total number of units built until the end of 2009 stood at slightly more than 7,000, of which about 80 percent were built in the 1980s and 1990s. Only in 2009 was there again any meaningful activity to build more units – an effort that continued last year. In this context, the government’s commitment is noteworthy as it represents a significant increase in the number of these types of units. Note that Graph 1 serves for illustration purposes only, since the time scale on the x-axis has suffered significant adaptations. The same applies to Graph 2. GRAPH 2

5,000

0 1981/90

1991/00

2001/05

2006

2007

2008

2009

GRAPH 3

GRAPH 3 - Social and economic housing number of bedrooms (housing units)

Economic

Social

18,000

15,000

12,000 9,000 6,000 3,000

0 T0

JANUARY 2011

Similar comments could be made about the economic housing class, units meant to be sold at controlled prices. As Graph 2 illustrates, the current stock stands just above 24,000 units, of which more than 90 percent were built, again, in the 1980s and 1990s. Since the end of 2006, there hasn’t been any activity to build more units.

T4+

Apartments in Macau will often be listed as T0, T1, T2, T3 etc... This refers to the number of bedrooms. The number of bedrooms in social and economic housing, as shown in Graph 3, seems to reflect the household and family composition in Macau or, at least, is a reasonable approach.

... and public housing now

GRAPH 4 - Housing units status Occupied

Vacant

200,000 180,000

Today’s social and economic conditions are vastly different from the situation that existed two or three decades ago. Unsurprisingly, the housing market has also changed markedly. GRAPH 4

The total number of residential units has grown in the last six years by about 17,000 units to reach a grand total of 190,000. The increase in these last few years corresponds roughly to the total amount of units that are vacant. Also note that, throughout the period, 8 to 10 percent of the housing stock has been consistently vacant.

160,000 140,000 120,000 100,000 80,000 60,000

GRAPH 5

40,000 20,000 0 2004

2005

2006

2007

2008

2009

2010/M06

GRAPH 5 - Housing projects, public and private Public

Public Cumulative

Private

Private Cumulative

1,400 1,200 1,000 800 600 400 200 0 2004

2005

2006

2007

2008

2009

The mix of public and private activity in housing can be gauged from the data provided in the housing surveys, although that data doesn’t directly match the one used in the previous graphs. Nevertheless, as highlighted in Graph 5 and as one might expect, most of the housing effort is carried commercially by private agents. Only in 2009 do we see a significant increase in the number of projects. GRAPH 6

Looking at Graph 6, based on information from the census, we realise that the vast majority of Macau families – about three-quarters to be more precise – dwell in homes that they own or are provided to them by their employers. It could be implied that only about 40,000 home units are rented. These somewhat disparate figures raise some interesting questions. We live in times of economic boom, with rising wages and low unemployment, and low natural growth of the resident population. How do these features compare with the need for an increase in the stock of public housing by 19,000 units? Further, what kind of analysis has been made to identify future needs and define adequate policies concerning construction of homes in the private sector? And what impact will this have on the residential market?

GRAPH 6 - Households by type of occupation Owner

Tenant

Employer

Other

90 80 70 60 50 40 30 20 10 0 1996

2001

2006

JANUARY 2011

Transportation

Mitsubishi Crystal Mover

Rail rolls out

Japan’s Mitsubishi Heavy Industries wins MOP4.69 billion tender for the city’s light rail network ollowing a delay of almost six months, the winner of the tender to supply the system and the rolling stock for the first phase of the Macau light rail transit system was announced last month. Japanese Mitsubishi Heavy Industries won the contract with a MOP4.69 billion (US$586 million) bid. This is not the company’s first business deal in Macau. In 1989, Mitsubishi was awarded the contract to build the Refuse Incineration Plant in Taipa. The first plant was completed in 1992 and an expansion completed in 2008. There were two other bidders competing for the light rail contract who may still appeal against the decision. The consortium bid from Bombardier and China Road and Bridge Corporation (Macau) led with the cheapest price for the basic proposal, MOP4.57 billion. The amount was 30 percent more expensive than the government’s newest estimates from October 2009. Bombardier had also announced that if it won it would build a carriage assembly factory in neighbouring Zhuhai. The third bid, from Siemens and the China Civil Engineering Construction Corporation, was the most expensive basic proposal at MOP6.28 billion.

Optional extras Overall, Mitsubishi’s bid was the cheapest. At MOP2.3 billion, the Mitsubishi bid offered the lowest price for the optional works in the tender: 10 years of system maintenance and two additional batches of trains that would fulfil the 2020 light railway capacity goals of moving 14,100 passengers an hour in each direction. JANUARY 2011

The optional works are not included in the contract that will soon be signed, but the government may demand the company deliver those services and trains at the price detailed in the initial bid. “Our pricing was a result of optimising initial investment costs and future costs, taking into serious consideration the long term-benefit of Macau,” the firm’s Transportation Systems general manager, Takayuki Hishinuma told Macau Business last May. Mitsubishi will deploy its Crystal Mover model, already being used in Singapore and at airports in South Korea and the

DETAILS OF THE FIRST PHASE TOTAL LENGTH: About 21 km. There will be about 2.6 km of tunnels. NUMBER OF STATIONS: 21. 17 will be elevated, 2 at ground level and 2 underground. MAJOR FACILITIES: 4 electricity substations AVERAGE SPEED: About 30 km/h TRAVEL TIME: One circuit should take about 38 minutes. About 16.5 minutes from the Border Gate to Barra and 21.5 minutes from Barra to Pac On Ferry Terminal. OPERATING HOURS: 19 hours a day FREQUENCY: One train every 3 to 5 minutes CAPACITY: Up to 7,800 passengers an hour in each direction (to increase to 14,100 passengers by 2020)

United States. The 47-metre-long, four-cabin trains can carry up to 476 passengers each time and at speeds of up to 80 km/h. As requested in the tender, the trains are fully automatic, and need no driver.

Construction soon Construction works for the light rail transit system are scheduled to start later this year in Taipa. The trains should be running by the first half of 2015, according to the governmentâ&#x20AC;&#x2122;s schedule. First proposed in 2003, the light rail has suffered major delays. The system was originally expected to start operations this year. One of the most complicated design issues is the passage of the trains through the Sai Van Bridge. Open to the public in 2005, the bridgeâ&#x20AC;&#x2122;s lower deck was designed to accommodate a future light rail system. The tender for the supply of rolling stock and systems for the light railway includes the design and construction works needed for it to pass across the bridge. Mitsubishi company officials stress the firm has its own engineering and construction division for bridges. The bridge was one of a number of public infrastructure projects caught up in the corruption scandal involving disgraced former secretary for Transportation and Public Works, Ao Man Long. Technical issues aside, the government expects the light rail transport system to generate MOP15 billion in social and economic benefits for the city in its first decade of service. It should reduce travel time on public transportation by almost two-thirds, leading to energy savings and a 20-percent reduction of greenhouse gas emissions. During construction, the project could create as many as 4,500 jobs. Once in place, the light rail system should employ about 1,000 people. JANUARY 2011

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

Missed connections THE NUMBERS DO NOT LIE. MOST SALARIES AND WAGES SIMPLY DO NOT REFLECT THE BOOM IN MACAU’S ECONOMY ometimes simple figures speak louder than words. Consider the latest data on earnings in Macau, for the third quarter of 2010. While the median monthly income of workers rose to MOP9,000 (US$1,125) there is little cause for celebration. Many factors affecting earnings depend on the employer, the employee (his or her expertise, experience and seniority, for example), the kind of work done and the demand for it. External factors also affect earnings, including market conditions, living standards and costs, inflation, the local and global economies, imports and exports, sales, local wage or salary levels, the employment rate and employment opportunities. Just how these factors may affect earnings in Macau is opaque. Let us take some examples. From the first quarter of 2008 to the third quarter of this year inclusive, simple statistics are revealing. The lack of a connection between earnings and wider economic forces is clear from the median monthly earnings for different levels of employment. - For the 15,700 legislators, senior officials, directors and managers of companies, median earnings rose and then fell back to the figure at the start of 2008, which was MOP20,000. - For the 10,800 professionals, median earnings rose and then fell back to the figure at the start of 2008, which was also MOP20,000. - For the 27,800 technicians and associated professionals, median earnings showed little change, hovering around MOP15,300. - For the 85,400 clerks – the largest single group of workers – median earnings dropped to MOP12,400. - For the 70,100 services and sales workers – the secondlargest single group of workers – median earnings did not change much, staying around MOP7,000, but were still below the overall monthly median. - For the 1,000 skilled agricultural and fishery workers, median earnings rose to MOP7,100. - For the 26,200 craftsmen and similar workers, median earnings rose considerably to MOP10,000. - For the 19,200 plant and machine operators, drivers and assemblers, median earnings rose considerably to MOP8,000 but were still below the overall monthly median.

JANUARY 2010

- For the 63,900 unskilled workers – the third largest single group of workers – median earnings never changed, not even once, remaining at MOP4,500, exactly half of the overall monthly median. There is no correlation between median monthly earnings and gross domestic product, even when controlling for retail sales, public gaming revenue and inflation – whether separately or in combination. This applies to median monthly earnings overall and to each category of employment, from legislators to unskilled workers.

Out of step There is no clear evidence of earnings rising in line with inflation. Rather, the higher the rate of inflation is, the lower median monthly earnings seem to be, which is odd. This oddity disappears when controlling for public gaming tax revenue. Even so, instead of what one might expect – earnings keeping pace with infl ation – there is no direct association between them. When we examine the relative effects of GDP, inflation, public gaming tax revenue and retail sales on median monthly earnings, the only one that has any significant bearing on median earnings is retail sales. So, major external factors in the economy seem to have little or no relationship to median monthly earnings. In other places, GDP, inflation and sources of revenue in the local economy, which in Macau’s case are gaming and sales, are more tightly matched to earnings. Not so in Macau. While it is unrealistic to expect a direct relationship between external factors and earnings, it is strange that there is no perceptible relationship at all. The numbers show us that for many workers in Macau, the massive boom in the economy has had little impact on their earnings. Their experience is of low earnings, inflation and of incomes that are failing to keep pace with changes in the economy. As ever, the low-paid suffer more than the rich. Little wonder, then, that there is social unrest in Macau. You would be restless, too, if you were part of an economic boom that leaves your income almost untouched while prices rise. In other parts of the world such frustration would bring people out onto the streets.

Politics

Memories

are made of this General Vasco Rocha Vieira has published his memoirs. It is a book that is essential for understanding the last years of Macau’s Portuguese administration and the scandals that ensued BY JOÃO PAULO MENESES IN PORTUGAL

he memoirs of the last governor of Macau, General Vasco Rocha Vieira, hit the bookshelves last month, reviving criticism of Jorge Sampaio, the president of Portugal at the time of the handover. Mr Sampaio kept Mr Rocha Vieira in the post of governor, although allegedly that was not the will of the Portuguese president. The first chief executive of Macau after the handover, Edmund Ho Hau Wah, is also targeted in the book. The book, entitled “Todos os Portos a que Cheguei” (“All My Ports of Call”), is available only in Portuguese. It can be found at the Portuguese Bookshop, near Senado Square. In the book Mr Rocha Vieira describes the creation of the controversial Jorge Álvares Foundation (see box). The foundation, meant to cement ties between Macau and Portugal after the handover in 1999, was controversial because of the way the project was funded and because it failed to fulfil its purpose, having been shunned by Mr Ho after the handover. Mr Rocha Vieira’s book asserts that Mr Ho was involved in the project before the handover. The

JANUARY 2010

Politics book says Mr Ho went so far as to impose conditions on his becoming a trustee of the foundation, which were accepted. It was already known that Mr Ho was privy to the whole affair, but Mr Rocha Vieira provides many details and dates. Once at the helm of the SAR, not only did Mr Ho fail to acknowledge that he played a part in the creation of the foundation, he also ensured that he put as much distance as possible between himself and the institution. He criticised the foundation, just as it was criticised by the Portuguese president. During the course of an intense argument between Mr Sampaio and Mr Rocha Vieira in the first half of 2000, Mr Ho stayed in constant communication with the Portuguese president and only when he went to Portugal, in May that year, did he privately reveal that he knew everything.

Explanations

SHAKY FOUNDATIONS

eneral Vasco Rocha Vieira says in his newly published memoirs that the Jorge Álvares Foundation was created to guarantee a connection between Macau and Portugal after the 1999 handover. It was meant to ensure that the cooperation would continue, that various institutions would be supported and that there would be a relationship on a cultural plane. Mr Rocha Vieira was convinced – rightly, as it turned out – that the Orient Foundation would heavily reduce its presence in Macau after the handover. So, he came up with the idea of his own foundation. The Jorge Álvares Foundation was established with MOP150 million in funds and its headquarters in Portugal. Stanley Ho Hung Sun donated MOP100 million, and MOP50 million came from the now defunct Macau Cooperation and Development Foundation, a public institution which, at the time, was JANUARY 2011

overseen by Mr Rocha Vieira. The project was hotly debated just after the handover because of the way it was funded. It was controversial not only because Mr Rocha Vieira oversaw the institution that contributed one third of the financing for his own pet project, but also because a former member of Mr Rocha Vieira’s government alleged that Mr Ho’s donation was not voluntary, but part of the price of Mr Ho’s 10th casino license. Mr Rocha Vieira’s book insists that Mr Ho’s donation was voluntary. Ten years on, the Jorge Álvares Foundation still exists, but its activities are residual at best, with just a few initiatives related to East Asia. So far it has been unable to establish any relationship with Macau, despite its original intention. Mr Rocha Vieira is still a trustee of the foundation but plays no executive role. JPM

What the book fails to explain (and Mr Ho is probably the only one who can do so), is why Mr Ho changed his mind about the foundation so quickly and so radically. The two most likely explanations are that either Mr Ho did not completely appreciate the implications of the creation of the foundation when Mr Rocha Vieira told him about it, or he changed his mind to show his solidarity with Mr Sampaio, with whom he always had a good relationship. Until this day, Mr Ho has given no explanation of what happened, and this silence has done him no favours. There may be yet another reason, which Mr Sampaio is likely to address in his own book, to be published soon (see box). Among the Portuguese president’s conditions for accepting Mr Rocha Vieira’s foundation may have been a demand that it be approved by the mainland Chinese government. As far as it is known, Mr Rocha Vieira spoke only with Mr Ho and told Portugal that Mr Ho agreed with the project. The mainland was never consulted and, apparently, was not too keen on the general’s initiative.

Fun with funds The creation of the Jorge Álvares Foundation is the book’s most frequent topic, but it addresses other questions, some of them also quite controversial. There is the case of an illicit fund al-

With Edmund Ho

legedly created by Stanley Ho Hung Sun and the president of the Orient Foundation, Carlos Monjardino. Until now, the existence of what the book calls the “excess fund” has been only suspected. Mr Monjardino has always denied the existence of private funds that were allegedly used mainly to finance the Portuguese Socialist Party. But now Mr Rocha Vieira says that the casino mogul told him personally that the private arrangement existed and that every year MOP60 million (US$7.5 million) was transferred from Macau to Lisbon. Besides heading the Orient Foundation since its establishment in 1988, Mr Monjardino was the secretary for the

Economy, Finance and Tourism in the Macau government from 1986 to 1987, afterwards serving as acting governor for a short while. He was in charge of renegotiating Mr Stanley Ho’s gaming monopoly in 1986. The establishment of the Orient Foundation was a condition of the extension of the monopoly until the end of 2001. From January 1996 the income from the gaming contract was no longer paid to the Orient Foundation, but went instead to the Macau Foundation. This remains the case today: casinos are obliged to pay 1.6 percent of their gross gaming revenue to the Macau Foundation.

With Jorge Sampaio and Edmund Ho

With Jorge Sampaio

RIGHT OF REPLY

he former Portuguese president, Jorge Sampaio, who is the main target of General Vasco Rocha Vieira’s memoirs, has already said that he will read the book and that he may respond. Whatever his immediate response, the former president will almost certainly answer Mr Rocha Vieira’s accusations in a book he is writing which will cover his years as Portugal’s head of state – the era of the handover of Macau. Macau gave Mr Sampaio some of the worst headaches of his 10 years as president, much as it gave his predecessor, Mário Soares, his own worst headaches. The difference is that when Mr Soares picked Mr Rocha Vieira as governor, he solved all his problems with Macau, while Mr Sampaio’s problems began only when he decided to keep Mr Rocha Vieira in the post. Mr Sampaio’s version of events is eagerly awaited. JPM JANUARY 2011

Property | Market Watch

One after another If last year’s vintage was considered a golden one for real estate, expect nothing less this year BY ALAN TSO

here were restrictive policies and limits on finance but Macau’s housing market enjoyed a golden 2010, rebounding strongly after the global financial crisis. According to the most recent figures from the Statistics and Census Bureau, there were 14,217 residential transactions in the first 10 months of last year, 26 percent more than in the overall 2009 and 4 percent more than in the full 2008. It is likely that when full year figures are available, 2010 will make it into the top 5 best years for

JANUARY 2011

Macau’s real estate sector in terms of residential transactions. In monetary terms, housing transactions in Macau were worth MOP33.36 billion (US$4.2 billion) between January and October, a 55 percent surge over the full 2009. The average price for residential floorspace for the first 10 months of 2010 stood at MOP34,252 per square metre – a new record. The rosy figures are largely the result of the exceptional performance of the primary housing market, as pent-up demand among cash-rich buyers was

finally met by the launch of several high-end projects. The total number of transactions in the primary market is on target to reach 5,300, with a value of MOP25 billion. These figures represent year-on-year rises of about 65 percent and more than 100 percent, respectively.

Better days There is every reason to believe that the market will continue its upward growth this year, says Ricacorp Properties’ executive director Jane Liu. She estimates this year will see

43 Residential units sold as 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

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

September

1,505

October

1,312

Source: DSEC

August

* Note: 1. The data includes transactions of residential units valued below MOP3 million, which are exempt from stamp duty. 2. The data covers residential units with stamp duty already paid.

Value of residential units sold as per record of stamp duty* MONTH

2009

January

VALUE (MOP million)

299

February

372

March

594

April

980

Sniper Capital launches new property fund

May

1,156

June

1,627

July

2,767

August

1,730

eal estate fund manager Sniper Capital has launched a new US$100 million (MOP800 million) private closed-end fund that will target undervalued nongaming real estate opportunities in Macau and “transform them into retail and food and beverage destinations”. The fund has received initial commitments of US$20 million from the firm’s existing investor base. Sniper Capital, which has committed US$5 million of its capital, said it would target a close during the first quarter. The fund will target internal rates of return of “25 percent or higher,” it said. The portfolio will consist primarily of retail, food and beverage and potentially some residential properties. Sniper said it had already identified more than 50 properties valued at US$85 million. Of these, US$4 million had already been converted using the firm’s own investment capital. “The sites are located on the periphery of mainstream areas and are generally significantly undervalued due to their derelict state, fragmented ownership and small acquisition sizes which deters the majority of local developers,” a statement from the managers said. The fund will have a five-year term with a potential two-year extension. Investors are likely to include high-net worth individuals, family offices, private banks and small institutional investors.

2010

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

September

3,687

October

3,421

Source: DSEC

YEAR

* Note: 1. The data includes transactions of residential units valued below MOP3 million, which are exempt from stamp duty. 2. The data covers residential units with stamp duty already paid.

JANUARY 2011

Property | Market Watch

Average transaction value of residential properties Value (MOP thousand) 3000 2500 2000 1500 1000 500 0

Aug

Sep

Oct 2009

Nov

Dec

Jan

Feb

Mar

Apr

May Jun 2010

Jul

Aug

Sep

Oct

Proportion of buyers

Total number of buyers in residential transactions in the first 10 months of 2010:

New Land Law up for public opinion

9% 91%

Non-Residents

19,606

Residents

CLaw that governs commercial and nononsultation on a new draft of the Land

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

3500 3000 2500 2000 1500 1000 500 0

Q4 2007

2008

2009

Q2 2010

Proportion of buyers

Total value of residential transactions in the first 10 months of 2010:

33,361,000,000

MOP

about 20,000 housing transactions worth MOP51 billion – a year-on-year increase greater than 20 percent in both cases. Ms Liu bases her bullish forecast on five prevailing, favourable factors. Interest rates are already low and likely to drop further, she says. Lower interest rates will in turn provide a greater incentive to invest. The influence of robust gaming and tourism industries will prop up personal income, allowing consumers to further JANUARY 2010

18% 82%

Non-Residents

Residents

commercial land leases has begun and will run until the end of the month. The biggest proposed change is to stop land grants for casino projects from not going to public tender, according to the Land, Public Works and Transport Bureau director Jaime Carion. However, non-gaming projects that fit into “an adequate diversification of the economic structure” may not have to pass the tender requirement, Mr Carion said. The draft rules also propose an economic and financial viability study for every project. An environmental impact evaluation may also be requested. Fines for land concessionaires that do not meet their development deadlines will also increase sharply. The maximum penalty for developers who use land for non-authorised purposes is the cancelling of a concession. The government also hopes to revise the calculation of land premiums to better reflect market values. The earliest the revised Land Law will might come into effect is next year. The current law was enacted 30 years ago.

loosen their purse strings, she says. That will have a positive effect on real estate. A third reason for optimism is Macau’s accessibility to Guangdong residents. Cross-border infrastructure projects, such as the Hong Kong-Zhuhai-Macau Bridge and development on Hengqin Island (see the report in the Economy and Finance section), will boost connectivity to the mainland. The flow of visitors to Macau, including skilled workers and profession-

als, will increase substantially this year when Galaxy Entertainment Group’s flagship resort finally opens to the public. Also, there are other resorts scheduled to break ground in Cotai this year, which will boost demand in the housing rental market. Finally, Ms Liu sees a sharp dip in the availability of new apartments for the next two years as projects delayed by the financial crisis create gaps in supply.

Property | Market Watch Notable residential property rentals - 16/11 to 15/12, 2010

Source: Centaline, Midland & Ricacorp.

District

Building/Street

Unit

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

One Central Jardins do Oceano Edf. Tai Keng Yuen Lâ&#x20AC;&#x2122;Arc One Central One Central Flower City Nova City One Central One Central One Central Lake View Mansion One Central La Oceania The Residencia Macau Pearl On The Lough One Central One Central Nova City Jardim Brilhantismo The Residencia Macau Jardim Brilhantismo Lake View Mansion Lake View Mansion Lai Chun Kok One Central Jardim Brilhantismo Pearl On The Lough Lai Chun Kok Nova City Nova City Edf. Va Iong Jardins do Oceano The Residencia Macau The Pacifica Garden Jardins do Oceano Edf. Hung Fat Garden Nova City Nova City Jardins do Oceano Prince Flower City The Pacifica Garden The Pacifica Garden Magnificent Court Kings Ville La Baie Du Noble La Baie Du Noble Nova City Nova City Kings Ville Nova City The Residencia Macau Edf. Jardim Hang Kei Nova City Edf. I Chan Kok

Block 6, M/F, unit A Orchid Court, H/F, unit B M/F, unit D M/F, unit B Block 1, M/F, unit F Block 1, H/F, unit B H/F, unit A L/F, unit G Block 7, H/F, unit H Block 1, M/F, unit A Block 1, L/F, unit B Block 2, L/F, unit G Block 7, M/F, unit C M/F, unit F Block 5, M/F, unit B H/F, unit E Block 3, L/F, unit A Block 1, M/F, unit B Block 13, L/F, unit B M/F, unit Y Block 3, M/F, unit B L/F, unit AB Block 3, M/F, unit E Block 3, L/F, unit E H/F, unit D Block 1, H/F, unit C M/F, unit Y Block 1, L/F, unit D M/F, unit C Block 13, L/F, unit B Block 13, M/F, unit D L/F, unit E Cattleya Court, H/F, unit D Block 4, M/F, unit A Block 2, H/F, unit L Cherry Court, H/F, unit L H/F, unit G, H Block 16, M/F, unit E Block 16, M/F, unit E Cherry Court, M/F, unit L (with car park) H/F, unit D Block 1, L/F, unit C Block 1, L/F, unit B M/F, unit U Block 1, L/F, unit C Block 3, M/F, unit N Block 1, M/F, unit F Block 14, M/F, unit E H/F, unit F Block 1, L/F, unit C Block 8, M/F, unit D Block 5, H/F, unit C M/F, unit H M/F, unit C M/F, unit F

Floor area (sq. ft) 2,265 2,637 2,800 2,803 1,759 1,359 2,080 2,505 1,235 1,273 1,359 2,334 1,176 1,463 1,696 2,055 2,636 1,359 1,515 1,700 1,767 1,670 1,728 1,800 2,060 918 1,650 2,055 2,060 1,515 1,559 1,680 1,503 1,693 1,317 1,514 2,500 1,281 1,281 1,514 1,665 1,226 1,252 1,360 1,422 1,570 1,589 1,314 1,339 1,422 1,045 1,207 1,300 1,318 1,600

Rent price (HK$)

Price per sq.ft. (HK$)

36,000 28,000 28,000 28,000 24,000 18,000 18,000 18,000 16,000 16,000 16,000 16,000 15,000 15,000 15,000 15,000 15,000 14,500 14,000 13,500 13,500 13,000 13,000 12,800 12,800 12,000 12,000 12,000 12,000 11,800 11,500 11,000 10,000 10,000 9,800 9,800 9,800 9,500 9,500 9,500 9,500 9,000 9,000 9,000 9,000 9,000 9,000 8,800 8,800 8,800 8,600 8,500 8,500 8,500 8,500

15.89 10.62 10.00 9.99 13.64 13.25 8.65 7.19 12.96 12.57 11.77 6.86 12.76 10.25 8.84 7.30 5.69 10.67 9.24 7.94 7.64 7.78 7.52 7.11 6.21 13.07 7.27 5.84 5.83 7.79 7.38 6.55 6.65 5.91 7.44 6.47 3.92 7.42 7.42 6.27 5.71 7.34 7.19 6.62 6.33 5.73 5.66 6.70 6.57 6.19 8.23 7.04 6.54 6.45 5.31

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

Notable commercial property rentals - 16/11 to 15/12, 2010 Type

Property

Unit

Shop Shop Shop Shop Shop Office Office

Centro Comercial Grupo Brilhantismo Edf. Lei Kai Kam Cheng Court Chuen Yuet Garden Macau Ginza Plaza Edf. China Plaza Centro Comercial Praia Grande

Shop Shop Shop Shop Shop L/F, unit K L/F, unit B

Source: Centaline

Floor area (sq. ft) 3,286 873 3,964 3,600 354 1,179 808

Rent price (HK$)

Price per sq.ft. (HK$)

120,000 88,000 40,000 30,000 12,000 9,900 6,000

36.52 25.20 10.09 8.33 33.90 8.40 7.43

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

JANUARY 2010

Property | Market Watch

Notable residential property transactions - 16/11 to 15/12, 2010 District Coloane Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Taipa Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Macau Coloane Macau Macau Taipa Macau Macau Macau Taipa Macau Macau Macau Macau Macau Macau

Building/Street

Source: Centaline, Midland & Ricacorp.

Floor area (sq. ft) Sale price (HK$) Price per sq.ft. (HK$)

Unit

Chuk Wan Hou Yuen The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental One Central One Central The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental One Central One Central One Central One Central One Central One Central One Central L’Arc The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental The Residences & Apartment at Mandarin Oriental Nam Van Peninsula One Grantai L’Arc One Central L’Arc L’Arc L’Arc One Central L’Arc L’Arc Lake View Tower Jardim da Penha The Residencia Macau One Oasis Cotai South Villa de Mer Villa de Mer One Grantai L’Arc L’Arc Nam Van Peninsula One Grantai The Residencia Macau The Residencia Macau Macau Ginza Plaza The Residencia Macau The Residencia Macau One Central

Peony Court, M/F, unit A (with car park) M/F, unit F H/F, unit B M/F, unit B M/F, unit E H/F, unit E M/F, unit E H/F, unit A M/F, unit A M/F, unit B H/F, unit A M/F, unit F Block 1, H/F, unit B Block 1, H/F, unit B M/F, unit F M/F, unit F M/F, unit E Block 2, M/F, unit B Block 5, M/F, unit A Block 4, M/F, unit B Block 4, M/F, unit A Block 4, L/F, unit B Block 2, M/F, unit B Block 2, M/F, unit B H/F, unit G H/F, unit C H/F, unit D M/F, unit C M/F, unit D H/F, unit C L/F, unit E Block 3, M/F, unit J H/F, unit D Block 1, M/F, unit E M/F, unit D H/F, unit F H/F, unit E Block 1, L/F, unit F H/F, unit E M/F, unit F Block 1, L/F, unit P Block 11, L/F. unit B (with car park) Block 1, L/F, unit A (with car park) Block 1, M/F, unit C Block 3, L/F, unit A Block 3, M/F, unit B Block 3, L/F, unit J H/F, unit A M/F, unit E L/F, unit C Block 3, M/F, unit L Block 1, L/F, unit B Block 1, H/F, unit B M/F, unit D Block 3, L/F, unit B Block 1, M/F, unit B Block 7, H/F, unit F

4,779 3,044 3,487 2,851 2,960 3,351 2,668 3,487 2,850 3,086 3,419 3,169 2,475 2,475 3,050 3,208 2,565 2,267 2,318 2,585 2,326 2,585 2,267 2,267 2,411 1,345 1,492 1,363 1,493 1,483 3,150 2,019 2,411 1,819 2,411 2,191 2,261 1,759 2,261 2,261 2,107 2,926 2,188 2,369 1,475 1,475 1,948 2,261 2,261 2,576 2,062 1,693 1,693 2,012 1,767 1,693 1,349

33,800,000 30,297,000 30,170,000 27,755,000 27,345,000 26,436,000 25,501,000 25,180,000 24,700,000 23,784,000 23,772,000 23,612,000 23,513,000 23,513,000 19,575,000 19,331,000 17,899,000 15,869,000 15,250,000 15,122,000 15,119,000 14,993,000 14,962,000 14,962,000 14,466,000 14,077,000 14,069,000 13,973,500 13,770,000 13,765,000 13,230,000 13,120,000 13,019,000 12,187,000 12,055,000 12,050,000 11,800,000 11,785,300 11,757,000 11,400,000 11,300,000 11,300,000 11,200,000 11,049,000 11,000,000 11,000,000 10,710,000 10,630,000 10,500,000 10,304,000 10,000,000 9,777,000 9,738,000 9,650,000 9,638,000 9,450,000 9,173,000

7,072 6,667 8,652 9,735 9,238 7,889 9,558 7,221 8,667 7,707 6,953 7,451 9,500 9,500 6,418 6,026 6,978 7,000 6,579 5,850 6,500 5,800 6,600 6,600 6,000 10,466 9,430 10,252 9,223 9,282 4,200 6,498 5,400 6,700 5,000 5,500 5,219 6,700 5,200 5,042 5,363 3,862 5,118 4,664 7,457 7,457 5,498 4,701 4,644 4,000 4,850 5,774 5,751 4,796 5,454 5,581 6,800

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

Notable commercial property transactions - 16/11 to 15/12, 2010 Type Shop Shop Shop Shop Shop Office

Building/Street Rua Leste do Mercado de S. Domingos Edf. Marina Plaza Rua da Barca Edf. Hong Chao Calçada do Botelho Tong Nam Ah Centro Comercial

Source: Centaline

Floor area (sq. ft) Sale price (HK$) Price per sq.ft. (HK$)

Unit Shop Shop Shop Shop Shop L/F, unit D

1,750 1,000 1,800 1,200 880 1,438

21,800,000 12,000,000 5,500,000 3,800,000 3,200,000 2,800,000

12,457 12,000 3,056 3,167 3,636 1,947

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

JANUARY 2010

Property

Rate flip on flats The government goes ahead with a property tax cut but drops a plan to tax leased and unleased apartments at the same rate he plans for curbing property speculation announced by the government in September are almost in place. But Chief Executive Fernando Chui Sai On and his team have abandoned the idea of lowering the property tax rate for leased apartments to match the rate for unleased apartments. The idea was meant to stimulate the rental market. The government still intends to cut property tax rates and its proposals are now up for approval by the Legislative Assembly. The government will now aim to reduce the tax on unleased flats from 10 percent to six percent, and re-

duce the tax on leased flats from 16 to 10 percent. Also proposed is a move that would allow owners of unleased flats an automatic deduction of 10 percent on their taxable income. Residences are subject to property tax, whether or not the owner lives on the premises. At present, if an apartment is rented out, the government takes 16 percent of the owner’s actual rental income, and if it is not rented out, the government takes 10 percent of the official rateable value annually. Executive Council spokesperson Leong Heng Teng said the government had dropped its plan for a uniform tax

New mortgages decline A

pprovals of new residential mortgages and commercial real estate loans declined in the third quarter of 2010, according to the Monetary Authority. The declines are probably unrelated to the government’s measures to curb real estate inflation, which were announced in late September. The value of new residential mortgages approved by Macau banks in the third quarter was MOP6.6 billion, 22.3 percent less than in the second quarter. Of this sum, 92.8 percent was lent to residents. However, the value of new residential mortgages was 5.8 percent higher than a year before. After a notable rise in the second quarter, approvals of new commercial real estate loans decreased by 12.4 percent to MOP10.1 billion in the third quarter, with 98.3 percent of the money lent to residents. At the end of September, 0.11 percent of residential mortgages and 0.19 percent of commercial real estate loans were considered delinquent.

rate for leased and unleased apartments because apartments could be rented out for profit. “Most of the people in Macau own the apartment where they live. They don’t get any profit from it. Rented flats are an investment from which profit arises. That is why the tax rate is different,” Mr Leong said. “Nevertheless, the drop to 10 percent from 16 percent is already a significant one and we think it will push people to rent [out unoccupied residences].” If approved by the legislators, the changes will take effect in this year’s tax assessments. The government says this will mean tax revenue for the year will be MOP278 million lower than the year before. Mr Leong said there were around 32,000 leased residences last year. The effect on the rental market could be bigger than the government expects because investors in property sometimes rent out apartments without declaring it, so they can avoid paying the higher tax rate. Data from the Statistics and Census Service indicate that there were 190,689 residences in June, of which 16,900 were officially vacant. The number of vacant residences has been increasing over the past few years. JANUARY 2010

48 KARL P. SAUVANT FOUNDING EXECUTIVE DIRECTOR OF THE VALE COLUMBIA CENTER ON SUSTAINABLE INTERNATIONAL INVESTMENT, AT COLUMBIA UNIVERSITY

KEN DAVIES SENIOR STAFF ASSOCIATE AT THE VALE COLUMBIA CENTER

Le défi chinois FEARS OF CHINESE OVERSEAS INVESTMENT, AS OF JAPANESE AND SOUTH KOREAN INVESTMENT IN THE 1980S AND 1990S – AND, BEFORE THAT, OF THE GREAT POST-WAR U.S. MULTINATIONALS, WHICH THE FRENCH WRITER JEAN-JACQUES SERVAN-SCHREIBER DUBBED “LE DÉFI AMÉRICAIN” IN THE 1960S – ARE MISPLACED o far, discussions about whether or not China should revalue its currency, the renminbi, have focused almost exclusively on the impact of the currency’s exchange rate on China’s trade balance. But what would an appreciation of the renminbi do to China’s inward and outward foreign direct investment (FDI)? In evaluating China’s currency policy, the effects of any change on the trade balance are no more important than the potential consequences for inward FDI, which plays such a crucial role in China’s economic development, and China’s outward FDI, which is receiving increased attention worldwide. China has been the developing world’s largest recipient of FDI since the mid-1990s. Revaluation of the renminbi would make it more expensive for foreign firms to establish themselves (or expand) in China – the world’s most dynamic market – and would render exports of foreign affiliates, which account for 54 percent of total exports, less competitive internationally. On the other hand, the increased cost would be offset to some extent by lower-cost imported inputs, and foreign affiliates could expect to repatriate higher profits from sales in China in terms of their own currencies.

China goes global

But the most notable development of recent years has been the surge in China’s outward FDI since the government adopted its “go global” policy in 2000, encouraging Chinese firms to invest overseas. China’s outward FDI more than doubled in 2005-2007, from US$12 billion (MOP96 billion) to US$27 billion, and then more than doubled again in 2008, to US$56 billion. Outflows continued to rise to US$57 billion in 2009, a time when global FDI flows had collapsed by 50 percent, making China the world’s fifth largest outward investor. The increasing international competitiveness of Chinese firms, together with government policy, has been the main driver of China’s skyrocketing outward FDI. The 20 percent revaluation of the renminbi against the US dollar in 2005-2008 undoubtedly facilitated this in the case of recipient countries whose currencies did not also appreciate against the dollar. China’s outward FDI is poised to increase sharply again in 2010, judging by the first half of the year, when it was rising at an annual rate of 44 percent. Revaluation would accelerate this trend. This is precisely what happened in Japan after the yen was revalued by over 50 percent against the dollar between 1985 and 1987, following the Plaza Accord. Japan’s outward FDI rocketed from US$7 billion in 1984 to US$20 billion in 1986, peaking at US$48 billion in 1990. A renewed renminbi appreciation would boost China’s outward FDI growth even further by lowering the cost of overseas assets for Chinese firms, which operate in a fairly competitive market and have strong cash reserves from both retained earnings and large-scale state credit allocations. Like competitors elsewhere, they need to invest abroad to JANUARY 2011

acquire a portfolio of local assets that give then better access to the markets, skills, technology, and natural resources that they need to protect and strengthen their international competitiveness. The revaluation effect would be reinforced by rising wage pressures inside China, which are already leading some labourintensive Chinese firms to invest abroad (there are more than 700 Chinese affiliates in Vietnam alone). Some of these firms have been weighing whether to move production abroad or to inland provinces of China; revaluation could push them in the former direction.

Business or politics?

Because most of China’s outward FDI is from state-owned enterprises (SOEs), suspicions of non-commercial motivations are widespread. But there is no systematic evidence that China’s SOEs are driven by more than normal commercial considerations. At the same time, various private or semiprivate entities have been investing abroad. As their operations are less visible, it is likely that their outward FDI, and therefore China’s total, is understated. Fears of Chinese overseas investment, as of Japanese and South Korean investment in the 1980s and 1990s – and, before that, of the great post-war U.S. multinationals, which the French writer Jean-Jacques Servan-Schreiber dubbed “le défi américain” in the 1960s – are misplaced. These investments were eventually accepted as making a contribution to their host countries. Similarly, the surge in China’s outward FDI is good for China and for host countries. Chinese FDI, like all FDI, can provide host countries with a bundle of tangible and intangible assets needed for economic growth and development. While a significant part of China’s outward FDI initially takes the form of trade-supporting FDI, it can be expected to lead relatively quickly to some production being shifted out of China, including to the US and Europe, thereby possibly reducing exports from China. Moreover, FDI, like trade, is a key means to integrate China into the world economy and make it a responsible stakeholder. Like their Japanese and South Korean counterparts, however, Chinese firms will have to learn how to operate in highly sophisticated developed-country markets, as well as in developing countries, where their investments in natural resources are expanding rapidly. They will also have to learn from the past mistakes of other multinationals. In particular, they need to establish a strong reputation as good corporate citizens, in addition to making a positive economic contribution to their host countries. The Chinese government can play a crucial role by adopting a code of conduct for all Chinese enterprises investing abroad, in line with internationally accepted norms and taking into account the increasing importance of sustainable FDI. For their part, recipient countries should accept, rather than shun or discriminate against, China’s “new kids on the block.”

JANUARY 2011

mbreport Private healthcare 50

JANUARY 2011

ALL IN GOOD HEALTH SMALL WAITING LISTS AND PERSONALISED SERVICE HAS HELPED MAKE THE PRIVATE HEALTHCARE SYSTEM THE PRIMARY SOURCE OF CARE IN THE CITY. THE GOVERNMENT’S HEALTH VOUCHER SCHEME HAS SEEN EVEN MORE PATIENTS “GO PRIVATE” IN 2010 BY SOFIA JESUS

JANUARY 2011

mbreport Private healthcare 52

he private healthcare sector in Macau is growing at a clip. “In the past, if you talked about [private] medical centres, you just could name a few. But now, there are even more than we can recognise. A lot of Hong Kong doctors and other private practitioners have come together to create medical centres,” Hope Clinic Taipa branch director David Cheang told Macau Business. Demand is through the roof, thanks in part to people’s aversion to waiting for treatment in the public system, addi-

JANUARY 2011

tional government support in the form of the healthcare subsidy scheme (see our report on these pages) and also because of the healthcare benefits wrapped into the benefits packages of employees at the city’s big companies. There were 1.2 million medical consultations in the private sector in 2009, about 57 percent of the total. The figure represents an increase of more than 16 percent over the previous year. At the end of 2009 there were 383 private clinics in Macau, excluding traditional Chinese medicine outlets (see

our report below). They make up more than 77 percent of all healthcare establishments. Of professionals in primary healthcare, 55.1 percent are in the private sector. There are some medical services where “going private” is the only option. For example, the government’s data states that at the end of 2009 all of the odontologists and 87 percent of dentists were working in private clinics. New services for patients, better access to care and increased competition among service providers is no bad thing.

Giving it away T

The average revenue for a private clinic in 2009 was almost MOP660,000, of which more than MOP81,000 came from government subsidies

“For us, I think this is good too, because we want to see the medical care level keep on improving, and Macau needs specialised care,” Mr Cheang says.

Tidy profits Hope Clinic has been in business for about 30 years. The Taipa branch opened three years ago and Mr Cheang is satisfied with the performance of the business. “Usually, for a clinic, it takes about two years to take off. We’re doing pretty well, now. We

have never lost any money,” he notes. His is not the only private healthcare business in Macau that is in good financial health. The average revenue for a private clinic in 2009 was almost MOP660,000, of which more than MOP81,000 came from government subsidies. Average expenditure was below MOP600,000, meaning an average profit of around MOP60,000. The Hope Clinic branches in Taipa and on the Macau peninsula serve very different kinds of patients. Mr Cheang explains that in Taipa, 85 percent are expats, with most from Australia or the United States. The charges are lower at the clinic on the peninsula, where most patients are Filipinos or locals. The peninsula branch also accepts insurance arrangements. Mr Cheang explains that the Taipa branch would overflow if it offered a similar service. “The majority of expats working in casinos prefer to pay here than go somewhere else,” he observes.

Patient relationship Chan Polyclinic has been in Macau since 1997 and has grown to five branches offering a range of healthcare services. At the branch near Lou Lim Iok Garden, clinic manager Ivy Wong says about 10 percent of patients are expatriates. Business, she says, is “quite good”.

he government’s healthcare subsidy scheme has been a boon for the private healthcare sector. Under the scheme launched in 2009, the government annually issues 10 vouchers of MOP50 each to all permanent residents for use in the private system that have a 12 month expiry. An average of nine out of 10 vouchers were used in the scheme’s first year, meaning the government spent around MOP206 million. More than 600 businesses have signed on, with more than 1,000 physicians offering conventional and traditional Chinese medicine. The official goal of this scheme is “to strengthen the collaboration between the public and private healthcare services providers, and simultaneously make full use of the medical resources available”. It also targets at elevating “the general level of social and medical services and to promote diversified development,” while popularizing the family medicine system. According to the government’s preliminary assessment of the scheme’s first year of operation, the majority of vouchers were used for checkups or treatment of minor illnesses in conventional clinics. Just less than half were used in establishments offering Chinese medicine. As successful as the programme appears, it was not without fault. There were a small number of clinics that attempted to take advantage of the scheme by accepting vouchers for products prescribed in Chinese medicine but not covered by the scheme, such as ginseng or dried seafood. Five establishments were kicked out of the programme. Four were practitioners of Chinese medicine. The Health Bureau also sent warning letters to 48 physicians who needed to “improve the sanitary condition of their premises” or to better organise “their archives of medical history and prescription records”. The authorities have now instituted a “routine inspection mechanism”. Between August and the end of October 2010, 31 establishments were found to be in breach of regulations. Three had to provide a written explanation and one was expelled from the scheme.

JANUARY 2011

mbreport Private healthcare 54 Macau’s casino boom has been good for Chan Polyclinic. It has meant more patients and many with health insurance. The business also benefits from a convenient location near the city’s centre. But the primary reasons for the clinic’s success are shorter waiting lists than in the public system and the “closer relationships with the patient” that private clinics enjoy. Mr Cheang, from the Hope Clinic, agrees. He says doctors at public hospitals have less time for each patient than at private clinics. “If you see a physician in the emergency room, they can only spare three minutes for you.” However, he says that if private clinics depended only on permanent residents, they might have a hard time because “the government is doing a very good job in primary care, for free”.

Bigger is better The boom in the number of private clinics does not scare Ms Wong. Both she and Mr Cheang believe that as the city’s gambling industry continues to grow and to offer better care to employees, business can only get better. “We opened a long time ago. We have a good reputation. It’s not a big problem,” Ms Wong says. Neither Ms Wong nor Mr Cheang

are bothered by proposals to build a new public hospital in Cotai. They welcome it. The hospital will open within five years, according to the government. The pair would rather see more coordination between the public and private sectors, to avoid loss of contact with patients. “Private doctors see the patient and then send them to the [public] hospital. But they don’t know what happens to them afterwards,” Mr Cheang says. As for medical training, he points out it would be a good thing to have a medical school in Macau but sees one major problem. “You need to be exposed to enough cases and you really need a big population base to do that,” he says. The alternative could be to send local medical students to a bigger city for their internships. Ongoing education in the private sector is one area that could be improved. Mr Cheang would like to see extra training in the public system for all doctors, arguing “it would also benefit all the community”. Ms Wong hopes the government will allow private doctors to use the public hospital for surgical procedures, allowing professionals to keep their knowledge up to date.

Complaints decline T

here may be complaints against the public healthcare system but the private sector also has its share of unsatisfied patients – although the number is decreasing. According to partial data, the Consumer Council says it has had 7 complaints about private clinics in 2010. There were 10 complaints last year and 26 in 2008. Most complaints focus on fees, bad service and doctors from abroad, the council says, and most are about conventional medicine. There has been only one complaint about a Chinese medical establishment since 2008. JANUARY 2011

An alternative with history W ith a history stretching back thousands of years, Chinese medicine is extremely popular in Macau. With almost 923,000 consultations in 2009, 11.4 percent more than in 2008, it is almost as popular as conventional treatment. It is also a popular subject at the Faculty of Chinese Medicine at the Macau University of Science and Technology. There are currently more than 260 undergraduates in the course

and since the faculty opened in 2000, it has trained 340 graduates, 40 masters and 15 doctors. Programme coordinator Zhao Yong Hua says the number of students has increased over the past two years. Enrolments are split 50:50 between Macau and mainland students. Mr Zhao regrets that with no Chinese medicine facilities in Macau’s public hospital, there are few opportunities for practitioners. Most of the city’s 630 practitioners work in private clinics and there were just 10 in the public system at the end of 2009. Traditional medicine is also increasingly expensive, with charges for

several services offered by practitioners up in 2009. The average price of massages, for instance, rose by about 20 percent, according to official figures. Besides teaching and training students at the university hospital, the university commits funds into research. Director of the university’s Macau Institute for Applied Research in Medicine and Health, Christopher Lam, says there have been around 40 research projects over the past three years. Some were related to the development of new drugs and to discovering the causes of particular illnesses under the faculty’s “systematic” approach to health. Looking ahead, university council

chairman Zhou Li Gao has high hopes for Hengqin Island. The government has announced it will build a science and industrial park for Chinese medicine there and has asked for the university’s input. “It’s good news for Chinese medicine in Macau,” Mr Zhou said, although he admits that it is “not very clear” how the park will work. There is one other significant reason for Mr Zhou to be optimistic. The university and the University of Macau have partnered in an application for the status of State Key Laboratory for Chinese medicine. The application has been recently approved and it could mean additional government funding.

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mbreport Private healthcare 56

Investment in the future

The increasing cost of maintaining the public health system almost certainly means private health insurance is set to become a cornerstone in healthcare BY SOFIA JESUS

f business seems good for private healthcare clinics, the same is true for insurance companies. Monetary Authority of Macau director Félix Pontes estimates that about onethird of residents were covered by medical insurance in 2009. Between 2005 and 2009, the number of health insurance policies bought exceeded 500,000. “People are more aware,” Mr Pontes tells Macau Business. He argues that people eventually become concerned about how they will pay their medical expenses, especially if they are unable to work. There are 23 licensed insurance companies in Macau, of which 20 offer health insurance. Mr Pontes says that between 2005 and 2009, insurers raked in MOP1.4 billion in gross premiums for health and related insurance. They paid out about MOP740 million to settle claims. The balance is acceptable, he says. Most consumers take out health insurance through a life insurer, which accounts for 90 percent of all health policies taken out between 2005 and the end of 2009. The growth in health policies was constant during the period. Mr Pontes says life insurers tend to dominate the market because they are “much more active in the market” and offer a wider range of products. Non-life insurers typically cover vehicles, real

AMCM director Félix Pontes estimates that about one-third of residents were covered by medical insurance in 2009 JANUARY 2011

57 estate and businesses, but also offer some health policies.

Unhealthy outlook Mr Pontes believes it is urgent to address the longterm healthcare needs of the population. The rising cost of medical care and longer lifespan could threaten the sustainability of the public healthcare system, he warns. “Up to now, the good health of the Macau people has come with a high price tag for the government,” Mr Pontes stresses. The percentage increase in healthcare expenditure per capita since 1991 has risen sharply, he says. Macau is not alone in battling against demographics. While most of Asia’s population is young, Mr Pontes points out that people are starting to wonder whether governments will be able to afford their healthcare bills in the future. The Hong Kong government has proposed a voluntary private health insurance scheme that will ease the burden on the public sector by encouraging people to seek private-sector medical care. The scheme would require a HK$50 billion (MOP51.5 billion) fund to subsidise premiums for the chronically ill and the elderly, and to attract young people to the scheme. Mr Pontes thinks Macau can learn from the overseas experience since it is necessary to look at other ways to finance healthcare costs. “In the medium term, healthcare insurance should be mandatory for companies with more than 100 employees and extendable in the long run to all companies. For this scheme, the government can create a fund to subsidise the payment for the insurance,” he suggests. Friendlier tax policies would help make private health insurance cheaper and more popular, he adds.

Sweet charity

Kiang Wu Hospital treats about 25,000 patients every year in the private system, helping low-income earners access high-quality care

Wang Ting Huai

hink of private hospitals and three thoughts crop up: fast service, quality treatment and high prices. Macau’s main private hospital, Kiang Wu Hospital, is slightly different. Care here does not necessarily cost your life savings. Hospital director Wang Ting Huai told Macau Business that, being a charity, the 732-bed hospital uses part of its revenue from paying patients for the treatment of

those who cannot afford it. The quality of the treatment is the same for all. It is only the surroundings that distinguish paying patients from charitable cases. The profitable hospital was established almost 140 years ago and operates as a subsidiary of the Kiang Wu Charity Association, itself once managed by Chief Executive Fernando Chui Sai On. The hospital employs about 300 doctors and 700 nurses.

Have ailment, will travel R

eliable figures might be hard to come by but it is common knowledge that many residents travel overseas for medical care. Bangkok’s Bumrungrad International Hospital is one of the most popular destinations with an average of 70 patients a month from Macau. “We are expecting the number [of patients from Macau] to increase in the future, as many more people in the Greater China region are becoming familiar with our name,” the hospital’s international marketing senior manager Philip Cheong told Macau Business. Bumrungrad comprises a 554-bed tertiary care hospital, a health screening centre, more than 30 speciality centres, a 125-room hotel and serviced apartments for families and convalescing patients. Bumrungrad, which in Thai means “care for the people”, has been in business for more than 30 years. It receives more than 400,000 overseas patients a year – about 5,000 come from Hong Kong. Hong Kong is itself another popular option for people who prefer to be treated outside Macau. Macau Business contacted the Hong Kong Hospital Authority to find out how many Macau residents use its medical services but the authority said that it did not collect detailed statistics about the origin of its non-local patients. JANUARY 2011

mbreport Private healthcare 58 The private rooms are all in the Dr Henry Fok Specialist Medical Building, opened in June 2009. Prices range from MOP1,200 to MOP6,000 a night. There are also cheaper options. In the old inpatient building, a bed in a double room costs MOP180 and a bed in a three-bed room costs about MOP50. One-third of the beds are sponsored by the government or the Kiang Wu Charity Association. Just over one-third of the hospital’s annual revenue of MOP718 million comes from the government in subsidies for medical care for children and the elderly, and for specific services such as hospice and palliative care, radiotherapy, cardiovascular surgery and prenatal or obstetric care.

Complementary care More than half of the hospital’s patients are locals. The remainder mostly come from Hong Kong and the mainland. Many have some form of financial support thanks to the hospital’s arrangements with 45 institutions and 15 insurance companies. Mr Wang welcomes the proposed new public hospital in Cotai. He believes Taipa needs it. “It’s a good thing. We are not the enemy, disease is. We work hand-in-hand, side-by-side [with public health services],” he says. Nor does Mr Wang seem concerned that a new hospital might eat into Kiang Wu’s bottom line – the hospital has a clinic in Taipa. He is confident that, if Macau’s economy continues to flourish, the government will give more support to all hospitals, public and private. “If we improve our standard, income may increase,” he comments. Mr Wang began his role as director in October. His “to-do list” includes a programme to modernise the hospital, improve the standard in some specialties and to provide doctors with continuing training. His aim in the next five years is to have some of his doctors receive training in the best hospitals in the mainland. “In the future, we hope the government can support us with more money to develop our hospital,” he says. JANUARY 2011

Patient pampering A new entrant into Asia’s cut-throat medical tourism sector is finding its feet in Macau BY BY SOFIA JESUS

magine relaxing in a whirlpool bath before your doctor’s appointment or having a massage after the checkup. It sounds unreal, but it is on offer at the Malo Clinic Health and Wellness Macau – billed as the world’s biggest medical spa. The business offers patients highquality healthcare, with an emphasis on preventive medicine, as well as “wellness services” and treatments in an environment that is a world away from that of a hospital, founder Paulo Maló tells Macau Business. The 15,000-square-metre clinic includes a day hospital, spa, pharmacy, beauty lab and a relaxation zone. The clinic has six fully-equipped surgeries, a cardiology centre and several other specialities on-site.

Healthcare’s globalisation The Malo is a recent entrant to Asia’s competitive medical tourism industry. The sector as a whole is in its infancy but shows “enormous potential”, according to the Asian Medical Tourism Analysis 2008-12 by European firm Research and Markets. The report

projects revenues in Asia will grow at a compound annual rate of about 17 percent over the next two years. The governments of India, Singapore and Thailand have invested heavily in their healthcare infrastructure to meet the demand. The trio currently dominate Asia’s medical tourism industry, with a combined market share of around 90 percent at the end of 2009. In Singapore, the most recent medical tourism statistics from the Singapore Tourism Board claim that revenue from medical tourism in 2007 was worth US$1.5 billion (MOP12 billion) to the economy.

Tour and tuck Macau’s Malo opened at The Venetian Macao last year, a part of the Malo Clinic group, which has establishments around the world. The investment in the outlet here is about US$45 million and it employs 130 staff. The government’s support in licensing and hiring foreign doctors helped convince Mr Maló to set up in Macau, plus the pedestrian traffic of

70,000 people a day at the Venetian was considered ideal, he says. At present only one in 10 customers goes to the Venetian principally to attend the clinic but Mr Maló says business “is going according to expectations”. He admits that the global financial crisis has hit the medical spa’s revenue, as it has the Venetian’s.

The Lisbon-based Malo Clinic group started expanding internationally in 2007. The group’s total income has grown rapidly. In 2009 it turned over €50 million (MOP680 million) and it expects to have doubled that last year. The international financial crisis and the difficulty in getting credit, delayed the opening of some establish-

ments but Mr Malo says the group has still achieved “great success”. “The internationalisation process is going very well.” In the Asia-Pacific region it has establishments in Macau, Japan, Hong Kong and Australia. Mr Maló hopes to open clinics in Shanghai and Beijing soon, and India is also on the list.

JANUARY 2011

CEO Interview

The long haul MGM Resorts International is placing its biggest bets in Asia. The companyâ&#x20AC;&#x2122;s Macau joint venture with businesswoman Pansy Ho Chiu King will soon launch its IPO in Hong Kong, while it also eyes developing a hotel-casino resort in Cotai. Meanwhile, the US-based firm has a deal with a Chinese partner to launch dozens of hotels in the mainland. In this exclusive interview with Macau Business, James Murren, chairman and chief executive officer of MGM Resorts International, talks about the future and the painful obstacles the company must overcome in Macau and the United States in order to achieve their great comeback BY PAULO A. AZEVEDO IN LAS VEGAS acauâ&#x20AC;&#x2122;s gaming revenue grew by more than 50 percent in 2010. Every year since market liberalisation, the city has posted a new gaming revenue record. How great would it have been for MGM Resorts International to have invested in more properties in the territory some years back or have already advanced to Cotai?

James Murren - We were not an original concessionaire. We did not have the opportunity to invest earlier than we did. As soon as we did have the opportunity, we invested right away as a joint venture [with businesswoman Pansy Ho Chiu King in MGM Grand Paradise]. We wanted to build something of the highest possible quality and it took some time to do that. The results of the facility speak for themselves. We are clearly one of the highest quality resorts in the city and we want to be much larger in Macau.

Do I wish that we had more resorts or a bigger footprint right now? Of course I do. Looking back to what has happened to the market, we wish we had more investment [in place] already. This is not a sprint; this is a marathon. We are very bullish on Macau for the long term and we intend to be there for decades to come. Nevertheless, how anxious are you to have a property in Cotai?

We are extremely excited about the prospect of being in Cotai. We think that it is going to be an important element of development there. It is not for us to decide that however. It is up to the government to decide whether or not they want to secure more sites for more casino developments and, if so, whether MGM [Grand Paradise] would be one of the selected companies. We think that the prospects for us to be in Cotai are bright. We know that we are moving down the path and we hope that we will be fortunate enough to be there. However, it is very important that

we do not think of this as the only opportunity to grow in Macau. There are more opportunities on the peninsula and throughout the SAR in general. We are keeping our eyes open. When do you expect an answer from the Macau government?

I do not have any expectations. I have learned in Macau that I cannot speak for the government. We are hopeful that it is a matter of months not years, because we are excited and anxious. We would love to be in Cotai and we will be prepared if we are allowed to be there. Lawrence Ho, Melco Crown Entertainmentâ&#x20AC;&#x2122;s CEO, told Macau Business that if the battle between the partners of Macao Studio City is not settled and they decided to sell, he would be interested. Soon after, Ambrose So said the same, that SJM would be interested. If they decide to sell, and of course if the Macau government agrees, would you also be interested? JANUARY 2011

CEO Interview

I did read those reports but it is not appropriate for us to comment on other development projects. Particularly one such as that, in the midst of litigation, which seems very unfortunate for everyone involved, including Macau itself. I would answer the question by saying that it is a very attractive piece of property, very strategically located and of a great size, which will likely ultimately be a very successful integrated resort site. By virtue of the facts, it has those characteristics that we would be interested in. But we are not going to involve ourselves in a project that is already underway right now.

The partner play MGM Resorts International is heavily targeting the mainland market, with several new hotels. Beijing by August 2011 and then Sanya, Tianjin, Chengdu and Shanghai, just to name a few, all in a four-year period. It shows a lot of confidence in that market.

We do have an awful lot of confidence in the Chinese economy and in the growth of the hospitality business in China. Part of our confidence in the opportunity there is by virtue of our partner, the Diaoyutai State Guesthouse. We formed this partnership three years ago, long before many were contemplating attempting to develop hotels in the mainland. The partnership has now secured 19 different projects. But there are many others in the pipeline given the robust nature of the Chinese economy and the opportunity for urban development. By 2020, there will be 220 cities in China with over a million people. The connectivity between those populations through the high-speed train network and the successive hotel developments that are already operating today, with many more underway, gives us great confidence. Per capita incomes have been soaring, the propensity to spend is rising and the attractiveness for brands is well known. What has become very apparent is that the history of the concept of “made in China” has now become “made for China”. And being “made for China” means that brands and companies need to be sensitive to what works in China. We believe that, given Diaoyutai’s unparalleled reputation for quality in JANUARY 2011

“DO I WISH THAT WE HAD MORE RESORTS OR A BIGGER FOOTPRINT [IN MACAU] RIGHT NOW? OF COURSE I DO. LOOKING BACK TO WHAT HAS HAPPENED TO THE MARKET, WE WISH WE HAD MORE INVESTMENT [IN PLACE] ALREADY” hospitality and products, and MGM’s unparalleled reputation in entertainment and hospitality, we have a significant advantage over other new entrants into the market. What is the responsibility of each partner, exactly? MGM will only manage or will it be a 50-50 partnership?

The partnership was formed in 2007. Diaoyutai owns 51 percent of the joint venture, MGM owns 49 percent. There is a board of directors and the chairman of Diaoyutai is the chairman of the joint venture and I am the vicechair. That board governs the affairs of Diaoyutai/MGM Grand Hotel Management Co. Ltd. Diaoyutai and MGM jointly, there is no separation of duties, develop the projects for the owners [of the properties] and manage all the hospitality developments. For example, at the first one, the Diaoyutai Art Hotel in Beijing, MGM is responsible for sourcing a lot of the interior designers, the training of all the personnel and for the marketing plans. We will jointly manage the property [with Diaoyutai] once it opens. In Sanya, we contributed with our brands at no cost. In this case, MGM does not get a branding fee. In other words, the joint venture has decided through the owner of the hotel to call it MGM Grand. The joint venture Diaoyutai/MGM is responsible as the master developer with the owner.

On the financial side, is MGM bringing 49 percent of the investment needed?

Both partners equally contributed for the seed capital, a few million dollars each into the joint venture to start staffing the people that work for the company. The major construction costs are supported by the owners [of the hotels]. We are not an equity owner in any of these projects. We are the developer and manager. Five years from now, 50 MGM projects will be underway in the mainland, including meetings, incentives, conferences, and exhibitions, entertainment, offices, residential and retailing in at least 20 cities. Those are quite impressive numbers. Will it take a lot of effort to run all those properties?

Yes it will. We both understand, Diaoyutai and MGM, that our efforts have to be outstanding. It is vital to the reputation of Diaoyutai and of MGM that, especially the early projects, are developed to the highest possible quality and are operated at the highest possible service standards. In Chengdu, the owner has very ambitious plans for the region. We are doing what we can to bring those dreams to reality. We have opened up quite large resorts many times, including City Centre [a multibillion dollar mega-complex in Las Vegas] just a year ago. We fully understand the pre-opening process, the interviewing process, the recruiting process, the training once the employment is secure, leading up to the opening and the post-opening, which becomes even more important.

Marketing opportunity It is also a good marketing strategy. It will be easier to bring Chinese tourists to all the other MGM properties when they are already familiar with the brand.

No doubt there is a cross-marketing opportunity. But we have a rich heritage. Many people still believe we make movies. That is certainly part of our past, not of our present or future. It is a great corporate opportunity for MGM to be able to plant its flag with the best possible partners in some of the major cities in China and not one that we take very lightly.

JANUARY 2011

65 Vietnam’s project is still on track?

Yes. It is called Ho Tram resort. I was there recently and all the pilings were done, the tower cranes were being erected. That project slowed down but now has sped up again. Any other places in Asia you would be interested in investing in?

We have not announced any others [but] we are very actively looking at other parts of Asia. I think that on a nongaming side, we would very much like to be in Japan and in Thailand. We have looked at Taiwan as well [and] we have always aspired to be in Hong Kong. It is a difficult, crowded market to get into but there is a possibility. We are taking one step at a time but we are really focused on the non-gaming element. To hope for a gaming jurisdiction to open up, everybody has got their sights set on Japan. We have taken the view that if and when Japan decides to go down this path, it will be extraordinarily transparent. It will be well known to all that there will be no competitor advantage of being early or aligning to a province or location.

“WE THINK THAT THE PROSPECTS FOR US TO BE IN COTAI ARE BRIGHT. WE KNOW THAT WE ARE MOVING DOWN THE PATH AND WE HOPE THAT WE WILL BE FORTUNATE ENOUGH TO BE THERE. HOWEVER, IT IS VERY IMPORTANT THAT WE DO NOT THINK OF THIS AS THE ONLY OPPORTUNITY TO GROW IN MACAU. THERE ARE MORE OPPORTUNITIES ON THE PENINSULA AND THROUGHOUT THE SAR IN GENERAL”

Clearly we have an interest in it. But our time is better spent in what is possible. And what is possible is non-gaming. In Macau, the mainland and Vietnam, you have teamed up with different partners. For those new jurisdictions, are you also looking for a local partner or are you thinking of bringing Ms Ho, your Macau partner, to other locations outside of the territory?

If anything happens on Hainan Island on the gaming side, we most likely would want Ms Ho to be a part of that. If Hainan opens gaming?

Gaming, but if it is non-gaming, it is with Diaoyutai. We believe very strongly in the value of local partners. Ms Ho has brought a tremendous intellect, level of experience and contribution to the Macau joint venture. Diaoyutai certainly has a history of being a good partner. Partnerships are marriages. Some people are great at being married and some are great at being alone. We believe very strongly in marriages and in partnerships. We do not presume to know everything about a market that we live far away from. It is a model that has worked for us in the past very successfully in the United States and it is working well overseas.

Listing to fund Cotai Will the money raised with the estimated listing of 20 to 25 percent of MGM’s Macau joint venture be used to fund all these activities?

I think we are well on track to go public with that joint venture. Part of the proceeds, when we do it, will be allocated to developing more in Macau, hopefully in Cotai. Bringing some super junkets to MGM Macau from Wynn Macau was a good move for the company, even if it irritated Steve Wynn. If you are not raising the commissions paid to those super junkets, as we were told you are not, how did you succeed in having them open VIP rooms there? Exactly what did you offer them?

MGM Macau is a beautiful facility that has been underutilised since its opening. Some of the problems with MGM Macau were self-inflicted and others were beyond our control.

MGM MACAU AT FULL SPEED T

he speed of growth at MGM Macau has prompted the gaming operator to make full use of all its gaming tables. MGM Macau’s president, Grant Bowie told Macau Business the casino had not previously made use of all its 427 gaming tables, with about 380 being used. However, with the building up of the business that took place in late 2009 and last year, the company has progressively put to use its spare capacity. Mr Bowie said all the casino’s gaming tables were approved by the government long before the industry-wide cap was announced last March. The company is making better use of its resources. In December 2009, MGM Macau was last in the league rankings of gross gaming revenue market share with a market share of just 7 percent. The operator has increased its business volume and, last month, it had a market share of 11.7 percent and had climbed one position on the ladder at the expense of Galaxy Entertainment Group. JANUARY 2011

CEO Interview

Construction around the site made the access very challenging. One Central was not opened when MGM was inaugurated and that impeded circulation throughout the property. Those were events beyond our control. What was within our control was marketing, operations and developing broader and deeper relationships with junket operators. We did not do that as well as we could have done. We have made many changes since we opened and we brought in a lot of talent operationally and from the marketing perspective. We have been building up our slot business dramatically. We have attracted some junket operators that were not in our building [and] had been in our competitors’, which has lifted the eyebrows of some of the competition. The criticism is not factually based because we have not changed the terms. The market is becoming more competitive, the [VIP] operators are becoming more discerning and they are more selective in terms of where they would like to set up the “shop”. In the stunningly beautiful MGM Macau tower, there were opportunities to bring in junket operators and we did that. We are proud of being able to do that and we are going to do that more. We are opening our supreme gaming area that will cater to the upperscale mass business. Some of our VIP slot business will be in that area. But we have over 40,000 square feet of shelledout space that we have not touched yet. We have a theatre that we never fully built and we have many other facilities that we can expand and will do so. Are you adding more tables?

We will be expanding to the extent that we are allowed to under the cap, yes. We have been working to that end and there are opportunities even within the current regulations for us to do that (see box).

No restriction fears In two consecutive days, top officials claimed that the Macau government is striving to control the gaming industry’s expansion, in order to promote an orderly and planned growth. Do you fear negative impacts ahead?

I am very encouraged by that, actually, and I will tell you why. JANUARY 2011

“WE ARE WELL ON TRACK TO GO PUBLIC WITH MGM’S MACAU JOINT VENTURE. PART OF THE PROCEEDS, WHEN WE DO IT, WILL BE ALLOCATED TO DEVELOPING MORE IN MACAU, HOPEFULLY IN COTAI” I had an opportunity to meet ambassador Wang Guangya, the current director of the Hong Kong and Macau Affairs Office when I was in Beijing, and I had an opportunity to be with the chief executive and secretary Francis Tam Pak Yuen. The impressions I got from meeting with a variety of officials is that the vision for Macau is one that is thoughtful and very clever. There will be pauses along the growth path and diversification has been a very important keyword in all the dialogues around Macau’s future. How will it diversify? It will diversify into many different business types, in other words, vertically. It will build upon the strength that already exists today, which is an emerging diverse hospitality centre, as Hong Kong is a financial centre. Macau can be a larger hospitality centre. How do you do that? Well, diversifying into integrated resorts that focus not only on the business traveller but also on the fit for the casual traveller, people like you and I that would visit for a long weekend, and leisure travellers. They [integrated resorts] can develop businesses that are attractive, whether it is theme parks, museums, galleries, public spaces and other forms of hospitality. But gaming, in my opinion, will always be a very major part of that. I think that it will grow, but in a sustained way. The regulatory climate is going to be very cautious because the risks are great and I am sure everyone understands that. If any operator runs into any regulatory problem, it is going to cast a cloud over the jurisdiction and nobody wants that.

In Macau, it is more than time for the system to become more transparent.

Again, it gets back to my comments about the United States and its growth. That is what has happened in Las Vegas. Las Vegas grew very rapidly and the regulatory environment struggled to catch up and stay ahead. I am very proud of what I believe to be the best regulatory environment in the world. I think it is a standard by which other people judge themselves in other parts of the world. But it did not come without a lot of work by the regulators here in Nevada. They had to evolve and grow as rapidly as the gaming industry. The same is true in Macau. The Macau government plans to create a database to record data from junket promoters and their associates, according to the chief executive. Will it help?

Yes. I still do not fully understand all the implications yet, but that is certainly a step towards the path of what I have heard from the government.

Atlantic nightmare Is Atlantic City a nightmare to forget once and for all, after their regulators ruled against your partnership with Ms Ho in Macau, eventually obliging MGM International Resorts to quit that market?

[Laughs] Well, we have not forgotten Atlantic City, since we still own half of the Borgata [Hotel Casino & Spa in Atlantic City]. There will be a time, hopefully in the not too distant future that our equity interest in a casino in Atlantic City will be a memory. However, we are still a very large landowner, something people tend to forget. We own an awful lot of land in Atlantic City. We are disappointed about how this has turned out. We feel very strongly in the value of this partnership. We know clearly what Ms Ho has brought to this partnership. She is an extraordinary CEO and an accomplished person, and I think the process could have been handled much better. We felt that [leaving Atlantic City] was the better course of action for our company to settle with New Jersey [regulators] at this point in time, rather than

“IN THE STUNNINGLY BEAUTIFUL MGM MACAU TOWER, THERE WERE OPPORTUNITIES TO BRING IN JUNKET OPERATORS AND WE DID THAT. WE ARE PROUD OF BEING ABLE TO DO THAT AND WE ARE GOING TO DO THAT MORE” to continue to prolong this process to its next phase, which would be going to the casino control commission. It could have dragged out for months or years. Do you still have high hopes that one day they will review their opinion on Ms Ho?

I do not have high hopes now. I think it is a possibility but not one that we are actively going to pursue. Our company’s energies should be focused in Las Vegas where the great recession has taken its toll on the resorts. We are starting to recover our business now. We think the best opportunity for our company is to get these resorts back to their pre-recession levels of profitability. Growing in Asia is a parallel priority and everything else we are looking at comes secondary. Finally, of course, City Centre. It is an astonishing property but it came with a price. What are the expectations in overcoming the financial challenges related to it?

City Centre is a fascinating book of which only about three or four chapters have been concluded. And those were the toughest ones. Actually, the first two chapters were kind of exciting and fun and then the last two chapters have been extraordinarily painful. But we turned the page on that last chapter because the financing of City Centre is underway right now. It is profitable as an enterprise. It is progressively doing better and it is going to be, in my opinion, the most profitable resort in Las Vegas for many decades to come. JANUARY 2011

Gaming

Billions race

A year of record revenues ends with a new monthly record, making 2010 the gaming sector’s biggest yet

acau set a new monthly casino gross gaming revenue record in December, according to official data released early this month. With total revenue of MOP18.88 billion (US$2.36 billion), last month’s casino take beat the previous record of MOP18.87 billion set in October, by a small margin. December’s record also represented a 66.4 percent year-on-year increase. And, meeting expectations, last year saw a record established for annual revenue. The 12 months ended with a gross revenue of MOP188.34 billion, a 57.8 percent increase over 2009, which was also the previous record.

Four-year spiral The upwards trend is likely to continue for the next four years, according to new research by PricewaterhouseCoopers. The company estimates casino

gross gaming revenue in Macau will top US$45.1 billion in 2014. That is almost double the overall figure from last year. According to the firm’s latest report, casino gross gaming revenue in Macau will increase at a compound annual growth rate (CAGR) of 24.7 percent until 2014. This year, the company has forecast gross revenue of US$28.3 billion. Next year’s amount should increase to US$34.2 billion, reaching US$39.9 billion by 2013. SJM chief executive officer Ambrose So Shu Fai also expects gross gaming revenue to continue to grow this year. He estimates a growth rate of between 15 and 20 percent for the full year. The PricewaterhouseCoopers report is also predicting a good 2011 for Singapore, saying it will become the

Gaming Results: Gross Revenue

Asia-Pacific region’s second biggest casino gaming market, overtaking Australia and South Korea.

Steady start Exclusive information compiled by Macau Business indicated that there were no major shifts in the gaming operator’s market share last month, although Sands China increased its performance by around two percentage points. Stanley Ho Hung Sun’s Sociedade de Jogos de Macau (SJM) continues to lead the ranking, with a December market share of 30 percent, followed by Wynn Macau with 17 percent, and Sands China, with about 16.7 percent. Melco Crown Entertainment was fourth, with a market share of about 14.5 percent. MGM Macau was next with 11.7 percent and Galaxy Entertainment Group rounds out the list with a 10-percentage-point market share.

In Million MOP (1HKD:1.03MOP)

17,075

18,000 16,000

13,937

14,000 12,000

18,883

18,869

19,000

13,445

13,569

Feb 2010

Mar 2010

14,186

16,310 13,642

17,354 15,773

15,302

Aug 2010

Sep 2010

11,347

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

Dec 2009

Jan 2010

JANUARY 2011

Apr 2010

May 2010

Jun 2010

Jul 2010

Oct 2010

Nov 2010

Dec 2010

Gaming Results: Market Share Per Operator 2010

2009 Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

SJM

31%

30%

32%

34%

32%

30%

32%

29%

30%

33%

31%

30%

Sands China

22%

20%

21%

19%

22%

19%

20%

18%

15%

17%

Galaxy

13%

10%

11%

10%

12%

13%

12%

11%

10%

Wynn

17%

13%

15%

13%

14%

16%

17%

15%

14%

12%

13%

17%

MPEL

12%

16%

14%

13%

14%

13%

15%

17%

14%

15%

MGM

10%

11%

12%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

Dec 2009

Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

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

JANUARY 2011

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 JANUARY 2011

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

Champagne numbers Macau casino stocks performance year-to-date vs Hang Seng Index 35 30 25

BY RAY CHAN

asino stocks listed in Hong Kong were among the top performers last year. Investors were broadly satisfied with the standout performance of the Macau gaming sector. The share prices of SJM Holdings (880 HK), Galaxy Entertainment (27 HK), Wynn Macau (1128 HK), Sands China (1928 HK) and Melco International (200 HK) were up by 181 percent, 169 percent, 95 percent, 68 percent and 25 percent year-on-year respectively, in trading on Christmas Eve. The shares easily beat the benchmark Hang Seng Index which at that stage had added just 4 percent. Investors signalled their pleasure and were reluctant to take new positions ahead of the holiday season, sending the average trading volume lower to below HK$60 billion for December, compared to the annual average of HK$70 billion a trading day.

Choppy seas Nevertheless, December was not a calm month for the casinos, especially for Sands

(Base=HK$10)

10 5 0 Jan 2010

Feb 2010

Mar 2010

Apr 2010

SJM Holdings Ltd. Sands China Ltd.

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Galaxy Entertainment Group Ltd. Melco International Development

Oct 2010

Nov 2010

Dec 2010

Wynn Macau Ltd. Hang Seng Index

US casino stocks performance year-to-date vs S&P 500 Index

(Base=US$10)

40 35 30 25 20 15 10 5 0

Jan 2010

Feb 2010

Mar 2010

Apr 2010

Las Vegas Sands Corp. Penn National Gaming Inc.

May 2010

Jun 2010

Jul 2010

Aug 2010

Wynn Resorts Ltd. Melco Crown Entertainment-ADR

Sep 2010

Oct 2010

Nov 2010

Dec 2010

MGM Resorts International S&P 500 Index

JANUARY 2011

As of December 24

It was a sparkling year for casino stocks that all outperformed the market in Hong Kong

Gaming | Stock Watch

14-day Relative Strength Index SJM Holdings Ltd. 90 80 70 60 50 40 30 20 10 0 Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Galaxy Entertainment Group Ltd. 90 80 70 60 50 40 30 20 10 0

Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Sands China Ltd. 90 80 70 60 50 40 30 20 10 0 Jan 2010

Feb 2010

Mar 2010

Apr 2010

Wynn Macau Ltd. 90 80 70 60 50 40 30 20 10 0 Jan 2010

Feb 2010

Mar 2010

Apr 2010

As of December 24

Melco International Development 90 80 70 60 50 40 30 20 10 0

Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

Jun 2010

Overbought JANUARY 2011

Jul 2010

Aug 2010

Neutral

China and SJM Holdings (see reports in this section). Sands announced that it was close to selling its Four Seasons branded luxury apartments in Cotai under a co-op format but lost its concession on land parcels 7 and 8. At SJM Holdings, chairman Stanley Ho Hung Sun transferred 7 percent of his stake to the company’s executive director Angela Leong On Kei, easing concern about succession plans for the 89-year-old. Mr Ho also stepped down from his role as managing director of Sociedade de Jogos de Macau, the licensed Macau gaming subsidiary of SJM Holdings. Ms Leong replaced him. The Macau government announced it had rejected SJM’s application for Cotai parcels 7 and 8. The land now appears destined for public auction.

Golden gongs

Sep 2010

Oct 2010

Nov 2010

Oversold

Dec 2010

Fourth quarter estimates by Morgan Stanley ranked SJM and Wynn Macau as the bestperforming stocks. “We expect SJM and Wynn Macau to beat consensus expectations for the fourth quarter of 2010 EBITDA by 16 percent and 28 percent, respectively,” the investment bank said in a research

note released last month. “While the People’s Bank of China rate hikes and regulatory risks are still looming, based on a strong set of monthly data of October/November, we expect SJM and Wynn Macau to outperform peers.” Morgan Stanley expects property EBITDA of US$333 million or MOP2.66 billion (excluding ferry operations) for Sands China and US$270 million for Wynn Macau. The investment bank predicts company EBITDA of US$118 million for Melco Crown Entertainment, HK$1,389 million (US$179 million) for SJM, and HK$594 million (US$76 million) for Galaxy. Looking ahead, there is an expectation that MGM’s Macau unit will join its rivals to raise about US$1 billion on the Hong Kong Stock Exchange early this year. On the mainland, investors have expressed concern over monetary tightening. The People’s Bank of China increased its benchmark one-year lending and deposit rates by 25 basis points on December 26, pushing the one-year deposit rate to 2.75 percent and the lending rate to 5.81 percent, suggesting the world’s second largest economy has entered a wave of interest rate hikes.

Gaming

Strategic plan Gaming tycoon Stanley Ho has started laying out the groundwork for his plan to hand over control of the empire e has been “the” man in Macau’s gaming industry for the past 50 years. Now, Stanley Ho Hung Sun seems to be finally preparing to retire. Last month, a series of share handovers and power swaps eased concerns about the succession plan for the 89-year-old titan. For starters, Mr Ho stepped down from his managing director position in gaming concessionaire Sociedade de Jogos de Macau S.A., the licensed Macau gaming subsidiary of SJM Holdings. His fourth wife, Angela Leong On Kei, has replaced him. The appointment was authorised by the government, as required by Gaming Industry Regulatory Framework Law. Ms Leong told Macau Post Daily that her appointment was a “normal procedure” due to Mr Ho’s lengthy recovery from a head injury suffered in mid-2009. “It’s inconvenient for him to frequently travel to Macau and handle company matters,” she said. “That is why I was appointed.”

Earlier last month, Mr Ho had transferred 7 percent of his SJM Holdings stake to Ms Leong. Mr Ho remains the company’s biggest shareholder with a 56.34 percent stake. As for Ms Leong, her share now stands at 7.69 percent. In August, SJM Holdings also named Timothy Fok Tsun Ting as executive director. He is the son of late Hong Kong tycoon Henry Fok, whose family’s foundation is a major shareholder in SJM’s parent company. Mr Ho has also hived off other parts of his vast business empire. In December, he transferred a 12 percent stake in transport and property company Shun Tak Holdings to a company controlled by three of his daughters Pansy Ho, Daisy Ho and Maisy Ho. Mr Ho’s move to divide his wealth among his vast family – 17 children overall from four wives – is seen as a positive move by investors. The underlying goal is to reduce uncertainty related to the mogul’s succession, Deutsche Bank said.

Play for parcels 7 and 8 ruled out

fter rejecting Sands China’s application for land parcels 7 and 8 in Cotai, the Macau government did the same with SJM Holdings’ request to win control of the same plots. The company was informed last month and for now, the government says it has no plans for the land’s development. Meanwhile, SJM is still waiting for word on its application for two other parcels in Cotai. One of the sites is close to the Macau Dome and next to the plot where Macau Theme Park and Resort has announced the construction of a gaming-free, familyoriented theme park and resort. SJM announced last month it was in talks with the park promoters, headed by Angela Leong On Kei to connect the properties and share facilities. Ms Leong is an executive director and a shareholder at SJM Holdings.

JANUARY 2011

Gaming

Mud-slinging and missteps

propriate authorisation. Again, the letter makes no specific claims and it is unclear if the Playboy deal refers to the nightclub that now operates out of the Sands Macao.

Macau government saying the lengthy process that would allow the Four Seasons luxury apartments to be sold through a co-op mechanism was “at its final proceeding”. The company added that the draft contract should be issued shortly. “The company has been inquiring of prospective buyers over many months and has accelerated the inquiries to ascertain the viability of a concentrated sales effort starting after the first of the year,” Mr Adelson said in the same announcement. Nevertheless, the government was steadfast in its denial. In a press release, the Lands, Public Works and Transport Bureau said it was still reviewing the application and no final decisions had been made yet. Other embarrassing incidents involving Sands China happened in December. A police operation rounded up more than 100 suspected prostitutes at the company's flagship Venetian Macao resort while Mr Adelson was in town. Then the company faced a protest from cleaning staff angry about differences in salary for jobs with similar responsibilities and over time hours. The dispute required the involvement of a mediator from the government’s Labour Affairs Bureau.

A dire month

Question marks

Mr Jacobs is seeking compensation from Las Vegas Sands for his termination. He argues he was fired because he resisted demands from the company’s chairman and CEO, Sheldon Adelson, for him to engage in improper and illegal activities. The public mud-slinging is the most recent colourful event in a string of news and incidents that made December a challenging month for Las Vegas Sands and its Macau subsidiary. The month began awkwardly with a Sands China announcement. It said the company had received a letter from the

This string of incidents prompted some analysts to question Sands China’s relationship with the government. Those questions were more pointed in the wake of the government’s refusal to grant Cotai parcels 7 and 8 to Sands, a decision that was made public early in December. The company has since submitted an appeal to the courts over the decision, Macau Daily Times reported. Sands China’s acting CEO Michael Leven downplayed the land blow-out, telling Bloomberg that the government was “trying to manage growth in a healthy way”. Projects by Wynn Macau, MGM and Sands’ parcel 3 may be the next three Cotai casinos allowed, he said. “They’re probably not going to allow them all to be built at once,” he told the news agency. “When one gets built and gets close to opening, they’ll allow the next one to start construction and it will open after the existing property ramps up.”

Las Vegas Sands levels accusations against its former Macau chief Steven Jacobs of making backroom deals as its operation here bumbles through to the end of 2010 Steven Jacobs (left) at Playboy’s 50th anniversary party at the Sands Macao, one of his last public appearances as Sands China’s president and chief executive

as Vegas Sands says it fired former Sands China chief executive officer Steven Jacobs because he was working on unauthorised deals and had violated company policies. The claims are made in Mr Jacobs’ termination letter, included in a court filing by Las Vegas Sands in the case against Mr Jacobs by the company. Sands China is the Macau subsidiary of Las Vegas Sands. The dirty laundry alleging dirty deeds comes after a particularly trying month for Sands China that saw it make headlines for the wrong reasons. According to the August 5 termination letter, Mr Jacobs repeatedly acted in a manner that exceeded his authority and “failed to keep the board of Venetian Macao or Sands China informed on important business decisions” and other actions Mr Jacobs took on behalf of the company. The letter cites the negotiations around a transaction with Harrah’s Entertainment, which is now Caesars Entertainment, involving parcel 3 and on parcels 7 and 8 in Cotai. The exact nature of the deal is unclear. The letter also mentions a deal signed with Playboy over which Mr Jacobs apparently failed to obtain ap-

JANUARY 2011

According to the August 5 termination letter, Mr Jacobs repeatedly acted in a manner that exceeded his authority

There’s no holding ’em High-stakes poker in Macau is skyrocketing, with Chinese millionaires trying to beat the American pros orget about VIP baccarat. The new craze at Macau’s casinos seems to be high-stakes Texas Hold ’em poker – played for extremely high stakes. Poker tables have been hosting games with MOP320 million on the table, with blinds 10 times higher than usual in Las Vegas. Industry insiders say wealthy Chinese businessmen that have

moved over from VIP baccarat are doing the heavy betting. Tracking down these high-stakes games is something of a challenge, since they are taking place semi-privately. The indications from specialist forums are that Hard Rock, StarWorld and Wynn Macau are some of the venues holding high-stakes games regularly. It is even harder to find out how

Heavy betting T

he high-stakes Texas Hold ’em poker games in Macau drew worldwide attention in November, when the Asian Poker Tour hosted a tournament at City of Dreams. With several top players in town, the real action ended up being at the veryhigh-stakes cash game tables, on the sidelines of the tournament. Games included some of the most recognisable names in the international poker world, like American professional players Tom Dwan and Phil Ivey, who faced wealthy Chinese businessmen. Some of the most talked-about games took place at StarWorld’s Poker King Club, one of the spots for high-stakes poker in Macau, with 11 tables. Although the action happened behind closed doors, there were regular updates available from several of the main specialist websites and online forums.

much is being bet. Official figures make no distinction between limit and nonlimit cash poker games. Besides, the data made public by the Gaming Inspection and Coordination Bureau refer only to casino gross revenue from poker. Macau’s Texas Hold ’em regulations say gaming operators can charge a commission, called a “rake”, of three to five percent of the pot. Since the maximum rake is capped – it can go up to only five times the value of the big blind – the figures for casino gross gaming revenue from poker fail to give a clear picture of how much is being bet. Generally, the rake depends on the limits – a maximum of HK$100 on lower-limit tables and HK$300 on the higher or no limit tables, industry insiders say. The values are higher than those in Las Vegas. Even so, casino gross gaming revenue does give a hint about how fast poker is growing. Casino gross revenue from poker jumped to MOP52 million in the third quarter of 2010 from MOP4 million in the first quarter of 2008. JANUARY 2011

Gaming

‘Wii, not Tetris’ The arm’s race between slot machine makers to build the biggest and best includes electronic replacements for games that fall inside the government’s cap on BY JOANA FREITAS

JANUARY 2011

77 aster, higher, stronger – the Olympic motto could be the maxim of modern gaming machine suppliers. With casinos demanding more advanced, networked, interactive and centrally managed slots, manufacturers are boosting their budgets for research and development. Slots are constantly evolving and manufacturers need to keep up, says Bally Technologies’ Asia-Pacific vice-president, Cath Burns. “It’s necessary to reinvent yourself over and over again, and companies like Bally spend a lot of money hiring people just to think about where to innovate,” she says. In the third quarter of 2010 alone, Bally spent US$21.4 million (MOP171 million) on research and development, 10 percent more than a year before. The sum was equivalent to 13 percent of the company’s third quarter revenue. International Game Technology (IGT) spent US$52.7 million on research and development in the same period, 2.3 percent more than a year before. “No other company would risk spending a lot of money on systems [that] they don’t know... are going to work but it is a risk that is worth it for IGT,” says Matthew Hiu, one of those in charge of product management at the US-based company. “There’s a big difference between the casinos that use technology and those that don’t. No one wants to play Tetris when they can play Wii.”

Slot boom Although it generates the highest gaming revenues in the world, Macau still lags behind other places in using high-tech slots. This is partly because most of its business is done at the gaming tables. Only around 5 percent of casino gaming revenues come from slots. “We can see Macau as the Las Vegas from 15 years ago in terms of [the] slot machines market,” says Mr Hiu. Although slots represent a small piece of the pie, there has been continuous growth in revenue for several years. Gross gaming rev-

enue from slots has increased every quarter for the past five years. The government’s decision to cap the number of gaming tables at 5,500 until 2013 may further boost this segment. No cap was announced for slots, meaning gaming operators can continue to enlarge their operations in this segment. Sands China, for instance, was obliged to cut the number of gaming tables it was expecting to deploy on parcels five and six in Cotai to 400 from 670. Instead, the company will add 100 electronic gaming tables, technically classified as slots.

Interactive play The new generation of slots is a far cry from the old one-armed bandits. Gaming operators are demanding products that allow for faster play, while enhancing player experience and increasing loyalty. One of the newer trends in the sector is server-based gaming. In this model, electronic games are downloaded in a matter of seconds from the operator’s back-end content management system over a high-speed network to the slots on the casino floor. Another trend is to maximise the use of digital signage on each slot, to pass promotional messages directly to players and to encourage a higher level of interactive response, such as ordering their favourite food. “We have to offer players a thrilling experience,” says Ms Burns. High-tech slots also allow for more responsible gaming, according to Eric Lancaster of IGT’s product management team. For instance, the use of biometric recognition systems and databases allows banned punters to be flagged or players to be alerted about the amount of money they have already lost. Gaming machine manufacturers are also increasingly looking at how to get the most out of the online and mobile gaming markets. Just two months ago, IGT announced the creation of a division within the company dedicated to this task.

Going in together A

ristocrat Technologies, Inc. and Bally Technologies, Inc. announced in November that they have entered into a technology cooperation agreement. Under this agreement, both companies will reinforce their commitment to delivering system-driven solutions that use Gaming Standards Association (GSA) and computingindustry protocols, to enable casino operators to create a picture-in-picture-style interface on the gaming device to differentiate their slot products, regardless of the manufacturer. Aristocrat and Bally said they are confident that their customers want this type of technology to be inter-operable, highly configurable, and available on an open network, easily enabling third-party applications and ensuring that gaming operators have the freedom to create differentiated marketing and service experiences on the games they own. JANUARY 2011

78 LEE KAH-WEE* TEACHING ASSISTANT AT THE NATIONAL UNIVERSITY OF SINGAPORE

Conversations between Macau and Singapore: planning, gambling and government TODAY, A HIGH TAX RATE FOR GAMING IS NO LONGER SUFFICIENT JUSTIFICATION FOR THE PROLIFERATION OF CASINOS AND INTEGRATED RESORTS – THESE DEVELOPMENTS MUST ALSO BE SENSITIVE TO THE CITY, WHICH HAS ITS OWN RULES, INTERESTS AND HOPES hen I arrived in Macau three months ago, I discovered a city embroiled in debates about its political autonomy, economic sustainability and cultural identity. At the heart of these debates lies the problem of urban planning. Particularly after the scandal of Ao Man Long in 2008, urban planning has become the site of critical engagement between experts, politicians, developers and the general public. How the problems were defined already suggested the solution – transparency, public participation and a more “scientific” approach are to be the defining features of a reformed planning system. In my conversations with planners, architects and administrators in Macau, I often feel slightly embarrassed when Singapore is raised as a model of good planning. The Singapore model, I was told, was efficient, immune to political manipulation and far-sighted. A planner told me how impressed he was when he visited the planning authority of Singapore and saw how all the master plans were exhibited in the lobby for the public to peruse. Relative to Macau, where planning is conducted through closed-door negotiations, this practice of exhibiting master plans must seem like the “sunshine” policy exemplar. I have also read several Macau government reports where Singapore is used as a benchmark for a planning system that is “disciplined”, “transparent” and “pragmatic”.

Misrepresentations

My slight embarrassment arose firstly from the knowledge that in Singapore, Macau is often used as a negative example. Particularly when Singapore was contemplating whether or not to legalize casinos in 2004, the official discourse often raised Macau as the city Singapore will not become. Instead of smoky gambling halls, Singapore will have an ‘integrated resort’. Instead of kitschy buildings, Singapore will have a global icon. Instead of dominating the economy, Singapore’s gaming facility is only a necessary evil to bring in the larger catch in the MICE and tourism industries. This is of course a complete misrepresentation of what JANUARY 2011

Macau has been trying to do since the liberalisation of the casino industry. But the misrepresentation is strategic – the Singapore government needed to overcome the strong moral aversion to gambling amongst its local populace and religious groups, an aversion the government had ironically cultivated through years of police action and public education. Macau was thus banished to its pre-liberalisation years, frozen as a “bad model”, and paraded as the whipping boy for the benefit of public re-education. I was more appalled than embarrassed by the suggestion that Singapore’s planning model could be seen as “transparent” and “immune to political manipulation”. If Singapore misrepresented Macau, then Macau also misrepresented Singapore. To be fair, Singapore’s planning processes are much more formalised than Macau’s. There are prescribed steps for the reviewing of master plans, lodging of development applications, and the public tender of land. But this does not mean that closed-door negotiations simply do not happen, and neither does it mean that planning becomes a completely technical task outside the influence of political forces. Rather, urban planning in Singapore has been an elitist and centralised exercise for a long time, until the 1990s when the government tried to engage in limited forms of public participation. Still, like other functions of the government that have undergone reform in the last 20 years, planning in Singapore is more transparent for the efficient working of market forces (to be “business-friendly”), but less so for the political engagement of the civil society. Singapore’s planning system reflects the political culture and economic realities of the country, and cannot be taken as a template for emulation.

It’s political, always

Planning is a political exercise. It is the conscious and continuous struggle to tame the future by working on the present, and this is a struggle between multiple interest groups with varying capacities to influence political decisions and accumulate material resources.

In some papers and interviews, I have come across more complex reasons why Singapore stands out as a model for emulation. Government officials from China who were sent to study public administration in Singapore often cite its long and stable one-party rule as a lesson in good government. Order, stability and growth are the virtues to be exalted. A local intellectual I spoke to wondered if China (and by extension, Macau) can maintain another 20 years of stability, because if so, it would surely be able to catch up with the developed nations of the West. “Far-sightedness” is, in other words, a euphemism for such a political system. A Macau government report suggested Singapore as an example of a strong state that presents, for Macau, an exemplar of how a small political-economic entity can survive and flourish in the global economy. In other words, for Macau to be autonomous, to occupy the freedom enshrined into the “one country, two systems” policy, Singapore is a viable option. Planning is also political because it draws that line between public good and private interest. In Macau, this line is most visible in debates about the gaming industry. Private monopolies and foreign corporations can make huge profits, and social problems can be tolerated, as long as part of this profit is channelled to public projects. In fact, in various countries, gambling has been legitimised in the name of social welfare, national survival and clean entertainment. In Singapore, gambling was seen as a polluting agent and the critical task was to sanitise the industry - not just by subjecting it to legal control and scrutiny, but also by projecting a correct architectural aesthetic that camouflages the casino. Hence, the tender process for the license was also an architectural competition, which allowed the authorities to influence the design of the building. “No mythical creatures or volcanoes!” a Singaporean planner told me, “We want a global iconic building.” In Macau, liberalising the gaming industry was carried out with the objective of sanitising the incumbent monopoly – to modernise it, clean it up, and raise it to international standards. The symbolism of SJM’s new developments – the lotus of Grand Lisboa, and the water-cube of Oceanus – are attempts to “indigenise” the company, just as Wynn adopted red as the primary colour in its casinos. This is a battle of appearances, and architecture is a weapon to represent private interest as public good.

Importing a desert

In Macau, I was told, too many opportunities have been wasted, of which the current wave of casino expansion is the latest. The direct importation of the Las Vegas architectural typology into Macau has been legitimised as a way to guarantee the success of the casino-strip model. It is a tried-and-tested

solution, and you do not want to tweak its nuts and bolts. But the consequences are not just aesthetic. The Las Vegas model was developed in desert conditions. There was no urban context to relate to. Each casino development is an interiorised economy, completely insulated from its surroundings by walls, moats, roads, landscaping and direct shuttle services. Lifting the Las Vegas model to Macau inadvertently imports the “desert conditions” as well. At Cotai, it is still possible to enjoy the illusion that you are in the fantastic “Las Vegas of the East”. But at NAPE, where the waterfront offers a great opportunity to connect to the sea and where a rich urban fabric is already in existence, a complete disengagement has taken place. The waterfronts around Wynn and MGM Macau are strangely beautiful for their emptiness, a marbled cemetery where the best views of the bridges and Taipa are safeguarded for no one. I am quite sure, when the Cultural Centre was built around a plaza, the intention was not to alienate it from the sea with Sands Macau on one corner, and Fisherman’s Wharf on another. The desertification of the city is even more apparent if we compare the street life on the sidewalk outside L’Arc and the existing one just across the road.

A common property

How do we plan for a future full of unknown risks? What are the limits of government intervention, even for a strong state? Where land is scarce, how can urban planning promote a more equitable distribution of wealth and secure a way of life that is precious to its citizens? At the end of my sojourn in Macau, I reflect on the many conversations I have had with concerned citizens and experts who gave me their opinions of how Macau should move into the future. They were all attempts to frame the city as a ‘common property’, an object that deserves care and attention, a cultural identity in search of an appropriate form. Today, a high tax rate for gaming is no longer sufficient justification for the proliferation of casinos and integrated resorts – these developments must also be sensitive to the city, which has its own rules, interests and hopes. In most of my conversations here, there is still a strong sense of optimism, perhaps sullied by past betrayals and disappointments, but also activated by them. I believe that the debates generated in Macau show how the city emerges as a space of collective identity and becomes the focus of political reform. For that, Macau also has much to tell Singapore, and many cities around the world. * Mr Lee is a PhD candidate at University of California, Berkeley, where he is developing a thesis on the urban transformation of Macau and Singapore as the casino industry moves across the Asia-Pacific. JANUARY 2011

80 80

Gaming

Raising an eyebrow Singapore exclusion orders arouse concerns BY ANDREW GELLATLY*

surge in the number of gamblers excluding themselves from Singaporeâ&#x20AC;&#x2122;s resort casinos has prompted speculation that regulators may soon find themselves under pressure to make the properties less accessible to locals. In a written parliamentary answer Vivian Balakrishnan, community development, youth and sports minister, told MP Terry Lee that, as of September, there were 2,500 self-exclusion applications and 194 family exclusion orders in the nation state, of which nearly 90 percent had been applied for or issued after the casinos opened.

JANUARY 2011

Third-party exclusions, which bar undischarged bankrupts and those on public assistance, had also risen sharply in the past year to top 35,000 in September. When launched in December last year, the National Council on Problem Gambling (NCPG) had identified just 28,661 people for third-party exclusion. The numbers of those self-excluding is unlikely to dip any time soon. The NCPG recently took steps to make it easier for foreigners and ex-patriot workers living in Singapore to exclude themselves or family members from the casinos. From November, they have been able

to download an application form for selfexclusion from the NCPG. Previously, foreigners had to file written applications at the NCPG office. Mr Balakrishnan said he believed the rise in casino exclusion orders was likely due to greater public awareness of such options and a greater willingness to seek help. An NCPG public perception survey in 2009 showed that at least seven in 10 were aware of problem gambling.

Playing at home Certainly the evidence confi rms more Singaporeans are staying home to

81 same period – broadly in line with the 90 it saw in the whole of the previous year. The self-exclusion figures, along with incidental evidence of multi-million dollar losses by Singaporean businessmen in the two casinos, Marina Bay Sands and Resort World Sentosa, have nevertheless fuelled speculation that Singapore’s Casino Regulatory Authority may need to take some action. The NCPG has commissioned a gambling prevalence study due to be completed in the second half of this year - a follow-up to previous studies done in 2008 and 2005 - that is likely to make uncomfortable reading for the government watchdog.

Stepping up

gamble, rather than travelling further afield. Recent figures from Genting Malaysia, the sister company of Resorts World Genting which operates Resorts World Sentosa, confi rmed that their giant casino property Genting Highlands has begun to feel the impact of competition from Singapore – historically one of their most significant feeder markets. At Genting Highlands the number of foreign hotel guests declined 17 percent year-on-year in the first nine months of 2010 mainly due to a fall in the number of visitors from China, Singapore and the Middle East, while business has boomed at the two Singaporean integrated resorts despite a S$100 (MOP610) per day fee that must be paid by Singaporeans as entry to gamble at the resorts. Malaysian politicians have also called for the Singapore government to act to limit access to the casinos by

Malaysian bus tour groups that cross the border daily. Tang Nai Soon, from the Malay district of Pekan Nenas, suggested that the government hold diplomatic talks with Singapore to stop such free packages as soon as possible, which he argued had encouraged Malaysian housewives to borrow from loan sharks to fund their gambling. “The government also needs to limit the number of Malaysians entering casinos in Singapore,” he said.

Seeking help Still, evidence that more gamblers are seeking out help in Singapore is harder to come by. The National Addictions Management Service attended to 130 new clients in the period from January to September 2010, compared to 210 in the whole of 2009. Singapore’s Tanjong Pagar Family Service Centre saw 76 new clients in the

In the meantime, observes Sean Monaghan, a senior consumer and gaming analyst at HSBC in Singapore: “Under the current regulations the government can’t adjust the entry fee, but they could advertise more regarding responsible gaming.” Mr Monaghan also notes that the Singaporean government might also choose to step up initiatives on problem gambling ahead of the next elections that must be held before February 2012. Speaking at the recent Global Gaming Expo (G2E) in Las Vegas, Michael Leven, president and chief operating officer of Las Vegas Sands, which owns the US$4.5 billion Marina Bay Sands property said: “It’s our belief that you have to have some local population situation and you do need that kind of support, but we do not need the Singapore market to grow from where it is now and we want to play by all the rules in Singapore.” “Singapore is very sensitive about pushing gaming – you can’t push it vigorously in terms of marketing to the local population.” Marina Bay Sands currently draws 30 percent of its business from the affluent local market. “As tourism builds in Singapore I think there will be less of a problem with that situation,” said Mr Leven. “If tourism does not build and the resorts are looked upon as dragging money out of the local economy, I think it will be a very sensitive issue for Singapore. At present levels though we’ve have heard nothing significant from anyone about any real concerns.” *Exclusive Gambling Compliance/Macau Business JANUARY 2011

Gaming

Union demands for complete smoking ban in casinos

Tight lipped Macau government won’t comment on eventual cap on slots he Secretary for Economy and Finance, Francis Tam Pak Yuen, refused to say last month whether the government is preparing to implement a cap on slot-machines. “Limiting the number of gaming tables is a first step to control the scale of the gaming industry, and we are reviewing other policies in order to reach a measured development of the gaming industry,” Mr Tam said. In March 2010, the government announced a 5,500-cap on the number of gaming tables until 2013. Mr Tam also said that the government is finalising a by-law to regulate slot machine parlours, including their location. There have been several calls from legislators to relocate slot parlours out of residential areas. Mr Tam stressed that the government is keen to increase the share of the mass market in the overall casino business.

PokerStars ready for 2011 PokerStars Macau at the Grand Lisboa has announced its schedule for this year, with plenty of poker on the calendar. From February 2127, PokerStars Macau will host the first of its three Macau Poker Cup events of the year. The series will conclude with the Macau Poker Cup Championship running from October 7 to 16. It will feature a HK$20,000 buy-in main event with a guaranteed prize pool of HK$4.5 million. Also announced for 2011 is the return of the Macau Millions series, running from April 2 to 10. The Asian Pacific Poker Tour will stop by in November for its fifth straight visit to the city.

The Macau Gaming Industry Employees Association, the territory’s biggest casino workers union, has called for a total smoking ban in casinos. The Legislative Assembly has already been debating for a year a draft law that restricts smoking in the workplace. However, legislators and the government are still discussing whether there should be some kind of exemption for the gaming industry. The government announced it would present a new draft around half a year ago, but it still hasn’t done so. The association’s head, João Bosco Cheang Hong Lok, demanded the government adopt a “strong” attitude on this issue, Macau Post Daily reported. “The only way to protect workers [from risk of cancer and associated dangers of second-hand smoke] is to ban smoking completely,” he said.

Steve Wynn gets Monaco citizenship Wynn Resorts Chairman Steve Wynn has been conferred Monegasque citizenship by Prince Albert II of Monaco. The process took place after Mr Wynn agreed to serve as an outside director for a joint venture between the governments of Monaco and Qatar, the Las Vegas Sun reported. According to Wynn Resorts, Mr Wynn didn’t renounce his American citizenship, remaining a US taxpayer. The new joint venture Mr Wynn is involved with is Monaco QD International Hotels and Resorts Management. The company was formed to acquire and manage hotels and resorts in Europe, the Middle East and North America. Wynn Resorts is the parent company of Wynn Macau, also headed by Mr Wynn.

Galaxy on hiring spree Galaxy Entertainment Group has been authorised by the government to hire up to 2,000 imported workers for its Galaxy Macau property, set to open later this year. However, the company will also have to hire at least 4,000 local employees in return. According to Galaxy, as of mid-December, it had already hired 2,700 local workers for the property. Meanwhile, last month JANUARY 2011

the group sold RMB1.38 billion of yuan-denominated three-year bonds priced to yield 4.625 percent, making use of the high demand for yuan-denominated products in the international financial markets. Galaxy said in a statement that the proceeds of the operation would be used for its non-gaming business and would “provide the group with additional financial flexibility”.

83 MICHAEL SPENCE PROFESSOR OF ECONOMICS, STERN SCHOOL OF BUSINESS, NEW YORK UNIVERSITY

The risk tsunami THERE ARE SEVERAL SIGNIFICANT RISKS TO GLOBAL ECONOMIC STABILITY AND PROSPERITY THAT MUST BE ADDRESSED URGENTLY t is time for the G-20 to take seriously its mandate to agree on steps to stabilize the global economy and launch it on a more sustainable pattern of growth. Instead, the G-20 is behaving like a debating society, with the cooperative approach that it fostered at the outset of the crisis devolving into an array of often-heedless unilateral actions by its members. Yet there are several significant risks to global economic stability and prosperity that must be addressed urgently. Ireland has thrown Europe into its second sovereign-debt crisis this year, and capital markets have become schizophrenic, with investment rushing back and forth across the Atlantic in response to contagion risk in Europe and quantitative easing in the United States. Meanwhile, capital is flooding into the higher-interest-rate emerging markets, causing inflationary pressures, driving up asset prices, and subjecting currencies to competitivenessthreatening appreciation – in short, distortions and policy headaches that require unconventional, defensive responses. Growth and employment forecasts in the advanced countries have been reduced – a delayed recognition of the reality of an extended and difficult recovery and a new postcrisis “normal.” With lower and more realistic growth forecasts, fiscal deficits in the short to medium term are viewed as more dangerous. In the US, a subset of policymakers believes that weakening growth and high unemployment require a policy response. With a cyclical mindset and fiscal space exhausted, a new round of quantitative easing (QE2) might be defended as a strategy for mitigating the tail risk of another downturn in asset markets (mainly housing) and households’ balance sheets – and with it the possibility of a deflationary dynamic.

QE2 no solution

Worryingly, QE2 appears to be viewed in the US as a growth strategy, which it isn’t, unless one believes that low interest rates will reverse the private-sector deleveraging process, raise consumption, and lower savings – neither a likely nor a desirable scenario. It also assumes that addressing structural constraints on competitiveness can be deferred – perhaps permanently. The view from outside the US is that QE2 is either a mistake with negative external effects, or a policy with the clear but unannounced intention of devaluing the dollar – a move whose main negative competitive and growth effects would most likely be felt in Europe, not in China, India, and Brazil. Unilateral action in this and other dimensions has undercut the G-20’s mission of identifying and implementing mutually beneficial policies in a coordinated way. A minimal requirement for G-20 progress is that policies in emerging and advanced countries that have significant external effects are discussed and, if possible, agreed upon in advance. Apart from the need to deleverage for a few more years, the US economy faces longer-term problems with aggregate demand, employment, and income distribution that cannot be solved through consumption and investment alone. America needs to expand its share in external global demand, which requires public-sector investment, structural change, and

improved competitiveness in the tradable sector. Meanwhile, Europe struggles to find a solution to its deficit and debt problems by treating them with short-term liquidity fixes whose purpose is to buy time for fiscal consolidation and, in the absence of the exchange-rate mechanism, some kind of deflationary process to restore external competitiveness. Success is by no means assured, and the most likely outcome is a sequence of contagion events and a broader loss of confidence in the euro. The core issue is burden-sharing across bondholders, citizens of the deficit countries, the EU, and, indeed, the rest of the world (via the International Monetary Fund).

Chain effect

The emerging-market economies are at risk as a result. They can sustain relatively high growth rates in the face of weak and lengthy recoveries in the advanced countries, but not if there is a major downturn in North America or Europe (or both), a serious outbreak of protectionism, or instability in global financial markets. The major emerging economies also have growing systemic effects on growth and employment across a broad range of countries, including the advanced ones. They must understand this. The old asymmetries are fading away, and there are new distributional challenges at the core of global economy-policy coordination. For most of the post-war period, advanced countries grew by expanding the knowledge and technology base of their economies. In a rapidly opening global economy, emerging economies learned to access both technology and markets, thereby growing at unprecedented and accelerating rates. As global economic activity shifted and the structure of all economies evolved with it, the distributional effects were overwhelmingly benign. But that was not inevitable. It came out that way because, for most of the period, the advanced countries benefited from market-driven innovation, while the emerging economies imported knowledge, exported goods and services, and had limited systemic impact on advanced economies. That pattern is changing. Emerging economies’ scale is growing, and their positioning on the global value chain is shifting rapidly. Surveys of attitudes toward the evolving global economic system show a widening divergence among countries as well as subgroups within countries. These almost certainly reflect divergences in terms of that system’s distributional impacts. Guiding global interdependence in a way that ameliorates negative distributional trends is possible, but it will require wisdom and insight. That challenge must be at the core of the G-20’s mission. To put it differently, recognizing our collective interest in the openness of the global economy is not sufficient. We need a pragmatic willingness to adapt incentives and outcomes to achieve distributional results that allow the major players, with their domestic political constraints, to keep the system open. The alternative will be unilateral measures aimed at achieving the same goals, but leading to outcomes that leave everyone worse off. JANUARY 2011

Business

Unconventional wisdom For the first time, pharmaceutical company Hovione has appointed a senior member of its local staff to head its Taipa factory ime and time again, Macau businessmen complain that there is a lack of human resources qualified to assume top roles in a company. International pharmaceutical group Hovione thinks otherwise. In October, the firm appointed Macau resident Eddy Leong to head its operations in the city, where it has a factory in Taipa. He is the first Chinese to be appointed general manager of its operations. He replaced Jorge Pastilha, who returned to Hovione headquarters in Portugal. Mr Pastilha is now the company’s general manager of technical operations for Asia. Mr Pastilha, who was Hovione Macau’s general manager for three and a half years, told Portuguese news

JANUARY 2011

Eddy Leong

agency Lusa that Mr Leong’s appointment meant the company had achieved “maturity” in Macau, where it first arrived in 1984. “After 25 years in Macau, Hovione has trained local staff that are perfectly able to assume any of the roles in the Macau factory, including that of general manager,” he said.

“This is proof of the local workforce’s maturity and that Hovione Macau can progress with local human resources. It also demonstrates that in Macau there are very highquality professionals,” Mr Pastilha said. Mr Leong took his chemical engineering degree overseas and joined Hovione in 1997. Besides having worked in the company’s factory in Taipa, he also spent some time at its mainland Chinese unit, in Zhejiang province. Most of Hovione Macau’s staff and managers are from Macau. In June, the company had 27 employees from abroad in a workforce of 131 people. Most of the company’s staff are highly skilled, with production-line workers accounting for less

than 30 percent of the total. Hovione Macau produces generic and custom-made pharmaceutical products. The United States is its main market, followed by Europe, Australia and New Zealand. Customers include leading generics companies, pharmaceutical multinationals and NASDAQ-listed biotech companies. The Macau plant works three shifts a day, seven days per week. It shuts down only for maintenance, for three to four weeks in August. The facility was one of the first in greater China to be approved by United States health authorities, according to Hovione. Hovione is an international group with more than 50 years of experience of developing active pharmaceutical ingredients and of compliant manufacturing, serving only the pharmaceutical industry. Besides China, it employs about 1,000 people in Portugal, Ireland and the US, and has a worldwide yearly revenue of about US$144 million. The mainland is the company’s major supplier of raw materials. It is also becoming more and more of a market for Hovione. “China represents a big window of opportunity for Hovione and all the other companies that bet on quality products,” said Mr Pastilha. The company entered the mainland in 2008, when it bought 75 percent of Hisyn Pharmaceutical of Zhejiang. The acquisition included a 22,000 square metre plant and development labs in Shanghai.

Sales on tap

US kitchen and bathroom equipment manufacturer Kohler opens a showroom in Macau as it expands through Asia

BY LUCIANA LEITÃO

s the luxury housing segment booms and new hotels keep on opening, several high-end kitchen and home appliance companies are eyeing the market here. Kohler is the latest entrant, having opened a showroom in Taipa early last month. The American company is no newcomer. It has been fitting out kitchens and bathrooms in hotels such as The Venetian Macao, the Wynn Macau, the Four Seasons and the Mandarin Oriental, for years. “We haven’t done much in the local retail business.

We need a good showroom. That’s why we did this project,” says Kohler’s president for the Asia-Pacific region, Larry Yuen. The 3,700 square feet showroom has more than 300 bathroom and kitchen products, ranging from the traditional to the contemporary and from European to American styles. Apart from fitting out bathrooms and kitchens for new apartments and hotels, Kohler is also aiming to grab a piece of the renovation market. “A lot of people now pay more attention [to renovation]. They are willing

Larry Yuen

to spend more, [since they] probably keep their apartments longer,” says Mr Yuen. The Kohler brand is sold in Macau through distributors. Wai Heng Construction Materials is Kohler’s new distributor here (see box) and is in charge of the Taipa showroom. Kohler intends to expand further in Asia. The new Macau showroom will be followed by similar showrooms in Vietnam, Thailand and Indonesia. Hong Kong and Macau are important to the company because of the kind of people that live here or visit. “People JANUARY 2011

Business

Builder’s merchant

that come here have a higher standard of living,” Mr Yuen notes. “We want to build up the brand and then we want to promote heavily the US lifestyle - it’s what we call gracious living - in most of the Asian countries.”

Building business Most of Kohler’s business is in fitting out new developments. “In Hong Kong and Macau, you will not see us a lot but we’re actually quite active because usually the fittings come with the apartment for sale. So, we don’t need many showrooms,” he explains. But Kohler also expects that with people spending more time at home, they will be willing to increase spending on home appliances. Kohler already has close to 800 stores

and outlets in Asia, many in the mainland. “We focus a lot on China and India. These two are the biggest markets,” Mr Yuen says. The company’s approach in the mainland is different from its approach in Macau and Hong Kong where Mr Yuen says it is “heavily retail-orientated”. “In the mainland, the apartment you buy usually has nothing. You have to decorate it yourself, so there’s a great demand for kitchen and bath products.” Founded in 1873 and headquartered in Kohler, Wisconsin, the company is one of the oldest and biggest privately held companies in the United States. Kohler is a global player in the manufacture of kitchen and bathroom equipment, cabinet work, tiles, home interiors, engines and power generation systems.

It’s your daily business

JANUARY 2011

orking in Macau for more than 20 years, Wai Heng Construction Materials has a 90-percent share of the market for quarried stone, ready-mixed concrete, cement and other raw construction materials, according to the company. “It’s because we have good customers, knowledge of sales and back-up services,” says the company’s founder Pun Wai Man. Wai Heng operates both in Macau and in the mainland. Expansion abroad is not an immediate goal, given the increasing volume of business the company has in the mainland, Mr Pun says. Aside from supplying construction materials and appliances, Wai Heng is also a leading developer of residential property in Macau. Property development accounts for 80 percent of the company’s activities here. After linking up with Kohler in the Buckingham residential project in Taipa, Wai Heng became the local distributor for the bathroom and kitchen equipment company. Wai Heng has an estimated annual turnover of HK$30 million in Macau from supplying construction materials such as quarried stone, cement and bricks. Plumbing materials account for HK$10 million of the company’s annual sales.

87 NOURIEL ROUBINI PROFESSOR OF ECONOMICS AT THE STERN SCHOOL OF BUSINESS, NEW YORK UNIVERSITY

A survival strategy for the eurozone IN THE NEXT FEW MONTHS, IT WILL BECOME CLEAR WHETHER EUROPEAN POLICYMAKERS CAN COMPROMISE AND IMPLEMENT REFORMS THAT DAMPEN THE THREAT OF A EUROZONE BREAKUP fter the Greek and Irish crises and the spread of financial contagion to Portugal, Spain, and possibly even Italy, the eurozone is now in a serious crisis. There are three possible scenarios: “muddle through,” based on the current approach of “lend and pray”; “break-up,” with disorderly debt restructurings and possible exit of weaker members; and “greater integration,” implying some form of fiscal union. The muddle-through scenario – with financing provided to member states in distress (conditional on fiscal adjustment and structural reforms), in the hope that they are illiquid but solvent – is an unstable disequilibrium. Indeed, it could lead to the disorderly breakup scenario if institutional reforms and other policies leading to closer integration and restoration of growth in the eurozone’s periphery are not implemented soon. The crisis started with too much private debt and leverage, which became public debt and deficits as crisis and recession triggered fiscal deterioration and private losses were mostly socialized via bailouts of financial systems. Then, distressed sovereigns that had already lost market access – Greece and Ireland – were bailed out by the International Monetary Fund and the European Union. But no one will bail out these super-sovereigns if the sovereigns prove to be insolvent. Thus, the current strategy of kicking the can down the road will soon reach its limits, and a different plan will be needed to save the eurozone.

Quasi-fiscal union The first institutional reform takes the form of a larger envelope of official resources, which would mean a quasi-fiscal union. Official resources currently are sufficient to bail out Greece, Ireland, and Portugal, but not to prevent a self-fulfilling run on the short-term sovereign and financial liabilities of Spain and other potentially distressed eurozone members. So, even if these countries were to implement the necessary fiscal and structural reforms, an increase of official resources would nonetheless be needed. Because nervous investors don’t want to be last in line in case of a run, a disorderly rush to the exits is likely when official resources are insufficient. Short of full fiscal unification – or a variant of it in the form of eurozone bonds – this increase in official resources would occur through a much-enlarged European Financial Stability Facility and a much greater commitment by the European Central Bank to long-term bond purchases and liquidity operations to support banks. Since quasi-fiscal union implies that the eurozone’s core economies could end up systematically bailing out those on the periphery, only a formal loss of fiscal sovereignty – a credible commitment by the peripheral countries to medium- and long-term fiscal discipline – could overcome the current political resistance of Germany and others. But even a larger envelope of official resources is not sufficient to stem the insolvency problems of Greece, Ireland,

and, possibly, Portugal and Spain. Thus, a second set of policies and institutional reforms requires that all unsecured creditors of banks and other financial institutions need to be “treated” – that is, they must accept losses (or “haircuts”) on their claims. This is needed to prevent even more private debt being put on government balance sheets, causing a fiscal blowout. If orderly treatment of unsecured senior creditors requires a new crossborder regime to close down insolvent European banks, such a regime should be implemented without delay.

Restructuring public debt Similarly, super-sovereigns cannot continue to bail out distressed sovereigns that are insolvent rather than illiquid. Thus, in addition to an orderly resolution regime for banks, Europe must also implement early orderly restructurings of distressed sovereigns’ public debt. Waiting until 2013 to implement these restructurings, as German Chancellor Angela Merkel proposes, will destroy confidence, as it implies a much larger haircut on residual private claims on sovereign borrowers. Thus, orderly market-based restructurings via exchange offers need to occur in 2011. Such exchange offers can limit private creditors’ losses if they are done early. That way, formal haircuts on the face value of debt can be avoided via new bonds that include only a maturity extension and an interestrate cap that is set below today’s unsustainable market rates. Waiting to restructure unsustainable debts would only lead to disorderly workouts and severe haircuts for some private creditors. Finally, Europe needs policies that restore competitiveness and growth to the eurozone’s periphery, where GDP is either still contracting (Greece, Spain, and Ireland) or barely growing (Italy and Portugal). Without growth, it will be difficult to stabilize public and private debts and deficits as a share of GDP – the most important indicator of fiscal sustainability. Moreover, without growth, the social and political backlash against painful belt-tightening will eventually undermine austerity and reform. Unfortunately, fiscal austerity and structural reforms are – at least in the short run – recessionary and deflationary. So other policies are needed to restore growth. The European Central Bank should pursue a much looser monetary policy to jumpstart growth, with a weaker euro to help boost the periphery’s competitiveness. In addition, Germany should delay its fiscal consolidation; if anything, it should cut taxes for a couple of years to boost its own growth and – via trade – that of the periphery. In the next few months, it will become clear whether European policymakers can compromise and implement reforms that dampen the threat of a eurozone breakup. Either the EU moves in the direction of a more stable equilibrium of closer integration, or the risk of an unstable and disorderly breakup scenario will rise significantly. JANUARY 2011

Technology

NOT-SO-TECH SAVVY MORE THAN HALF OF ALL LOCAL COMPANIES MAKE NO USE OF INFORMATION TECHNOLOGY

JANUARY 2011

erms such as data warehouse, cloud computing and e-commerce are commonplace in the vocabulary of businessmen worldwide. In Macau, however, information technology is still an alien concept for the majority of companies. According to the latest study into the use of information technology in the city, only 46 percent of businesses made use of IT in their operations in 2009, one percentage point down from the previous year. The data was collected by the Statistics and Census Service. This proportion is around half that in developed countries like Australia or Switzerland. Macau also lags behind Hong Kong (63 percent) and Singapore (76 percent). Restaurants are the businesses that use IT the least in Macau. Not even one third use it. In the wholesale and retail sector, only 40 percent use it. Together, restaurants and wholesale and retail companies make up more than 75 percent of all businesses here.

Size matters The only industry that had already fully adopted IT by the end of 2009 was, unsurprisingly, the gaming industry. Travel agencies were close behind, with only three out of 169 companies using no IT whatsoever.

Two rules of thumb appear to apply here. First, the more workers a company has, the more likely it is to use IT in some way or another. Second, the bigger a companyâ&#x20AC;&#x2122;s revenue, the more likely it is to use IT. Businesses that do employ IT tend to use its simpler functions: word processing and record-keeping. Most businesses have yet to make use of technology for more complex tasks such as sales. The restaurant sector is the leader in this area but, even so, not even one in four restaurants that employ IT use it for such purposes. Macau businesses could hardly be labelled primitive. For instance, 82 percent of companies that do use IT had Internet connections by the end of 2009, almost a quarter had renewed or upgraded their systems during the year and 18 percent had installed additional resources. The low penetration rate of IT in the business sector contrasts with what happens at home. According to the Statistics and Census Service, three out of four families in Macau are connected to the Internet. Among the population over the age of two, 56 percent used a computer in 2009, and a similar percentage used the Internet. And, unlike in the business sector, the figures are going up, not down.

Lashou.com eyeing Macau

ashou.com, a leading group-buying discount website in mainland China, says it is planning to enter the Macau market. â&#x20AC;&#x153;Lashou.com will ... expand into Hong Kong and Macau before the end of January 2011,â&#x20AC;? the founder and chief executive of the company, Wu Bo, told the Global Times. The Lashou.com site was launched last March. The company remains in the red owing to expansion, Mr Wu said, although he added that it should turn a profit no later than next June, when it will have doubled the number of mainland cities where it has a presence to 200. The company recently secured US$50 million (MOP400 million) in new financing.

According to the latest study into the use of information technology in the city, only 46 percent of businesses made use of IT in their operations in 2009

Graph 1 Purpose of Using Information Technology by Industry

Graph 2 Usage of Internet

100%

80%

60%

40%

20%

Industrial Production

Others

Construction

Travel Agencies

Publicity & Promotion

Hotels

Word Processing

Restaurants

Transports, Storage & Communications

Design/Production

Service Sector

Archives

Gaming

Inventory

Sales

Wholesale & Retail Trade

Accounting

JANUARY 2011

Lifestyle

Zhuhai Ho! Zhuhai has relaxed restrictions on Macau yachts and sailing enthusiasts are expecting plain sailing ahead BY ALEXANDRA LAGES

ast off, whistle for the wind and set a course for Zhuhai. This year brings good news for yachtsmen. Yachts registered in Macau are now entitled to apply for a licence to sail to Zhuhai without having to give up their Macau licences. The Zhuhai government announced that Macau and Hong Kong yachtsmen would be able to sail pleasure craft into the city’s waters and moor without restrictions. Before, yachts registered outside the mainland had to go through troublesome procedures before they could sail into mainland waters. The process could take up to seven days and boat owners who made regular visits to Zhuhai needed to give up their Macau or Hong Kong licences to apply for a mainland one.

JANUARY 2011

It is exciting news for the bodies associated with yachting, which expect the change to fill the pastime’s sails. Jon Galbraith, principal of the Macau Yacht Sailing Academy, was delighted with the new rules, even though he has yet to see the details. “We want to get more clubs from Zhuhai to participate in our regatta and this measure will open [it] up to more clubs from there to come across,” he said. The president of the Macau Yacht Club, Vicente Ó Man Seng, said the Macau Maritime Administration had not yet informed him of the change but he welcomed the relaxation of the rules. “We’ve been battling for this for years. Until now, every time we sailed to China or the nearby islands, we needed

to acquire a licence in advance. This will be a great help,” he said.

Escaping the doldrums The Maritime Administration believes the new rules will help promote yachting in Zhuhai, Macau and Hong Kong. A spokesperson told Macau Business: “The Maritime Administration welcomes the adoption of the policy and will keep in close contact with the Zhuhai authorities in order to stay well informed of relevant measures and reinforce cooperation in the management of yachts.” Mr Galbraith is hoping that from now on, more people will get involved in sailing. Just after the handover, sailing in Macau was in the doldrums after an exodus of expatriates who were yachtsmen. His academy started more than two

Set on a slipway

ustralian boatbuilder McConaghy Boats is considering setting up a boatyard to build or service yachts in Macau, said Mark Evans, who heads the company’s Chinese operations. But there is no concrete timetable for the development. Mr Evans initially looked at an old boatyard in Coloane and started discussions with the government but the project is still on hold. At present, yachtsmen or would-be yachtsmen have to go to Hong Kong or Zhuhai to buy a boat, unless they buy a share in one of the Macau Yacht Sailing Academy’s craft. McConaghy Boats was founded by John McConaghy in 1967. In 2006, it opened a 27,000 square feet facility in Zhuhai, which has since tripled in size. There, the company’s 160 employees build boats ranging from foiling moths to luxury yachts. “Although at this stage we have no immediate plans to manufacture in Macau, we have looked at, in the future, servicing and providing repairing works for vessels,” Mr Evans said. For now, the company’s main goal is to increase sales. It expects business to improve after the completion of the Macau Yacht Club’s new clubhouse. Club president Vicente Ó Man Seng said construction of the MOP10 million clubhouse has begun and is expected to completed in the second half of 2011.

years ago. It has five yachts and 20 dinghies, and counts 65 children and 42 adults among its members. It is starting to get involved in competitions in Hong Kong. “The growth in the number of sailors in Macau is tremendous,” Mr Galbraith said. “There are over 100 people sailing now in Macau but we want to grow to the next stage.” In November, 80 yachts were registered with the Maritime Administration. The vice-president of the Macau Sport Development Board, José Tavares, is less impressed by the change in restrictions. “At this moment, I believe it will not have a big impact in Macau. Yachting activity here is very small. It is limited mainly to social sailing and there are few sport competitions,” he said.

But the business community is certain that change has come. Australian boat builder McConaghy Boats foresees an increase in sales to Macau yachtsmen due to the new rules (see report on these pages).

Boatloads of booty Even so, the head of the company’s Chinese operations, Mark Evans, points out that there are still limitations in Macau. “You can only sail in certain areas, while in Hong Kong you have a lot of freedom,” Mr Evans said. The city also suffers from a lack of facilities. “Macau could have a good marina business, with casinos entering into the business as well. It would be a multibillion business but you have to have the facilities,” he said. “That would not only create hun-

dreds of jobs just in servicing and maintenance of the vessels, but it would be supporting local businesses by having the owners and crews spending their money in the local hotels, restaurants and casinos.” Macau has two places where yachts can tie up. One is the Lam Mau Marina, in the Inner Harbour area. The facility, privately-run by the Macau Yacht Club, has 150 berths. The other is the Cheoc Van Nautical Club, managed by the Macau Sport Development Board, in Coloane. The Maritime Administration spokesman said: “If the demand for yachting increases, the facilities at the Macau Fisherman’s Wharf will be able to serve as a new yacht berthing area after some additional works.” JANUARY 2011

Lifestyle

No ordinary 19

Caesars Golf Macau’s new clubhouse opened last month, offering fine dining and a spa to attract golfers and non-golfers alike BY LUCIANA LEITÃO

aesars Entertainment Corp – previously known as Harrah’s Entertainment – is trying hard to get a strong foothold in Macau. Finding it increasingly difficult to enter the casino market, the United States-based gaming company has decided to upgrade its golf course in Cotai. The refurbished clubhouse opened its doors last month and aims to offer tourists something new, the company says. The 32,000 square feet clubhouse is for golfers and non-golfers alike, says general manager Li Wei. “It’s the perfect place for events and parties. It has a wedding chapel, not to mention kids’ programmes,” Ms Wei says. “It will be a tourist destination with an added value.” Apart from a small café area, the clubhouse includes a golf lifestyle boutique and a spa. The venue’s fine-dining restaurant serves regional Chinese cuisine and Japanese specialities. One of the eatery’s highlights is its wine cellar, with about 300 vintages available.

JANUARY 2011

“You have here the best view in Macau. So, after playing in the casino, you have a place to relax,” says Ms Wei. For special guests, VIP dining suites will be available that are suitable for karaoke and team building. The clubhouse can accommodate up to 250 people for private events. Caesars Entertainment paid US$577.7 million (MOP4.6 billion) in September 2007 for the 70-hectare Macau Orient Golf Course and the rights to the land. The property occupies five percent of Macau’s entire area. The course was renamed Caesars Golf Macau in December 2008 to go with a US$26 million redevelopment of the property.

Missing the cut According to several analysts, the acquisition was part of the company’s strategy for entering Macau’s casino market. But Caesars has been left dangling, caught by the freeze on gaming licences or

sub-licences. The government’s recent announcement that it will strengthen its control over the gaming industry, advancing its orderly and planned development, have further reduced the odds of Caesars entering the market in the short term. Outside the clubhouse, there is a semi-public 18-hole refurbished golf course, which has been shaped to emulate some of the most famous courses in the world. Caesars Golf Macau also has practice facilities, including a full-length driving range with 22 stations, customised with a target green and bunker. The property also has the first Butch Harmon golf school in Asia, a collaborative effort with the famous trainer. “Macau has a major draw from hotels and casinos. It’s very interesting for us to be involved,” says Mr Harmon, who has trained notables such as Tiger Woods and Phil Mickelson. Caesars Golf Macau is one of seven golf courses in Caesars Entertainment’s global resort portfolio.

93 Wynn Macau, which won its first star. Tung Yeen Heen, however, lost its lone star. The 2011 guide, like the previous year’s, mentions 38 of the city’s restaurants. Seven are new to the guide and seven others have been dropped. The variety of cuisines mentioned has contracted, with 14 global flavours represented instead of 16. Macau’s Thai and Mediterranean cooking no longer make the grade. As in previous editions, no Portuguese or Macanese restaurants have stars, although the guide recommends five Portuguese restaurants and one Macanese. The new guide also includes 14 local hotels, the same hotels listed in 2010’s guide.

Local flavour

Star struck

Macau has gained three new stars and lost one in the latest Michelin guide. Where does the city’s culinary reputation stand?

he rate of improvement in Macau’s restaurant scene does not match the rate of growth in its economy according to the Michelin Guide Hong Kong and Macau 2011, published last month. As in the previous edition, Robuchon a Galera at the Hotel Lisboa is

the only Macau restaurant in the top, three-star category. Macau still has nine starred restaurants and The Eight and Tim’s Kitchen, both at the Lisboa hotels complex, added a second star in this year’s edition. There was just one new name among the starred establishments: Il Teatro at

To ensure consistency, Michelin’s undercover inspectors use five criteria in awarding stars: product quality, preparation and flavours, the cuisine’s personality, value for money, and consistency over time and across the menu. “These criteria are appropriate for all types of cooking, including Chinese (for example, noodles, dim sum, Cantonese dishes),” Michelin says. However, the guide’s choices among Chinese restaurants have faced strong criticism since its first edition, published in 2008. Macau and Hong Kong together have four, three-star restaurants. Sun Tung Lok becomes Hong Kong’s third, top-ranked eatery, its reputation for serving shark’s fin soup notwithstanding. A dozen establishments have two stars, three are in Macau, and 53 have one star, five of which are in Macau. In an attempt to include more local flavour, the guide takes into account more Chinese dishes than before, such as Cantonese roast meat, dumplings and congee. Almost 70 percent of the restaurants reviewed offer Chinese cuisine such as Shanghainese, Pekingese, Sichuan, Cantonese and Chiu Chow food. The new edition retains 50 Bib Gourmand restaurants that the Michelin inspectors think are good value for money, with a full three-course meal costing MOP300 or less. There are five in Macau. While Michelin guides are known for giving out stars, restaurants with one or more stars make up just 10 percent of those reviewed. More than one million copies of the guides are sold every year around the world. JANUARY 2011

Lifestyle

MICHELIN MAN: big eyes, no nose Would-be gastronomes place great faith in the Michelin guides. The experienced gourmet might question the ratings and follow their own noses instead BY PATRICK STUART*

he existence of a three-star Michelin restaurant in Macau along with some one-star establishments may be something of a surprise to those researching the restaurant scene. But after you have sampled some of the best restaurants in town you may end up asking yourself if the Michelin Guide can be trusted. It was only a few years ago that Michelin set out to expand its little red book to cover destinations around the globe. New York and San Francisco came first, followed by Tokyo, Los Angeles and Las Vegas, and then Hong Kong and Macau. But even in Europe, the guide cannot always be trusted to the extent it can be in France, especially in destinations

such as Portugal that do not merit their own dedicated team of inspectors. The guide to Portugal is simply an add-on to the Spanish guide, much like Macau is included in the Hong Kong guide. But dedicated food lovers who have enjoyed the delicacies of numerous restaurants with one, two or three stars in Europe know what to expect. I did not manage to sample all of Macau’s Michelin-starred restaurants during my week in the city but I tried my best, eating lunch at The Eight and Tim’s Kitchen and dinner at Robuchon a Galera and the Altira’s Aurora. All were excellent as far as restaurants in their general category are concerned: The Eight for Cantonese with a contemporary twist, Tim’s Kitchen for high-end classic Can-

tonese, Robuchon a Galera for the full French gourmet experience and Aurora for chic and sophisticated Italian.

Outstanding dim sum I am not the gourmet most qualified to comment on the quality of the food at Cantonese restaurants but The Eight and Tim’s Kitchen can be compared to Chinese restaurants in London that hold Michelin stars, and both are worthy of their one-star rating in the old Michelin guide, which has been upgraded to two in the most recent edition. That said, my experience was almost entirely limited to dim sum – outstanding in both cases – with the addition of one roast dish at each to get a better idea of the know-how in the kitchen. But Robuchon a Galera was something of a disappointment. It has some truly great dishes that would be worthy of any three-star restaurant in Europe. The duo of potato with fresh white Alba truffle is simply sublime, as is the supreme of caviar in coral jelly and anise cream. “Shining sea urchin cream” with wasabi does not measure up to the last two dishes but is an exemplary interpretation of a more humble ingredient. Other courses fail to meet the mark. Roast Brittany lobster served in a broth is slightly overcooked and despite the origin of the prime ingredient, it in no way

“I am not the gourmet most qualified to comment on the quality of the food at Cantonese restaurants but The Eight (left) and Tim’s Kitchen (right) can be compared to Chinese restaurants in London that hold Michelin stars” JANUARY 2011

95 meets the standard of delicate flesh to be expected at this level. “Slow-cooked chicken in cocotte” is a tasty dish in the rustic sense – and restaurateur Joël Robuchon has a love of authentic French cuisine – but incorporating this into an haute cuisine menu seems something of a misjudgement.

Shattered expectations Service at Robuchon a Galera could also be better. I sat for what seemed like ages before I was offered a wine list and when the food started to come, it was all a bit rushed. Rather than lingering over my meal, I was in and out in less than two hours, including the initial long wait. Robuchon a Galera has to be commended for having one of the world’s truly great wine lists, a mammoth volume that is also available on a more readerfriendly iPad – a noteworthy innovation. The selection of wines available by the glass is not extensive but covers enough styles to match anything on the menu. However, the restaurant does not have suitable glasses available for the food-and-wine pairing experience to really shine. I was quite shocked to have radically different white wines – ranging from an excellent German Riesling to a full-bodied Chassange-Montrachet – served to me in exactly the same style of glass. The open-mouthed bowl style

of glass is perfectly suited to the Chassange-Montrachet but cannot be more inappropriate for the Riesling. Although I only drank one red wine, an outstanding Burgundy, I noticed on other tables that all guests were being served red wines in pretty much the same glasses. At one-star level this would be just about excusable but here, especially considering the huge investment in the wine cellar, it is nothing short of criminal. I raised the point with the sommelier and he reluctantly agreed that they did not have as a good a selection of glasses as he would like, but said that when they moved to their new premises in the Grand Lisboa he expected this to change.

Lacking creativity The most notable aspect of Robuchon a Galera, apart from the wine list, is the trolley service, starting with the huge mounds of delectable butter served at the table and what has to be among the best bread selection that can be seen anywhere, then the stunning desserts and the artful display of petit-fours, all served from elegant Christofle chariots. In short, this Robuchon outpost would most certainly be unworthy of three stars in Europe. However, it would deserve to be a solid two-star, were it not for from the poor selection of wine glasses.

“Service at Robuchon a Galera could be better. I sat for what seemed like ages before I was offered a wine list”

Aurora at the Altira is a thoroughly enjoyable experience – enough to entice you back – although it leaves you wondering why it deserves the Michelin star. The service is nothing short of exemplary and the food is very good. I started with a warm carpaccio of sea bass, a simple dish with a simple salad dressing, followed by a tasty saffron risotto with seared scallops and then cod. Each dish was competently produced using good quality ingredients but there was nothing remotely creative about it and certainly it would have no chance of receiving a Michelin star in Europe. One positive point about Aurora is the excellent and reasonably priced wine list. One of the best white wines from Portugal’s Alentejo region, Pêra Manca, at MOP3,800 would be reasonably priced even in Portugal. Here in Macau it is a bargain. My advice is to take no notice whatsoever of the Michelin guide and just follow your nose. Let it lead you, for example, to Aux Beaux Arts, the brasserie at the MGM Grand, where French-Lebanese chef Elie Khalife serves not only great traditional French food in the brasserie style but also a range of more sophisticated dishes. In a different environment his food would be at least as worthy of a star * F&B expert based in Europe as Aurora.

“Aurora at the Altira is a thoroughly enjoyable experience, although it leaves you wondering why it deserves a star” JANUARY 2011

96 JOSEPH STIGLITZ UNIVERSITY PROFESSOR AT COLUMBIA UNIVERSITY

New Year’s hope against hope FOR EUROPE AND THE UNITED STATES, 2010 WAS A YEAR OF DISAPPOINTMENT he time has come for New Year’s resolutions, a moment of reflection. When the last year hasn’t gone so well, it is a time for hope that the next year will be better. For Europe and the United States, 2010 was a year of disappointment. It’s been three years since the bubble broke, and more than two since Lehman Brothers’ collapse. In 2009, we were pulled back from the brink of depression, and 2010 was supposed to be the year of transition: as the economy got back on its feet, stimulus spending could smoothly be brought down. Growth, it was thought, might slow slightly in 2011, but it would be a minor bump on the way to robust recovery. We could then look back at the Great Recession as a bad dream; the market economy – supported by prudent government action – would have shown its resilience. In fact, 2010 was a nightmare. The crises in Ireland and Greece called into question the euro’s viability and raised the prospect of a debt default. On both sides of the Atlantic, unemployment remained stubbornly high, at around 10 percent. Even though 10 percent of US households with mortgages had already lost their homes, the pace of foreclosures appeared to be increasing – or would have, were it not for legal snafus that raised doubts about America’s vaunted “rule of law.”

Wrong resolutions

Unfortunately, the New Year’s resolutions made in Europe and America were the wrong ones. The response to the private-sector failures and profligacy that had caused the crisis was to demand public-sector austerity! The consequence will almost surely be a slower recovery and an even longer delay before unemployment falls to acceptable levels. There will also be a decline in competitiveness. While has China kept its economy going by making investments in education, technology, and infrastructure, Europe and America have been cutting back. It has become fashionable among politicians to preach the virtues of pain and suffering, no doubt because those bearing the brunt of it are those with little voice – the poor and future generations. To get the economy going, some people JANUARY 2011

will, in fact, have to bear some pain, but the increasingly skewed income distribution gives clear guidance to whom this should be: approximately a quarter of all income in the US now goes to the top 1 percent, while most Americans’ income is lower today than it was a dozen years ago. Simply put, most Americans didn’t share in what many called the Great Moderation, but was really the Mother of All Bubbles. So, should innocent victims and those who gained nothing from fake prosperity really be made to pay even more? Europe and America have the same talented people, the same resources, and the same capital that they had before the recession. They may have overvalued some of these assets; but the assets are, by and large, still there. Private financial markets misallocated capital on a massive scale in the years before the crisis, and the waste resulting from underutilization of resources has been even greater since the crisis began. The question is, how do we get these resources back to work?

The Argentinean example

Debt restructuring – writing down the debts of homeowners and, in some cases, governments – will be key. It will eventually happen. But delay is very costly – and largely unnecessary. Banks never wanted to admit to their bad loans, and now they don’t want to recognize the losses, at least not until they can adequately recapitalize themselves through their trading profits and the large spread between their high lending rates and rock-bottom borrowing costs. The financial sector will press governments to ensure full repayment, even when

it leads to massive social waste, huge unemployment, and high social distress – and even when it is a consequence of their own mistakes in lending. But, as we know from experience, there is life after debt restructuring. No one would wish the trauma that Argentina went through in 1999-2002 on any other country. But the country also suffered in the years before the crisis – years of IMF bailouts and austerity –from high unemployment and poverty rates and low and negative growth. Since the debt restructuring and currency devaluation, Argentina has had years of extraordinarily rapid GDP growth, with the annual rate averaging nearly nine percent from 2003 to 2007. By 2009, national income was twice what it was at the nadir of the crisis, in 2002, and more than 75 percent above its precrisis peak. Likewise, Argentina’s poverty rate has fallen by some three-quarters from its crisis peak, and the country weathered the global financial crisis far better than the US did –unemployment is high, but still only around 8 percent. We could only conjecture what would have happened if it had not postponed the day of reckoning for so long – or if it had tried to put it off further. So this is my hope for the New Year: we stop paying attention to the socalled financial wizards who got us into this mess – and who are now calling for austerity and delayed restructuring – and start using a little common sense. If there is pain to be borne, the brunt of it should be felt by those responsible for the crisis, and those who benefited most from the bubble that preceded it.

JANUARY 2011

THE RULE OF TRADITION

Food & beverage expert David Wong, and his rituals for the season THE SPECIAL ‘LAI SI’

Check out our shopping list RABBIT PREDICTIONS for Chinese New Year See what astrologists say about 2011 the Year of the Rabbit

BREAKDOWN BY THE NUMBERS

ALL NUMBERS RELATED TO CHINESE NEW YEAR WERE DISCOVERED IN THE VERY SECRET WORLD OF THE INTERNET!

MOP100

It can be MOP100 or MOP1,000, but it has to be an even number – odd numbers are for funerals. During this time, small red envelopes (“lai si”) containing money are given out to family and friends to wish prosperity and luck. The money should be given in a single note and should certainly never contain any coins.

It’s the forbidden number. During Chinese New Year, never offer anything in fours, as the number four (四) can also sound like “death” (死), in Chinese. If this is true during the whole year, this is especially true during this superstitious season.

An unlucky age during Chinese New Year. The Chinese Zodiac uses a cycle of 12 – so for those who will be turning 12, 24, 36 (or any multiple of 12) during the Year of the Rabbit, it will be an unlucky year, according to traditional belief.

9,500

The total number of commemorative coins issued by the Monetary Authority of Macau to celebrate 2011 the Year of the Rabbit. There are three types of coins, with face values of MOP20, MOP100 and MOP250, respectively.

4,709

The Chinese year that starts on February 3, 2011, according to the Gregorian calendar. Traditionally, the Chinese use a 60 year-cycle calendar that can be traced back to Emperor Huangdi, in 2,637 BC. A complete cycle takes 60 years and is made up of five cycles of 12 years each. 98

After Christmas and the Western New Year, comes Chinese New Year. Or should we say Lunar New Year, given it is celebrated in several places in Asia? Regardless of the name, it’s probably the most important celebration in this part of the world. What to do, where to go, what should you give? We help you out with these dilemmas. First and foremost, we have searched online for the astrological predictions and found that the Year of the Rabbit will bring changes for everyone. We have also found your compatibilities and incompatibilities in love, so read on if you want to know more. Furthermore, we interview food and beverage expert David Wong and hear how an unconventional man enjoys Chinese New Year in a typical and traditional fashion. But if you want to move away from tradition a little bit, then we have searched around and found some interesting gifts that may be an alternative to the usual “lai si” (red pocket with money). Alongside clothes, accessories and jewellery, we have even found a new Shiatsu massage at The Spa at Crown. For stressed friends and relatives, it is guaranteed relaxation. While we’re on the subject of original gifts, why not the most expensive of all? White truffles! Late last November, Stanley Ho Hung Sun did it again. During a charity auction, his SJM Holdings paid US$330,000 (MOP2.64 million) for two pieces of white truffle weighing a total of 1.3 kilograms. For Mr Ho and for many others, white truffles are definitely the most wanted item on their gifts list. Finally, if you want to celebrate Chinese New Year the unconventional way, then head off to some of the great restaurants in town. We analyse their menus and give you some ideas on where to eat out during your Chinese New Year. Enjoy!

The Lunar New Year in China

The Lunar New Year in the rest of Asia

In China, Japan, Korea, Vietnam, Tibet and Mongolia, the Lunar New Year celebrations fall on or near the same day, because these countries follow the lunar calendar.

In some Asian countries, celebrations of the Lunar New Year fall on different days because they follow a lunisolar calendar: this is the case in Thailand, Laos, Cambodia, Sri Lanka and India.

Legend has it that the celebrations of Chinese New Year may be related to a beast known as Nian. The beast came out to eat people on the night before the beginning of a new year until an old man found a way to control it. Then people started to observe and celebrate Chinese New Year.

Legend has it that in India, everything started with Prince Rama. He was banished to the forest for 14 years by his stepmother but, after rescuing his kidnapped wife from a neighbouring princedom, he returned and reclaimed his throne.

In China, the festival is celebrated everywhere almost the same way. A week before the New Year, men bid farewell to the Kitchen God, who makes a week-long annual report to the Jade Emperor in Heaven. Sweet, sticky food, especially the syrupy malt sugar, is offered to his image in the kitchen to please him, but also to glue his mouth shut.

In India, the festival is celebrated according to regional customs. Most mark the day by worshipping Lakhmi, the Hindu goddess of prosperity and Ganesh, the god of wisdom and good fortune, visiting loved ones and exchanging homemade traditional sweets.

The ostentatious festivities begin on the first full moon of the year and last for 15 days. They involve firecrackers, flowing silk dragons dancing in the street and opulent feasts of auspicious-sounding dishes and sweets.

Koreans tend to celebrate the lunar New Year, or Sol, with a whole less pomp than other Asian groups because they are caught between two calendars – and consequently two New Years. The celebrations involve nice quiet family time, ancestor worship and lots of rich food.

You should eat certain foods such as black moss seaweed, which is a homonym for exceeding in wealth, and dried bean curd, which is another homonym for fulfilment of wealth and happiness.

Popular Tet (Vietnamese New Year celebrations) dishes include banh chung, a square shaped, sweet rice cake stuffed with mung beans and pork. It’s usually eaten with dua mon, a concoction of pickled radishes, peppers and other vegetables.

In China, people greet each other during this time by saying “gong hei fat choy” (meaning “congratulations for striking it rich”) or just “gong hei” (meaning “congratulations”). Children get “lai si”, pocket money in tiny red envelopes from married adults.

In Thailand, people greet each other during Songkran with a water sprinkling ritual. During the four days of festivities, which fall in mid-April, people sprinkle and douse each other with perfumed water to symbolize cleansing and renewal.

The 15th day of the lunar month is the last day of the festivities, usually called the Lantern Festival. But it is also traditionally considered the Chinese Day for sweet-hearts, since it was considered the time when women could leave the house to have fun.

A big part of Cambodia’s Xyoo Tshiab are matchmaking affairs, given it’s the time of vacation from the task of tending farms for the Hmong tribes.

SEVEN DEADLY SINS AND THE CHINESE NEW YEAR Gluttony – During Chinese New Year, you’re expected to raid the sweet shop and eat as much candy as you can. It is believed that it will deliver you a sweeter year. Just be aware of any eventual pain in your stomach afterwards. Greed – Yes, it’s New Year, but don’t think of renewing your wardrobe and shoe collection. The word “shoes” in Cantonese also means “rough”, so during the holiday period it is better to avoid some rough seas. Lust – Don’t lust for meat during this season. You are supposed to eat a lot of fish, since Chinese believe this will bring luck and prosperity. Sloth – Before Chinese New Year celebrations begin, you

must avoid laziness and clean your house thoroughly in order to sweep away the bad luck. Envy – It’s useless to envy anyone’s good hair, since during this season you should avoid hairdressers. Otherwise, your luck will be chopped off. Wrath – Avoid getting angry with your children on New Year’s day. It is believed that if you cry on that day, you will do it throughout the year. Therefore, children’s misbehaviour is particularly tolerated. Pride – Yes, you’re allowed to be proud, because you’re paying off all your debts. The Chinese believe that if you start your year in debt, you’ll finish it like that. But it’s a good kind of pride. 99

FEATURE

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hiatsu is an old Japanese massage technique that uses finger pressure to relieve any discomfort caused by jet lag, muscle pain, headache, anxiety or stress. So if any of your loved ones suffers from these, why not offer them a few sessions at The Spa at Crown as a Chinese New Year gift? “It’s a traditional massage that helps the body to recover, without the need for taking drugs or

chemicals,” explains Terry Liew, Shiatsu master, who recently visited The Spa at Crown to train the resident therapists. Different from regular massages, shiatsu will stimulate the body, helping it to self-repair. “The normal massages available elsewhere make you feel good at the time, but the next day you go back to your normal state,” says Mr Liew.

It’s a holistic approach. Through rhythmic finger and palm pressure, shiatsu masters detect the imbalances of the body and try to improve the natural flow of energy. And with no massage oil being applied, you just need to relax and leave yourself in the hands of the experts. Depending on your problems, you might need several sessions. Care to try it out?

BIG SPENDER

White and expensive For this month, we suggest an original and particularly expensive gift: white truffles. In November, Stanley Ho Hung Sun’s SJM Holdings paid US$330,000 (MOP2.64 million) for two pieces of white truffle weighing a total 1.3 kilograms, during a charity auction. It was the highest bid at the international white-truffle auction that raised a total of US$417,200. Truffles are considered a culinary delicacy, so rare that they are often found at charitable events such as this auction. But why are these mushrooms so expensive? To start with, white truffles are available for only a few months a year and they have to be discovered by pigs (truffle hogs) or dogs. Furthermore, they come mostly from one part of Italy, the Langhe area of the Piedmont region, in northern Italy. The most famous ones – also the most delicious ones – are from the countryside around Alba. And there is no other way to get them other than by setting off pigs in Piedmont. Don’t even think of trying to grow them in your backyard. Add to this the rare aroma, taste and the aphrodisiac qualities, and this is definitely one the most precious presents you can give to anyone who really enjoys food. Mr Ho would certainly enjoy such a gift. Let’s not forget that this is the second time his name has been in the newspapers because of truffles. In 2007, he paid a record US$330,000 for a 1.5 kilogram white truffle.

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FIRST PERSON

HE WAS BORN IN HONG KONG, BUT GREW UP IN THE UNITED KINGDOM AND SPENT MOST OF HIS ADULT LIFE ABROAD. HOWEVER, GIVEN HIS VERY TRADITIONAL FAMILY BACKGROUND, DAVID WONG YUK SHAN STILL FOLLOWS THE LONG-ESTABLISHED PRACTICES DURING CHINESE NEW YEAR. THE HEAD OF THE FOOD & BEVERAGE DEPARTMENT AT THE INSTITUTE FOR TOURISM STUDIES REVEALS SOME OF HIS RITUALS

TRADITION IS WHAT IT USED TO BE avid Wong Yuk Shan might have lived most of his life in the United Kingdom, but Chinese New Year is still very important to him. It’s a time for family reunion and traditions, which he follows strictly. The head of the Food & Beverage department at the Institute for Tourism Studies (IFT) left Hong Kong when he was four. He grew up in the UK and worked in several places, such as France, Thailand and now Macau. But having very traditional parents, his Chinese background is always present when it comes to celebrating this season. Before the beginning of the festivities, Mr Wong cleans the house, sweeping away all the bad luck and evil spirits remaining from last year. Also, he opens up the windows the night before

New Year’s Day and leaves the lights on, which means he is letting the luck enter into his house. On New Year’s Eve and on New Year’s Day he has a traditional dinner with his family. On the first day of the New Lunar

THE INTERNATIONAL EXPERT During his career, David Wong Yuk Shan has worked with David Evans, the former vice-president of the World Master Chef Society, the late Jean Bordier, chairman of the Master Chefs of France, and chef Raymond Blanc at his two-Michelin star restaurant “Le Manoir aux Quat Saisons”, in Oxford, UK. Regarding his hotel experience, he has worked at the former Mandarin Oriental in Macau (now Grand Lapa), the Westin Banyan Tree in Bangkok and the Luxury Collection Sheraton in Phuket. Currently, Mr Wong is the executive assistant manager of the Food & Beverage department at the Institute for Tourism Studies. He has recently released the second edition of his cookbook entitled “The Art of Modern Portuguese Cuisine”. He is one of the founding members of the Macau Culinary Association as well as the secretary general for Disciples of Escoffier in Macau. A regular food and wine judge on the international circuit, he also writes restaurant reviews and wine columns for South China Morning Post, Macau Closer, Macau Daily Times and Fine Drinks Magazine. He is an honorary advisor to the Association of Bartenders & Sommeliers in Macau and is an approved tutor for the Wine and Institution Trust, in the UK.

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Year, Mr Wong and his family dress up – preferably in something new – and visit their relatives and friends to wish them Happy New Year. Additionally, he watches his language, avoiding swearing of any kind. If you show any kind of disrespect on this day you risk having an unfortunate year.

The food on the table

On Chinese New Year’s Eve and the first day, Mr Wong’s table is always filled with conventional and non-conventional dishes. “Raw fish salad (Yee Sang) is the traditional dish but I always remember having turnip cakes and melon seeds for Chinese New Year,” he says. Let’s not forget that fish and seeds symbolize prosperity and good luck. As for the non-conventional dishes, it varies from year to year. “We can even have a big steak,” Mr Wong explains. All this food is usually paired with Riesling wine. “It’s a food wine and great with Asian food in general. Riesling ranges from dry to sweet and should be properly chilled,” he notes.

Life in the UK

Mr Wong lived for 23 years in the UK and always celebrated Chinese New Year there. “It’s not a public holiday, like in Macau, but in the UK there is a large Chinese community. My parents were – and still are – there, as well as a lot of other relatives,” he says. “Chinese families are very close and the UK is quite small. It’s easy to get in contact and travel around. That’s why we keep traditions.” While in London, Mr Wong did exactly the same things as he does now in Macau, with one difference: “Afterwards, we went to the pub with friends.” When his children were born, in Thailand, he also taught them the Chinese traditions. And today, even though they are still very young – 10 and 12 years old - they already are aware of them. “They look forward to getting ‘lai si’,” he says, laughing.

ESCAPES

Philippines’ promotions Why not try the Philippines for a different Chinese New Year? Cebu Pacific has announced a seat sale for its flights from February 1 until March 31, 2011. It may be a very good option for those who just want to relax away from Macau. It’s a great place to escape the hordes of people that travel to other parts of Southeast Asia during Chinese New Year. With coral-fringed islands, the Philippines have some of the world’s best diving and snorkelling places on offer. Above sea level, the landscape will certainly thrill travellers.

Getting closer Close to us, there’s a good alternative place to spend Chinese New Year: Hong Kong. Forget about the neon skyline, and think of nice beaches and hiking trails. While you’re at it, you can also go out to Lamma Island to enjoy the open views and the fresh seafood at different rustic restaurants. At night, cruise to some of the trendiest bars in Soho to drink some chocolate martinis and mango daiquiris. If you’re the outdoor type, camp out on Pui O Beach on Lantau Island. Right around the corner from the hectic city, this is a small paradise. You can also take a peak at the Giant Buddha statue, at Po Lin Monastery. In Hong Kong, you can have the busy city life as well as the calming outdoors and beach life. It’s a good solution for those who do not have much time, but still want to enjoy a few days away.

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GOURMET

Instead of a traditional Chinese New Year meal in your home, treat yourself to some of the cityâ&#x20AC;&#x2122;s best gourmet options for the season

Something new Square Eight restaurant has been renovated

nother reason to be excited during the Chinese New Year, Square Eight is re-launching with a new concept that tries to reflect the uniqueness of various Chinese regional specialties with creativity. Square Eight is in its new phase after renovation, having reopened its doors last month. Trendy and stylish decorations together with an introduction of exquisite cuisines on the new menu are the highlights of the re-launch. Being a Michelin recommended restaurant for three consecutive years, Square Eight offers popular Southeast Asian classics, Macanese favourites and Chinese cuisines. In addition, chef Mingo Wan and the culinary team have introduced a series of Chaozhou and Shanghainese traditional

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dishes, as well as Northern Chinese specialties such as stir-fried prawns with chilli soya sauce and Sichuan styled spicy beef with peppercorns among many others. Chef Wan brings with him over 30 years of culinary expertise. In the kitchens of Hong Kong and Macau, he perfected his skills delivering high quality dishes, true to their origins. His vision of fresh, wellsourced ingredients, flavour-driven dishes and value for money offerings has gained him a strong reputation in the region. Square Eight at MGM Macau, with its new face and enticing dishes, is a perfect choice for families and friends to celebrate Chinese New Year.

Chef Wan

Modernity and tradition At MGM Macau

This Chinese New Year, at MGM Macau, special meals will be available at Grand Imperial Court, Imperial Court and Aux Beaux Arts restaurants, where, once again, tradition will be reinvented. At Aux Beaux Arts, between February 3 and 5, for MOP888, you can enjoy a menu that includes Alaskan crab in spicy tomato jelly, horseradish foam and micro green, smoked eel and foie gras terrine with roasted sea weed and green tea celery chutney, alongside baby shrimp consommé on pan seared goose liver with braised salsify and borage flower. As for Imperial Court, there will be two different set dinners during this time, for MOP9,880 (for 12 people) or for MOP980 per person.

The Chef highlights, from February 3 to 28, are the braised superior shark’s fin soup with sea urchin and crab meat, braised sliced African abalone with boneless pork knuckle in oyster sauce, and wok- fried sea whelk with morel mushrooms and white asparagus. At Grand Imperial Court you can choose between two set dinners (MOP10,800 for 12 people, or MOP980 per person), where the highlights will be wok-fried supreme shark’s fin with crab meat and farm eggs, braised whole conpoy with sea moss and dried golden oysters, as well as slow-cooked superior fish maw in saffron flavoured chicken broth. It’s definitely an indulgent alternative for those who prefer to eat out during this period.

Fish, seafood and Japanese At Altira

Ying, Tenmasa, Aurora and Kira, at Altira, will serve a special menu during Chinese New Year. For this season you can expect seafood, dim sum and (unconventional) Japanese delicacies. At Ying, from January 10 until February 28, there will be four set dinner menus, for MOP2,880 (six people), MOP5,888 (12 people), MOP6,880 (12 people) and MOP9,880 (12 people). These include specialities such as braised dried oyster and sea moss, stir-fried scallops and asparagus, as well as shark’s fin soup with crab meat and winter melon. Furthermore, Chinese New Year specialities such

as abalone, shark’s fin, fish maw and sea cucumber in abalone sauce, and double-boiled shark’s fin soup with chicken will be available a la carte. On the same dates, Tenmasa will also have a Japanese New Year Dinner set, for MOP888, while there will also be an a la carte with other delicacies. On February 4, the one Michelin star Italian restaurant Aurora will serve a seafood buffet for MOP428. At Kira restaurant, on February 3 and 4, there will be two unlimited dinner menus (MOP488 and MOP588). Finally, Altira has some Chinese New Year hampers prepared, with different treats. Special tailor-made hampers can also be ordered. Try it.

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SHOPPING LIST

Watches and jewellery

We have selected the most prestigious items just for you. Think of them when you’re looking for a present for that special someone David Yurman Wave rings

Sterling silver band rings showing wave texture all the way around. With intricate textures, this collection fits the modern man perfectly. Price: To be announced Where: The Shoppes at Four Seasons

Omega Museum Collection Collector’s Piece Constellation Quartz 35mm for Omega

It’s the perfect piece for women. At only 35mm, this timepiece will bring elegance to any lady. Price: MOP101,800 Where: Grand Lapa, DFS The Shoppes at Four Seasons

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One of Omega’s biggest strengths is combining traditional values with today’s highest technological standards. These are timeless pieces with an exquisite design. Price: MOP127,200 Where: Grand Lapa, DFS The Shoppes at Four Seasons

Wave cufflinks by David Yurman

Sterling silver oval-shaped cufflinks, these feature intricate textures and carvings to create a very artistic and contemporary look. A gift for the elegant man. Price: To be announced Where: The Shoppes at Four Seasons

David Yurman Jumping Hours

One of the Ancestraleâ&#x20AC;&#x2122;s Tourbillon collection, this watch is a perfect fit for the modern man. Price: HK$248,900 Where: The Shoppes at Four Seasons

Tourbillon by David Yurman

A 43mm watch with the signature of one of the most elegant watch designers worldwide. A gift he will cherish. Price: HK$763,700 Where: The Shoppes at Four Seasons

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SHOPPING LIST

Clothes and accessories

What if you offer a different type of ‘lai si’? Think about these suggestions

Valentino’s flower bag

With its flower patterns, it’s perfect for this time of the year. This Valentino bag from the spring collection will illuminate you through sunny days. Price: HK$7,300 Where: Grand Lapa, The Shoppes at Four Seasons, City of Dreams

Tube dress from Valentino

This attire from the spring collection will put you in tune with the season. Price: HK$40,500 Where: Grand Lapa, The Shoppes at Four Seasons, City of Dreams

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Swarovski crystal Chinese zodiac collection

For the Year of the Rabbit, Swarovski presents the Rabbit, the Sheep and the Pig, given their affinities. By 2012, the Swarovski Chinese zodiac collection will be complete. It will be perfect on your desk and maybe it will bring you luck for the year ahead. Price: MOP2,450 (Golden Shine Rabbit), MOP2,100 (Silver Shade Rabbit) Where: Grand Canal Shoppes at The Venetian Macao, City of Dreams, DFS The Shoppes at Four Seasons

Red dress by Valentino

This dress in red will cause a sensation particularly during this season. With the perfect colour for Chinese New Year, this piece from Valentinoâ&#x20AC;&#x2122;s spring collection will bring a shine to any woman who wears it. Price: To be announced Where: Grand Lapa, The Shoppes at Four Seasons, City of Dreams

Louis Vuitton Monogram Vernis Leopard Zippy Wallet

This different style of wallet comes in Monogram Vernis leather and features a zipper closure. It holds up to eight credit cards and has one compartment for small change and four others for bills and documents. But it is the funky pattern that makes this truly different from any other LV product. Price: MOP7,600 Where: Grand Lapa, DFS The Shoppes at Four Seasons, Wynn Macau, One Central

Mahina Cirrus, Louis Vuitton Itâ&#x20AC;&#x2122;s one of the new leather goods from the Louis Vuitton collection. With an elegant shape, the Mahina leather bag serves perfectly as a casual bag. It has an engraved press lock, flat shoulder strap and zipped closure. Price: MOP23,800 Where: Grand Lapa, DFS The Shoppes at Four Seasons, Wynn Macau, One Central

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ZODIAC PREDICTIONS

The Year of the Rabbit

It starts with the passage of the Moon, the patron of love, to the constellation of Sagittarius from the zodiacal constellation of Scorpio. According to many, the Year of the Rabbit is a year of changes

Rabbit

1915 1927 1939 1951 1963 1975 1987 1999 2011

Rat

1912 1924 1936 1948 1960 1972 1984 1996 2008

1913 1925 1937 1949 1961 1973 1985 1997 2009

Tiger 1914 1926 1938 1950 1962 1974 1986 1998 2010

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It is the year of the Rabbit and the universe is going to conspire in your favour. If you have a business, relax, because nothing bad will happen to it. You can take some time to travel or just to take care of yourself. So, this year you just have to be focused on being happy and expanding your horizons. Change for the better is in order. In love, Rabbits should wise up to not spending unnecessary time with romantic affairs.

Your life may witness tension in family relationships and financial instability, but you will prevail from pursuit of the Rabbit (cat). In the first half of the year, some unresolved issues may complicate your life, but afterwards everything will get better. All you have to do is carefully plan your actions. This year, expect activeness and strength from Rats, stimulating them not to hide from their problems.

In general, the year will be successful, but Oxen will have some reason to worry. Their creative side will show up and Oxen will surprise everyone. In the Year of the Rabbit, they will strive for self-education, science and will read books of wise thoughts. They will feel frustration related to their careers. Furthermore, their financial position will not be that stable, although by the middle of the year it will find some balance. Adventures, trips and travels, along with new friends will revive their lives. In the end, Oxen will feel the breeze of success.

It will be a very successful year for the Tiger in regards to career. With perseverance, hard work and good health, Tigers’ lives will be a success. However, given their workaholic tendencies, they may have some problems in relationships and family, weakening the ties. So, the Year of the Rabbit will require a calm attitude, tolerance and understanding.

Dragon

1916 1928 1940 1952 1964 1976 1988 2000

Snake

1917 1929 1941 1953 1965 1977 1989 2001

Horse

1918 1930 1942 1954 1966 1978 1990 2002

Sheep

1919 1931 1943 1955 1967 1979 1991 2003

Dragon will triumph in all fields, even romantic ones. As for Dragons who still haven’t found anyone, this is the year that they’ll have a higher chance of marrying. The only possible foreseeable danger is growth of their ego, feeling the dizziness of success. This might lead to actions that can endanger everything. This is especially true for young Dragons.

The wise Snake will have even greater insight, showing intensified feelings and a very developed intuition. Because they can foresee events, Snakes are not afraid of moving towards their goals. Without having some relaxation, Snakes can make mistakes. This will be a very lucky year in love. However, Snakes should not be over-confident and should not fully rely on strangers.

Passion will dominate the Horse’s life. Even the calmest people from this sign will want to go with the flow of love experiences. Their emotions and feelings will boost their will to create. So, this will be a good year in all fields. Where love is concerned, Horses will have to show prudence in making decisions. They won’t only have one romance, but instead, several. This is a very strong year for Horses, inspiring other people and also shining at social events.

This will be a year that will enable the Sheep to enjoy life and organize their family matters. Sheep will be especially strong in systematic work, such as charitable organizations and fund-raising. However, this might not be a good year to prosper professionally and in business. Their efforts should be towards urgent problems in their personal lives, since married Sheep should really solve pending issues. The single ones will experience passionate love.

W Monkey

1920 1932 1944 1956 1968 1980 1992 2004

Rooster

1921 1933 1945 1957 1969 1981 1993 2005

Dog

1922 1934 1946 1958 1970 1982 1994 2006

Pig

1923 1935 1947 1959 1971 1983 1995 2007

The Monkey will feel full of energy and confident in everything. In the professional field, they will achieve great success. This year, they will want to learn new things and may attend training courses. However, Monkeys might have problems in family relationships, since they are too busy with themselves.

The Rooster has to be prudent. Their aggressiveness might cause problems in life, which may lead to some change in their circle of relationships. Although Roosters will have some equilibrium, they might not have the patience to maintain it. So, they have to control their problematic family life in order to avoid a very difficult and troubled life.

This will be a relaxing year for Dogs. Although, they might have some financial problems, they will be strong at developing new projects and making important decisions. It is a good year for education and redesigning skills. Along with improving professional skills, Dogs must focus on self-improvement. However, they should control hasty decisions and actions.

Pigs will have no big problems, but they must not blindly trust others. They can expect no global changes, but there will be new meetings and acquaintances. They will surely go through an intense love experience – and that might be outside their current marriage/ relationship – forcing the Pig to live with contradictions.

ho is your best romantic partner? Who is most compatible with you in the bedroom? Here are our answers, according to the Chinese zodiac. Maybe you’ll be surprised. Since this is the Year of the Rabbit, let’s start with them. Rabbits in a relationship are romantic and caring, but also very realistic, often having difficulties in settling down. They enjoy the intimacy and tenderness of making love and are more compatible with Sheep and Pigs and least with Roosters. As for the proud and energetic Dragons, they often hesitate to commit. However, their direct approach means that whenever they meet ‘the one’, they stick with him/her. They like to experiment while making love, being more in tune with Monkeys and Rats and less with Dogs. Wise and creative, Snakes do not think of relationships as a priority, but once they get into one, they can be very jealous. Although they are not very good at communicating their feelings, they can be very affectionate under the sheets. Their best partners are Roosters and Oxen, while they are not very compatible with Pigs. The witty and intelligent Horses are very affectionate. However, they are prone to falling in love quickly, finding it hard to commit long-term. And even though they are very relaxed people, they have a lot of energy in the bedroom. Most compatible with Dogs and Tigers, they do not have a strong connection with Rats. Sheep work on their relationships to ensure a lifetime of happiness. Once they’re confident, they are very passionate when it comes to getting intimate. Their best partners are Pigs and Rabbits, while things do not go that well with Oxen. As for the entertaining Monkeys, they are fun-loving people. They do tend to flirt a lot having difficulties in committing. However, when they do, they are very loyal. As for sex, excitement and intensiveness are the two words to describe them. They are most compatible with Dragons and Rats and least with Tigers. Roosters look at love as a challenge. Although they have some difficulties in expressing their feelings, they are very caring. In the bedroom, they aim at intimacy and passion. They best partner-up with Snakes and Oxen, and least with Rabbits. Dogs are loyal. However, when it comes to relationships they tend to wait. When they do get involved, they tend to worry too much. Prone to keeping their emotions on a leash, they can, however show affection under the sheets. Their best sexual partners are Horses and Tigers, while Dragons and Dogs do not get along. Then comes the Pig. Since they are dreamers, they get easily disappointed. Loving foreplay, they get along perfectly with Sheep and Rabbits, but not with Snakes. As for Tigers, they are passionate. Prone to dominate relationships, they are very honest with their emotions. Spontaneous and creative in the bedroom, they match best with Horses and Dogs and least with Monkeys. The extrovert and charming Rats are always getting into relationships, being very attractive. In the bedroom, they are playful and full of energy. They are most compatible with Monkeys and Dragons and least with Horses. Last but not least, comes the Ox. They aim at more traditional romantic involvements and are very generous under the sheets. Roosters and Snakes partner up best with them, while Sheep and Oxen are not a good intimate fit. So, for the Year of the Rabbit, we wish you a very successful love life. After all, isn’t that what we all want? 111

Next month look for Fashion Grand Canal Shoppes, The Venetian Macao 3D Gold 5cm Abiste Adidas agnès b. Aigle Aimer Alqvimia Anteprima Apothecary Armani Exchange Arté Madrid Artini Ashworth Autore b+ab Bauhaus Belle Bershka Blancpain Blush Bossini Boucheron Boutique di Gondola Boutique V Breil Brooks Brothers Butani BVLGARI Canudilo Canudilo Holiday Caran d’Ache Carat Carl F. Bucherer Century Chai CHARRIOL Chevignon Chocoolate Choi Tai Fook Watch&Jewellery Choi Wai Jewellery Chopard Cirque du Soleil Boutique City Chain CK Calvin Klein CK Jeans CK underwear Clarins Club Monaco Coach Codes Combine Columbia Sportswear Co. Converse Corona Crocodile Crocs Damiani Davidoff Deicae Demandor Derain DG Lifestyle Store Diesel Dilys’ Don Gilato Dooney & Bourke Ecco Edelweiss Jewellery Elegant Prosper Elle Jewellery Elov Empezoni Emphasis Jewellery Emporio Armani Emporio di Gondola Enzo EQ:IQ Esprit Expressions Fabio Caviglia Fables Fancl Fila Fiorucci Florsheim Folli Follie Fossil Francesco Biasia Franck Muller French Connection Furla G2000 Geox; Joy & Peace Giordano girls talk

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Giviea K5 Glashütte Original 2706 Godiva 2640a Göessele 2627 Grossé 2631 Guess Accessory 2601 Guess Jeans 2429 H&B Medicine Shop 2120a Hatta Fine Jewelry 1013 Hauber 2622 Hearts On Fire 2008 Herborist K6 Henry Jewellery&Watches2013b Hogan 2510 Home of Swallows 2201a Hugo Boss Orange Label 2031a Hush Puppies 2111 i.t 2328 innée 2636 Izod 2423 Izzue 2613 Jaquet Droz 2523b JC Versace 2001 Jean Scott 2007a Jean Scott Sport 2433 Jipi Japa 2102a Joan&David 2612a Just Gold 2113 Kaltendin 2017a Kego 2402a Kilara & Ceu 2306 Killah 2306a Lacoste 2508a/2403 Lancel 2701 Laneige 2409 Le Saunda 2210a Levi’s 2425 Links of London 2608a LLadró 2013c L’Occitane 2608 Longines 2400 Luisa Cerano 2622 Luk Fook Jewellery 2018 Lush 2636a M Missoni 2630 Malo Clinic & Spa 3015 Manchester United 2215 Mango 2321 Marisfrolg 2619 Marjorie Bertagne 2648 Marlboro Classics 2509 Marathon Sports 2221 Massimo Dutti 2442 Maubossin 1013 Maud Frizon Paris 2650 Max&Co. 2623 Mercato 2508 Michel René 2703 Michele 2621 Mikimoto 2011 Millie’s 2405 Mirabell 2658 Miss Sixty 2438 Mocca 2322 Moiselle 2607 Montagut 2525a Montblanc 2002 Monte Carlo Jewellery 1001a Moreline 2639 Murano 2652 Murphy & Nye 2702 NaRaYa 2212 Natural Beauty Mix 2128 Nautica 2709 Next 2211 Nike 2432a Nine West 2605 Normana 1020 O’Che 1867 2426c Omega 2003a Optica Boutique 1010 Optica Fashion 2005a Optical 88 2019 One Timepieces 2610 Osim 2106 Oto 2120 Outdoor Fashion 2523a Passion Play 2300b Patchi 2111a Paul & Shark 2007 Piaget 2013 Piquadro 2023b Promod 2316 Pull&Bear 2525 Pure and Beautiful K7 Q’ggle 2216 Rado 2006a Raffles 2119b Rayure 2606a

Replay Rich Jade Richard Mille Rimowa Rockport Sa Sa Sa Sa Selective S. Culture S.T. Dupont Samsonite Shiseido Sisley Sisley Paris Sketchers Smalto by Paris Soft & Intimate Sparkling Color ST GE Staccato Stefanel Stella Luna Steve Madden Stone Market Stradivarius STS Canada Sulwhasoo Swarovski Swatch Tara Moor Tasaki The Kiss The Manchester United Experience Thomas Sabo Tie Rack / Bric’s Tiffany & Co. TISSOT Tommy Hilfiger Tonino Lamborghini Tourneau Toywatch Triple Five Soul Triumph and Hom TSL Tumi U-Boat United Colors of Benetton Valente Venetian Flori Venilla Suite Verri Vertu Vilebrequin What For Wolford Y Nan Yes Zara Zydo

2427 2117 1002 2708 2203 2318 2642a 2300 1022 2527a 2017 2310 2630a 2216 2625 2527 K9 2612a 2319a 2421 2026 2612b 2402b 2509a 2643k 2617 2415 2426a 2426 2101 2302b 2215 2426b 2435 2003 2411 2710 2646a 1003 2417 2436 2220 2022 2707 2426 2308 1021 2633 2600 2703a 2006b 2623a 2205 2626 2625 2023 2313 2013b

The City of Dreams Alfred Dunhill Bally Burberry Cartier Chanel Chopard Chow Tai Fook Coach Emporio Armani Gucci Hublot Hugo Boss i TO i Insider IWC Jimmy Choo LeSportsac Longines Marc by Marc Jacobs Omega PENACHE Ralph Lauren Rock Shop Rolex Salvatore Ferragamo Swarovski Tag Heuer The Bubble Shop Timeless Tudor Tumi Valentino Vertu Vivienne Westwood Yves Saint Laurent

L1, The Boulevard L1, The Boulevard L1, The Boulevard L2, The Boulevard L2, The Boulevard L2, The Boulevard L2, The Boulevard L1, The Boulevard L1, The Boulevard L1, The Boulevard L2, The Boulevard L1, The Boulevard L1 & 2, The Boulevard L1, The Boulevard L2, The Boulevard L1, The Boulevard L1, The Boulevard L2, The Boulevard L1, The Boulevard L2, The Boulevard L2, The Boulevard L1, The Boulevard L1, Hard Rock Hotel L2, The Boulevard L1, The Boulevard L1, The Boulevard L2, The Boulevard L1, The Boulevard L2, The Boulevard L2, The Boulevard L1, The Boulevard L1, The Boulevard L2, The Boulevard L1, The Boulevard L1, The Boulevard

The Esplanade, Wynn Macau

Shoppes at Four Seasons

Alfred Dunhill Bvlgari Chanel Christian Dior Ermenegildo Zegna Fendi Ferrari Giorgio Armani Gucci Hermes Hugo Boss Louis Vuitton

Miu Miu Cigar Imporium Piaget Prada Sundries The Signature Shop Tiffany & Co. Tudor Van Cleef & Arpels Versace Vertu Wynn&Co Watches and Jewellery

The Encore, Wynn Macau Cartier Chanel Piaget

Grand Lapa Hotel Bally Burberry Cartier Christian Dior Cigar Imporium Alfred Dunhill Emporio Armani Ermenegildo Zegna Florinda Jewelry Hermes Hugo Boss Orange Label Louis Vuitton Omega Salvatore Ferragamo Valentino

13 1 12 11 17 10 9 2 16 8 5 4&5 6 7 15

DFS Galleria, The Four Seasons Armani Bally Burberry

Caran d’Ache Cartier Celine Chanel Chaumet Chloe Chopard Clinique Debeers

1112 1123 1110 1129 1125 1109 1117 1101/41 1123a 1101/43 1101/22 1101/42

DFS Beauty World DFS Jewellery and Watch World DFS Sunglass World

1101/18-30 1101/33-45

Dior Dior (Beauty Zone) Dunhill

1120 1101/23 1106 1112 1102 1108 1116 1101/44 1101/26 1101/21 1101/28 1101/25 1121 1115 1101/45 1126 1111 1113 1101/29 1101/38 1101/33 1105 1101/31 1101/39 1101/40

Emporio Armani Fendi Gucci Hermes IWC Jurlique Kiehl’s Lancome L’Occitane Loewe Louis Vuitton Omega Prada Ralph Lauren Salvatore Ferragamo Shiseido Swarovski Tag Heuer Tod’s Tumi Vacheron Constatin Van Cleef & Arpels

1101/36

Abiste Alain Mikli Altea Milano Aquascutum Armani Collezioni Audemars Piguet Autore Bottega Veneta Brioni Butani Canali Cerruti 1881 Chic Elegance Cho Cheng Coach Cole Haan David Yurman Diamond SA Diane Von Furstenberg Dilys’ D’urban Ed Hardy / Christian Audigier Gieves & Hawkes Giuseppe Zanotti Givenchy GoldVish S.A. Guess by Marciano H&B Medicine Shop Hugo Boss Juicy Couture Kate Spade Kent & Curwen Kenzo Kwanpen La Perla Lancel Mango Tree Marc by Marc Jacobs Marni Max Mara On Pedder Optica Privé Pedder Accessories Ports 1961 Renaissance Arts Gallery Roberto Cavalli Class and Cesare Paciotti Samsonite Black Label Shamwari South African Diamonds Shanghai Tang Shiatzy Chen Shimansky St. John Stefano Ricci Stuart Weitzman Tse tsesay Valentino Versace

1208 1212 2835b 2836 2805 & 2806 1130 & 1131 1129 2845 2802 1223 2850 2801a 1207 2821 2856 2812 2801 2816 2846 1211 2835b 2820 2835a 2847 2851 1226 2858 1215 2807 2859 2829 2837 2840 2817 2849 2857 2813 2831 2841 2808 2848 2823 2838 2810 1213 2800 2825 2818 2839 2833 2821 & 2822 2809 1128 2850a 2832 2832 2842 2853 & 2855

One Central Bally Bottega Veneta Bvlgari Burberry Cartier Céline CentralDeli CK Calvin Klein Dior Dolce&Gabbana Emporio Armani Ermenegildo Zegna Europe Watch Company Fabio Caviglia Fendi Furla Gucci Hermès Hugo Boss Kenzo Lancel Leonard Loewe Loro Piana Louis Vuitton

Marc by Marc Jacobs Marc Jacobs Max Mara Montblanc Officine Panerai Pal Zileri Rainbow Ralph Lauren Rimowa Salvatore Ferragamo Shiatzy Chen Tod’s Vertu

128-129 G8 G9-G10 125-127 G1-G2 G35 222 232-233 G30-G31 G36-G38 G32-G33 G39-G42 101-107 130 G11-G12 131 G24-G26/ 110-120 G13-G15 132-135 116 139 112 G5 G6-G7 G27-G29/ 121-132/ 229-231 117 G23 113 G4 G22 115 136-138 G19-G20 211 G3/108-109 110 G18 G17

Tourism

Okura Macau

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Banyan Tree Macau

The next big thing Okura and Banyan Tree gearing up for Macau debut anyan Tree Hotels & Resorts is on the countdown to the opening of its first property in the territory, at Galaxy Macau. The same is true for Okura Hotels & Resorts Worldwide. Galaxy Macau is scheduled to open later this year in Cotai, although no official inauguration date has been announced yet. Banyan Tree Macau will comprise of a total of 246 suites with in-room relaxation pools and ten pool villas. It will also include the first and only Banyan Tree Spa in town, with more than 2,800 square meters and 21 treatment rooms. James Chow, director of sales and marketing at Banyan Tree Macau, said, “People will be able to enjoy a

completely unique sanctuary in the middle of the Cotai entertainment district, with Galaxy Macau’s incredible rooftop white-sand beach and wave pool as the backdrop.” As for Hotel Okura Macau, it will include 488 guest rooms and a Yamazato Japanese restaurant, among other features. The facility is also positioned to help grow Japanese tourism to the city, according to its promoters. Yoshinari Fujii, director of sales and marketing at Hotel Okura Macau, said, “Okura has been the leading name in Japanese hospitality for over 50 years, and we look forward to delivering our world-class service, cuisine and culture to the many people from mainland China, Asia and around the world who will be visiting this special property.”

More group tourists Visitor arrivals on package tours increased by 4.2 percent year-onyear to 396,310 in October 2010. In comparison to October 2009, increases were registered in the number of group visitors coming from the mainland, Hong Kong, Japan, South Korea, Malaysia and India. In the first ten months of 2010, visitor arrivals on package tours went up by 30.2 percent yearon-year to 4.8 million.

Hotels busier The average occupancy rate of hotels and guesthouses in the first ten months of the 2010 stood at 78.7 percent, up by 9.2 percentage points year-on-year. The number of guests reached 6.4 million, up by 18.2 percent over the same period of 2009, with the majority coming from the mainland and Hong Kong. At the end of October 2010, Macau had a total of 19,849 rooms.

Strong Christmas A total of 439,396 tourists entered Macau between December 24 and 27, a year-on-year increase of 19.2 percent, according to official data. Overall, local authorities recorded almost 908,000 bordercrossings during the Christmas holidays, including Macau residents and blue card holders.

JANUARY 2011

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January

Date: Event:

February

21st

III DICE Delta Inter Chamber Event

Venue: TBC Organiser: Macau Business | Delta Bridges | Work in Progress Address: 9/F Flat H, Block C, Nam Fong Ind. Bld. 679 Av Dr Francisco Vieira Machado, Macau Tel: (853) 28331258 Fax: (853) 28331487 Website: www.deltainterchamber.com/ E-mail: dice@macaubusiness.com

Date: Event:

21st – 23rd

World Game Protection Conference and Casino Surveillance Technology Exhibition

Venue: M Resort, Las Vega Organiser: World Game Protection Address: 9480 S. Eastern Ave., Suite 105, #92, Las Vegas, Nevada 89123 Tel: (1) 702 407 9900 Website: www.worldgameprotection.com E-mail: willy@worldgameprotection.com Date: Event:

22nd – 24th

Gaming Executive Summit Latin America

Venue: Marriott, Panama City Organiser: Terrapinn Address: 96 Spring Street, 4th Floor, New York, NY 10012 Tel: (212) 379 6320 Fax: (212) 379 6319 Website: www.terrapinn.com/2011/geslatam/ E-mail: michael.weinberg@terrapinn.com March

Date: Event: Venue: Organiser: Address: Tel: Fax: 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

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

25th – 27th

Date: Event:

25th – 28th

IGE 2011

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

4th Annual Anti-Corruption Asia Congress

Venue: Renaissance Harbour View Hotel, Hong Kong Organiser: Ethical Beacon Address: 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong Tel: (852) 2531 6111 Fax: (852) 2219 0112 Website: www.AntiCorruptionCongress.com E-mail: info@EthicalBeacon.com JANUARY 2011

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

1st – 3rd

iGaming Asia Congress

Grand Hyatt, City of Dreams, Macau Beacon Events 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong (852) 2219 0111 (852) 2219 0112 www.igamingasiacongress.com info@BeaconEvents.com 3rd – 5th

7th Guangzhou International Game & Amusement Exhibition

China Import & Export Fair Pazhou Complex Guangzhou Grandeur Exhibition Service Co., Ltd 2nd Floor, No.318 Chebei Road, Guangzhou, 510660, China (86) 20 22106418 (86) 20 82579220 www.chinaamusement.com sales@grandeurhk.com March 30 th – April 1st

Asia’s GEM-Gaming and Entertainment plus Leisure Expo Manila

Venue: SMX Convention Centre Organiser: Asia GEM and Tourism Foundation, INC. Address: 3rd Floor, Rm. 304 LTA Building, 118 Perea St., Legaspi Village, Makati City 1129, Philippines Tel: (63) 2 750 13 69 Fax: (63) 2 893 40 97 Website: www.asiangemphil.com E-mail: agem@asiangemphil.com

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

115 JEAN-PAUL FITOUSSI PROFESSOR OF ECONOMICS AT SCIENCES-PO, PARIS, AND AT LUISS, ROME

The fallen heroes of the financial crisis TODAY THE GLOBAL ECONOMY’S ARSONISTS HAVE BECOME PROSECUTORS, AND ACCUSE THE FIRE FIGHTERS OF HAVING PROVOKED FLOODING scar Wilde said that experience is the name we give to our mistakes. In 2009, we tried to analyze the errors that led the world into economic crisis. Now it is time to analyze the mistakes we made when trying to get out of it. When the scale of the crisis became clear in 2009, many were certain that it would be managed badly. But perhaps we should be grateful that it was managed at all. Unlike in the 1930’s, decision-makers acted quickly, ignoring dogmas that warned against rapid intervention. Moreover, they knew that, in contrast to the inter-war period, close international coordination would be needed. In 2008-2009, the influence of the G-20 grew, at the expense of the G-8. People became aware of the need for truly global governance. And, at long last, a number of proposals emerged aimed at making such governance a reality. Experience, it turns out, is not just the name we give to our mistakes. As the financial crisis has shown, it is also the process that enables us to increase our understanding and ultimately to envisage a new world. Unfortunately, however, this process has not gone far enough, enabling many banks, governments, and international institutions to return to “business as usual.” Indeed, today the global economy’s arsonists have become prosecutors, and accuse the fire fighters of having provoked flooding.

Failed opportunity At the peak of the crisis, governments had an opportunity to create a new global financial infrastructure. But they let it slip through their fingers. The fact that many Western economies got out of recession should not fool us into thinking that the crisis was only a brief interlude, and that the post-crisis world can return to the pre-crisis status quo. There is pressure to rewrite the history of this crisis by depicting effects as if they were causes, and to blame the governments that managed the crisis for starting it. A low point – perhaps one should say the height of ridiculousness – was reached when rating agencies intensified their surveillance of government debt, and markets that had been victimized by the agencies’ incompetence and bad faith became fixated on their evaluations. Lehman Brothers had been awarded a high rating on the very eve of its collapse, yet now the rating agencies criticize governments that pulled the global economy back from the abyss for violating accounting principles. Are rating agencies and the markets really so ill-informed

about public spending? According to the International Monetary Fund, G-20 countries earmarked 17.6 percent of their GDP on average to supporting their banking systems, although they spent much less. Likewise, spending to stimulate the real economy totalled only 0.5 percent of GDP in 2008, 1.5 percent in 2009, and probably 1 percent in 2010. In total, the recovery plans of European Union members came to only 1.6 percent of GDP compared with 5.6 percent in the US. Governments took the right measures to save the banks, but ignored the political consequences. By doling out vast sums of money to rescue the financial system, without asking for genuine guarantees in return, they showed a lack of foresight. Acknowledging that rating agencies were incompetent without doing anything to regulate them was inexcusable.

A Pyrrhic victory As a result, taxpayers may need to pay twice, once for the bailout and again for the low-quality debt they have incurred during the bailout, as the austerity programs unveiled in Europe attest. Paradoxically, the growing sense that a catastrophe has been averted has given rise to a growing demand for governments to cut public and social spending, and to refrain from proposing investment programs. People are racing back to the policies that caused the crisis in the first place. But governments are not guilty of deceiving the public; if anything, they acted naïvely and are now paying the price. Governments really have no choice: they must take responsibility and exercise power, even if it requires swimming against the tide of public opinion – and especially if it can help alleviate the social suffering brought on by the crisis. Indeed, we should remember that economic growth was sustainable only in countries with highly developed social welfare systems, like France. Yes, these countries will recover at a slower pace than elsewhere, but countries that have fallen into a deep hole must work harder than those that have fallen into a shallow one. Perhaps most importantly, the drive for greater competitiveness, regardless of the cost, will only aggravate the crisis. After all, export-led growth policies can succeed only if other countries are willing to run deficits. Given that the global imbalances that led to the crisis remain unaddressed, increased competitiveness will be a Pyrrhic victory – and one that will exact a severe toll on domestic living standards and consumption. JANUARY 2011

116

Memory

In Babylon Half a century ago, thousands of Macanese were working in the financial sector in Hong Kong. Today, only a few are still there. Macau Business recalls the era BY LUCIANA LEITÃO

rancisco da Roza, born in Shanghai, was a refugee in Macau and went to Hong Kong after World War Two to work for the Hong Kong and Shanghai Banking Corp. Like Mr Roza, thousands of Macanese were hired by the bank and other Hong Kong financial institutions in the middle of the 20th century. The Macanese are an ethnic group that originated in Macau in the 16th century, consisting mostly of people with some Portuguese ancestry. In Hong Kong’s financial sector they were praised for their language skills. Usually, they were able to speak English, Cantonese and Portuguese. Apart from HSBC and the British colonial government in Hong Kong, companies such as China Light and Power, Jardine Matheson and Butterfield and Swire (part of what is now the Swire Group) were among the major employers of the Macanese. The historical role of the Macanese in Hong Kong’s financial sector was brought to light again two months ago but not for the best of reasons. One of

JANUARY 2011

the most high-profile members of the remaining community, Gabriel Ricardo Dias-Azedo, former managing partner of the accountancy firm Grant Thornton, was arrested in Spain for allegedly having stolen more than HK$91 million (US$11.7 million) from friends and business partners.

Loyalty rewards The recruitment of Macanese by the financial sector in Hong Kong dates back to a financial crisis in the 19th century,

“HSBC was the largest employer of Portuguese [in Hong Kong]. Many from Macau knew the jobs were available and went to Hong Kong,” says Archer Larcina, who was responsible for recruiting workers for the bank

according to Archer Larcina, who was responsible for recruiting workers for HSBC from 1946 to 1968. When the crisis occurred, the few Macanese already working at the bank were the only ones not to take their money and run. They kept working, even with lower salaries, showing loyalty to the company. “The bank was very grateful and employed a lot of Portuguese in the clerical staff,” says Mr Larcina. “More than 1,000 Macanese were recruited,” Mr Larcina says. “HSBC was the largest employer of Portuguese [in Hong Kong]. Many from Macau knew the jobs were available and went to Hong Kong.” But the Macanese never rose above a clerical level. “The British were at the management level, the supporting staff up to certain seniority were our people, then the Chinese were the cashiers,” says Mr Roza.

Middle class Mr Roza believes being Macanese was an advantage in pursuing a financial career at that time, not only in Hong Kong

117

The author of a book entitled “The Portuguese Community in Hong Kong”, António Manuel Jorge da Silva, says the major advantage of the Macanese was their command of Cantonese, English and Portuguese. “However, after the Opium Wars, the British didn’t need the Portuguese any more, so the Portuguese language became less useful to them,” Mr Silva says. “Cantonese was always useful because they had to instruct the staff. The British would tell the Portuguese and the Portuguese would tell the Chinese.”

but elsewhere. For instance, besides HSBC, he also worked in banks in the United States. In Hong Kong and worldwide, Macanese could make use of their language skills to get a better position, he says. “I could move easily with Westerners as well as Easterners.” When the bank was dealing with Chinese businessmen, he was usually the middleman because, even though he spoke the language, he could pretend not to understand certain cultural differences.

In Hong Kong and worldwide, Macanese could make use of their language skills to get a better position, says Francisco da Roza. “I could move easily with Westerners as well as Easterners”

Macanese began to trickle away from Hong Kong in the 1950s and the trickle became a stream in the 1960s. It was a time of many changes. People were starting to protest against the British colonial rule, complaining about corruption and the worsening of living conditions. There were riots, first in the 1950s and again in the 1960s. “The first riots in the 1950s scared the Macanese away,” says Mr Silva. When the Immigration and Nationality Act of 1952 liberalised immigration from Asia to the United States, many chose to resettle there. After the second bout of rioting, in 1967, Macanese were even more frightened and the exodus was given new impetus, he says. With the Macanese leaving Hong Kong, mostly for California, financial institutions had to look for other sources of recruits. “They started to employ locally,” says Mr Roza. A Macanese businessman and politician in Hong Kong, Roger Lobo, remains there today. But he saw many Macanese leaving to seek their fortune in other countries. They were also afraid of what might happen after the handover of Hong Kong from British to Chinese rule in 1997, Mr Lobo says, recalling that many were frightened of mainland China’s communist regime. “No one could expect that the posthandover would be something like it is today,” he says. “Many left because they were afraid of having a different life and harsher living conditions.” Some eventually returned to Hong Kong but very few. JANUARY 2011

Photos courtesy of António Manuel Jorge da Silva, International Institute of Macau and the Macanese Communities Council

Taking fright

118

Memory

n its heyday, the Macanese community in Hong Kong numbered more than 20,000, most working in the financial sector. Today, it seems to number no more than 1,000, and many are already retired. The estimate of 1,000 is Francisco da Roza’s. Mr Roza is chairman of Club Lusitano, one of the main Macanese institutions in Hong Kong, with 200 members. The Portuguese consulgeneral in Macau and Hong Kong, Manuel Cansado de Carvalho, says it is difficult to say exactly how many Portuguese passport holders live in Hong Kong because there is constant coming and going. “There are several thousands, which can be divided into three groups: Portuguese that come from Portugal – there are some recent arrivals of people related to multinationals or companies with a presence in Hong Kong; the Chinese with Portuguese passports; and the old Macanese community that moves around the Club Lusitano,” Mr Carvalho says. Furthermore, there are several people of Portuguese origin that do not have Portuguese passports. “For instance, some people, by the end of the British administration, chose British nationality, but are still related to Portugal,” he says. Mr Roza says that, unlike in the 1950s, very few Macanese are still working in the financial sector in Hong Kong. “We have some lawyers and accountants, people connected to that area. For instance, my son is lawyer, specialising in banking law, which is somehow related.”

After peaking in the mid-20th century, Hong Kong’s Macanese community is slowly vanishing BY LUCIANA LEITÃO

Anyone for lunch? Club Lusitano’s rooms are mostly empty nowadays. “If you come during lunch on a weekday, you’ll find 20 to 26 JANUARY 2011

119

A ONCE-CROWDED REFUGE C

lub Lusitano was created by businessmen and is often thought of as a businessmen’s association. It was founded in 1866, one year after the Hongkong Shanghai Bank Corp (now HSBC). In 1849, after the murder of the governor of Macau, Ferreira do Amaral, many Macanese were afraid and left for Hong Kong. They established themselves in Wellington Street, Central, and it became the Portuguese quarter. Some Macanese businessmen decided to create an association and Club Lusitano was born. At that time, there were already two other Macanese associations in the city.

people here. The younger Macanese don’t think as the Portuguese do. And the oldest ones stay at home,” says a Macanese businessman and politician in Hong Kong, Roger Lobo. “A lot of people have left and they cannot return because they sold their houses and went to the United States. Now, the rents and prices are high and

they cannot afford [them].” The Macanese in Hong Kong tend to opt for an international education abroad or a Chinese education for their children, rather than a Portuguese education. As a result, according to Mr Roza, younger generations are becoming disconnected from their origins.

When the Japanese invaded Hong Kong, Club Lusitano became a shelter for Macanese refugees who were trying to reach Macau. With many Macanese working for HSBC in the 1960s and the club premises being within walking distance of the bank, its rooms were packed. “In the 1970s, we were beyond the 5,000 mark,” says the club chairman, Francisco da Roza. But today Club Lusitano is struggling for survival because the number of new members is shrinking.

Forgotten heritage His own children are an example. “They had a very international education abroad, and now are coming back to Hong Kong, because the future is here,” he says. “For my children, their connection to the Portuguese culture is the food. Also, they are very supportive of the

Portuguese national football team, but that’s about it.” Another example is Luís Souza. His great-great grandparents went to Hong Kong in the 19th century and he is a fifth-generation Macanese accountant. Having studied in English, he does not speak Portuguese and if it were not for Club Lusitano – membership of which he inherited from his father – he would not know any other Macanese. Mr Souza’s brother and sister are even more disconnected, having lived most of their lives in Canada, he says. Are any of the younger generation of Macanese in Hong Kong interested in their roots? “I think very few are,” says Mr Souza. Only those in their 60s or older are really active members of the community, he says. It was all very different in the 1950s. “There were over 20,000 Macanese people in Hong Kong but a lot of them left in the late 1960s,” says Mr Roza. “It’s a sad story.” JANUARY 2011

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Corporate Social Responsibility

The gift of giving Inspired by the spirit of Christmas and the Lunar New Year, Macau Business has been finding out just how generous Macau people are BY SOFIA JESUS

here is an ancient Chinese saying: “If you take from society, you should give back to society”. So how deep are philanthropic sentiments in Macau? There is a long and strong tradition of charity here. Recently 40,000 people took part in the Macau Daily News Readers Charitable Foundation’s sponsored Walk for a Million and raised more than MOP9 million for the needy. Looking at donations to charities like Tung Sin Tong, it is clear that for many people, giving is second na-

JANUARY 2011

ture: they give regularly, all year round. For other charities, like Caritas or the Macau Red Cross, regular donations are less common than special donations for particular causes, such as disaster relief. In the past, temples served as conduits for alms, says political analyst and sociologist Larry So Man Yum, who is an authority in the field of social work. “Rich people would give money to the temple, which would then provide help to people in need. The temple acted as a kind of charity organisation.” Charity was also common among village clans.

Mr So says that while there are still clans and temples, their charitable function has been diminishing. In their place various Catholic groups have a growing role in helping the community. Since the handover, he says, non-governmental organisations have developed, making the charity network more professional. But Chinese tradition is still what impels people to give. “Rich people are kind of obliged to do charity,” Mr So says. “If we do good now, we will be better tomorrow,” is what they believe. He says that this is especially so among

121 know about the cause, they will try to extend a helping hand, he says. Donations to Caritas increased from over MOP7 million in 2006 to more than MOP10 million in 2009. In 2008, the year of the Sichuan earthquake, it received a record MOP11.4 million in donations. “Not many people do regular donations,” says Eddie Wong, president of the Macau Red Cross, but whenever there is a major disaster, his charity goes out to raise money, and he is happy with the results. The Macau Red Cross raised about MOP21.6 million in 2009, the biggest single donation from a private citizen being MOP5 million. In the year of the Sichuan earthquake it raised about MOP144 million, of which over 30 percent was donated anonymously. Associations are one of the main sources of donations, but it is also common for well-established businesspeople to donate when there is a big disaster, Mr Wong says. Ordinary citizens also give, often to honour the memory of a deceased relative. One family gave MOP1 million to build a school in memory of their father, for example. Compared to other Chinese, Macau people are more inclined to donate, Mr Wong says. He thinks that even though Macau has become an international city, it retains the old close-knit feeling it had when it was a small community.

Beginning at home

“those whose businesses are least moral” and who wish to atone for their bad deeds.

Emergency response Charities here seem satisfied with the donations they receive. “In general, Macau citizens are very generous,” says Caritas Macau’s secretary-general, Paul Pun Chi Meng. But they usually need a reason to give, he says – a natural disaster or a deadly or debilitating disease, for example. As long as they

In the last two years, the central government’s Liaison Office in Macau received more than MOP120 million in donations to mainland Chinese causes, a source in the Liaison Office says. The Liaison Office is only one of the conduits for donations to help the mainland in time of need, the source says. “For us, the amount of money donated is not that important. What we value is the attention paid by Macau people [to the mainland], as these donations involve all the sectors, from businesspeople to public workers to normal citizens,” the source says. A Chinese Academy of Social Sciences report says Macau, Hong Kong and Taiwan residents and

Gaming for good

acau’s wealth is derived from casinos, and the gaming industry is a big source of funds for charities. But are the gaming operators donating their fair share? Eddie Wong, president of the Macau Red Cross, says the industry donates substantial amounts of money. Although he thinks the gaming operators are generous, he also thinks that “maybe they could afford a little more”. Political analyst and sociologist Larry So Man Yum believes the idea of corporate responsibility is taking root in the gaming industry. “People are demanding casinos do something for the community. I see the casinos giving more in the future.” Macau Business contacted the six gaming operators, but none would give details of its budget for donations to charity. Galaxy Entertainment Group said it had “budget allocated for scholarships, donations, sponsorships or general support to various institutions and charitable activities” but wouldn’t say how much. Last year Galaxy and its chairman, Lui Che Woo, gave MOP5 million to the central government’s Liaison Office in Macau to assist the victims of the Qinghai earthquake. The office also received MOP1 million from Galaxy to help the victims of the Gansu mudslides. Other donations were made to charities like Tung Sin Tong, Peng On Tung and the Lotus Charitable Foundation. Galaxy also organises charity work done by volunteers, such as visiting the elderly. Wynn Macau said donating time and dedicating itself to the benefit of others was “a meaningful way of giving back” for its good fortune in being in Macau. Without giving specific examples, Wynn Macau said it donated annual scholarships to universities, offered disaster relief aid and engaged in voluntary work in the community. Melco Crown’s City of Dreams has a long list of the work it does in the community, especially among children. This work includes organising birthday parties for children in the Cradle of Hope orphanage and taking children to visit museums and other places of interest. Altira Macau renders several kinds of services in the community, such as working with the elderly, the blind and drug addicts. MGM Macau, Sands China and SJM Holdings did not reply to our request for details, although their involvement in charity work is understood to be widespread.

JANUARY 2011

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Corporate Social Responsibility

The Macau Red Cross raised about MOP21.6 million in 2009, the biggest single donation from a private citizen being MOP5 million. In the year of the Sichuan earthquake it raised about MOP144 million, of which over 30 percent was donated anonymously

overseas Chinese contributed 81 percent of the RMB4.51 billion (MOP5.45 billion) donated to the mainland from external sources in 2009. With Macau’s economic development, donations to Tung Sin Tong have increased. Established in 1892, Tung Sin Tong is a leading charity, providing free medical services and education for those in need. Tung Sin Tong’s José Chui Sai Peng is surprised that even in tough economic times, like the 1990s, donations never stopped increasing. Mr Chui thinks one reason for this could be that people “actually consider charity as a commitment” and will give, regardless of how much money they have. In another tough economic era, the 1960s, Mr Chui’s late father, businessman Chui Ta Kei, negotiated bank loans to ensure that Tung Sin Tong could continue its charity work, even though he was struggling to pay the salaries of his employees. “He would do charity work as a matter of principle, not because everybody was doing it, not for good press, not to gain some kind of return or government appointment,” Mr Chui says. JANUARY 2011

He believes this attitude is still common among donors today.

Famed for generosity “Donors come from all walks of life,” Mr Chui says. They are not necessarily rich. Some are people whose families once received help from Tung Sin Tong and wish to return the favour. Many prefer to remain anonymous, especially when the donation is big. The charity receives monthly or quarterly donations throughout the year, and every year it has a fundraising campaign, which brings in between MOP8 million and MOP10 million. Businessman Stanley Ho Hung Sun is well known for his philanthropy. He has long been committed to worthy causes, especially education and culture, in Macau, Hong Kong and the mainland. Another noted philanthropist is businessman Antonio Ferreira, alias Wu Shun Him, who is involved with the Macau Daily News Readers Charitable Foundation and the Kiang Wu Charitable Association. The vice-president of the Macau Chamber of Commerce, Vong Kok Seng, believes generosity has always been re-

lated to economic growth. “When the economy is behaving better, it’s easy for donations to grow,” he says. “The Macau government has always been in the lead, but there has always been a strong contribution from entrepreneurs to help fund-raising,” Mr Vong says. He says it is not unusual to see businessmen both donating to and working for more than one charity. He believes it is all about giving back to society. Few of these philanthropic entrepreneurs were born with silver spoons in their mouths, he says. They know what hard times are and “when they have a stable lifestyle or business, they don’t forget”. Larry So thinks some philanthropists “expect something in return,” like their family name on a building. But he does not believe they care much about the tax benefits of giving. Mr So believes most Chinese people are charitable because “they want to do good” as individuals. In Macau, according to the Finance Bureau, donations made by companies or businessmen to local charities can be deemed as tax deductible expenses, but the upper limit shall not exceed 0.2 percent of their annual sales volume.

123 FAN GANG PROFESSOR OF ECONOMICS, BEIJING UNIVERSITY

Urbanizing China THE KEY TO SUCCESS WILL BE TO MAKE RURAL IMMIGRANTS TO CHINESE CITIES EQUAL CITIZENS IN TERMS OF OPPORTUNITIES AND PUBLIC SERVICES easured by the percentage of people living in its cities, China’s urbanization rate currently stands at about 48 percent, according to official statistics. Given that the share of city dwellers was only 18 percent just 30 years ago, this is remarkable progress. But it is still unsatisfactory, because most other countries at a similar stage of development experienced faster urbanization than industrialization. China’s urbanization has lagged behind its industrialization, which now is around 70 percent when measured by the percentage of the labour force whose income is derived mainly from non-farm activities. Another striking difference between China and some other developing countries is that Chinese cities, large and small, lack any sign of significant urban poverty or slums. People often attribute this to China’s “hukou”, or household registration system, which separates the urban privileged and the rural poor from the start of their lives. But, although the “hukou” system may prevent rural people from enjoying some urban benefits and public services, such as public education, health care, or employment insurance, it has never kept rural labourers from moving into cities. Indeed, China’s government has actually been encouraging rural labourers to move to cities to find better jobs. That is why more than 40 percent of China’s labour force, some 300 million people, has shifted over the past 30 years from agriculture to industrial and service sectors, which are now increasingly concentrated in cities. As a result, migrant workers with a rural “hukou” now outnumber workers who hold an urban “hukou” on average in Chinese cities.

An explanation So if it is not the “hukou” system that has prevented the growth of slums in China, what has? I believe that the most important institution in preventing dire urban poverty is a unique land system for China’s rural areas. China’s entire reform process started with the adoption of the so-called “rural household contract system,” which leases productive land to farm households. This meant that collective production was dissolved early in the reform process and private farming prevailed. Though farm “collectives” have remained the owners of rural land, households may obtain all “residuals” of their production, which creates the necessary incentive to use land productively. They may even transfer the lease to other farm households if their members find better jobs in the cities. Households can keep this entitlement for the term of the lease (now 30 years), but they do not have a property right in the land itself. If rural workers have financial difficulties, which in other countries often lead to land sales, they can work harder to find other jobs or seek government help. But land can never be sold or mortgaged, and its use cannot be changed from farming to other commercial purposes without government permission.

This peculiar arrangement has generated an important result: if migrant workers lose their urban jobs, they retain some income from their land lease and can return to their village and reclaim the land (normally within one year). The small piece of land allocated under the rural household contract system may not make farmers rich, but it serves as a social safety net of last resort. This goes a long way toward explaining why China’s urbanization has lagged: the system of land tenure – which seems impossible to replicate in other developing countries – ensures that the reservoir of labour for industrialization and urbanization remains located in country villages, rather than in city slums.

Step-by-step Although this arrangement provides a smoother path to urbanization, it is a transitional, not a permanent one. Migrant workers still feel unable truly to integrate into cities, because their social safety net remains anchored to their rural origins. Indeed, the segregation caused by the land system has enlarged rather than narrowed social disparities. Given these circumstances, and that Chinese are highly mobile, the country’s urbanization is far from stable. To achieve “permanent urbanization,” China must develop a new safety net. Announcing the abolition of the “hukou” system might be easy, but it would mean little without institutions that can cushion the risks faced by rural migrant workers in China’s cities. Making public services like education and the formal social safety net available to rural immigrants, even at a lower level due to limited public resources, is the key to success here. When that is achieved, rural immigrants will eagerly settle as permanent urban residents, and Chinese society will become more equal in terms of access to public services. China’s new five-year plan for economic and social development, to be implemented starting in 2011, may address the issue in a meaningful way, by aiming for the establishment of a national, universal, and portable social-security system. The plan may also require city governments to increase the provision of public goods – including education, health care, and a minimum level of income protection – to non-“hukou” regular residents. Some experiments in this regard have already taken place in cities such as Chongqing and Chengdu. Urbanization in China may take generations to complete. But, after long debate and hesitation, it is clear that policymakers seem ready to move into the next phase of urbanization by adopting new approaches. The main challenge is not infrastructure and urban facilities, however important they are. Rather the key to success will be to make rural immigrants to Chinese cities equal citizens in terms of opportunities and public services. That may not be achievable overnight. But, step-by-step, it can and must be done. JANUARY 2011

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Entertainment

From the peninsula to Cotai, thousands in Macau partied the night away at various countdown parties to celebrate the arrival of 2011. The choice was nothing if not plentiful, with casino-organised parties, government sponsored countdown shows and celebrations being held at several bars and nightspots. For the most resistant revellers, the partying to non-stop music continued until dawn, with a crescendo of cheers and toasts to welcome the New Year and the start of a new decade.

Sai Van Square

Ponte 16

Grand Lisboa

MGM Macau JANUARY 2011

125 NIRUPAMA RAO INDIA’S FOREIGN SECRETARY

The emerging-market growth engine AS WE HEAD INTO THE SECOND DECADE OF THE CENTURY, INNOVATIVE IDEAS LIKE USING GLOBAL SAVINGS OR SURPLUSES TO FINANCE INFRASTRUCTURE IN EMERGING AND DEVELOPING COUNTRIES SHOULD BE PURSUED SERIOUSLY he key role of emerging and developing countries – including India, China, and Brazil – in sustaining world economic growth was brought into sharp focus during the recent global crisis, and has been well documented. This trend is likely to continue in 2011 and beyond. Indeed, the IMF expects that emerging and developing economies will grow by 6 percent in 2010 and 6.3 percent in 2011. Emerging-market economies have not only cushioned the global impact of the recent crisis, but have also helped industrialized countries reverse the recessionary trend of 20082009. But recovery remains fragile in the developed world, with unemployment remaining at crisis levels. But, while emerging economies are proving to be drivers of global demand, the right mix of government initiatives and policies is still required to ensure that they continue to provide the impetus for faster world economic recovery in the short term and be the engines of sustainable growth in the medium and long term. There is also a strong need for supporting long-term capital flows to emerging economies to stimulate investment further, particularly in their infrastructure sectors, thereby injecting much-needed additional demand into the global economy.

The importance of the middle-class In this regard, another important development is the increasing number of emerging-market middle-class consumers, their growing purchasing power, and thus their potential impact on global demand. According to one estimate, middle-class consumers in a dozen emerging economies today wield annual purchasing power totalling approximately US$6.9 trillion (MOP55.2 trillion). Indeed, projections from McKinsey & Company suggest that the purchasing power of this rising middle class in emerging markets may rise to US$20 trillion over the next decade – twice the current level of consumption in the United States. The four biggest emerging economies – Brazil, Russia, India, and China (the BRICs) – are large producers and consumers of goods and services, and will also be important in shaping the pace, direction, and sustainability of global economic growth. Let me turn to India specifically. In the five years preceding the 2008-2009 crisis, the Indian economy grew at an average rate of nearly 9 percent annually. During the crisis, annual growth slowed, but only to 6.7 percent, reflecting the economy’s inherent resilience. The growth rate subsequently recovered to 7.4 percent in 2009-2010, and we expect 9 percent growth by 2011-12. The strength of the Indian economy is underpinned by a high saving rate and robust investment. The government’s prompt

action to counter the crisis – fiscal stimulus, growth packages, and monetary easing – proved effective. A sound financial and banking system with limited exposure to global markets, together with the importance of domestic consumption in sustaining demand, has also helped. But what distinguishes India from other emerging economies, in particular China and the Southeast Asian countries, is that domestic demand, rather than exports, is the primary driver of growth.

Infrastructure deficit A return to high growth rates globally will require a broader revival of demand. Needless to say, this will occur only gradually, particularly in the developed countries. Thus, India’s high growth rates will have to remain dependent on strong domestic demand. In order to meet this challenge, we are focusing on investments in infrastructure sectors such as power, telecommunications, roads, ports, and airports. While the public sector will continue to play an important role, given the massive investment required, substantial private investment – including foreign investment – would be needed to address India’s huge “infrastructure deficit” and the financing gap that accompanies it. A strategy of private-public partnership has been adopted to address the infrastructure challenge. At the same time, we need to invest in our human capital, supporting the development and upgrading of the workforce’s skills and capacity for innovation. At its summit in Seoul in November, the G-20 firmly placed development at the core of its agenda. Indian Prime Minister Manmohan Singh, underlining the importance of infrastructure investment, made the following proposal, which several leaders endorsed: “Recycling surplus savings into investment in developing countries will not only address the immediate demand imbalance, it will also help to address developmental imbalances. In other words, we should leverage imbalances of one kind to redress imbalances of the other kind.” As we head into the second decade of the century, innovative ideas like using global savings or surpluses to finance infrastructure in emerging and developing countries should be pursued seriously. Doing so would not only sustain the growth momentum of these economies, but would contribute to global recovery by generating much-needed additional demand in the developed countries. While the emerging economies’ global role will inevitably grow in the coming years, this shift will need to be anchored in a cooperative partnership with the developed world. As for India, our resilient democratic values, ability to manage diversity, and strong economic fundamentals underpin our country’s current global posture. JANUARY 2011

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

Last Christmas I gave you my heart sually played on the radio around Christmas time, “Last Christmas I gave you my heart”, a song popularized by British pop duo Wham! sets the mood to re-think our mistakes, to pay attention to the hidden or unhidden lessons and move on. If this song has the same effect on you that it has on me, you are humming it already and it will stick in your mind for at least a couple of hours. If you’ve never heard of it, Google it, or just pay attention to its chorus:

“Last Christmas I gave you my heart But the very next day you gave it away This year to save me from tears I’ll give it to someone special” If we dissect the above stanza, we find a simple process that you can apply in all areas of your live. First, you need to understand the problem – he gave his heart to the wrong person; then, you need to visualize the goal – give your heart to someone special; and finally, you just need to believe that your goal is achievable and create a plan to achieve it – according to the third line of the stanza, the plan was just to save him from tears, or in other words avoid suffering for love.

Begin with the end in mind According to the powerful lessons in personal change taught by Stephen R. Covey, you need to “begin with the end in mind”. In other words, you need to know where you are heading or what your goal is before you actually start acting on it. The mentioned author believes, and we concur, that all things are created twice: first, the mental or psychological creation (the ideological concept) and then the physical or second creation. This is the principle in which the concept “begin with the end in mind” is founded on. It can be illustrated if we think of a construction project (a home, bridge, hotel, etc). We certainly need both parts of the process or a reality created twice for it to become true. You may be surprised to find out that sometimes it will take more time to create the construction plan on a piece of paper (mental creation) than to actually build the infrastructure (physical creation). The same theory applies to any type of business. First you need to create the company’s mission, vision and values (mental process or creation) and afterwards you can start selling your product or rendering your services (physical process or creation). JANUARY 2011

Creating eating goals If your intentions do not include construction or starting up a business, here is a little guide to assist you with the mental creation of your goals: 1. Evaluate the mistakes you have made last year in all areas of your life; 2. Treasure the lessons you have learned from such mistakes; 3. Decide where you are heading personally and professionally; 4. Write down your goals bearing in mind the following: a) The goals need to be personal, simple and clear (understandable by a five-year old); b) They need to be positive and written in the present tense (Example: “I am a non-smoker” rather than “I do not smoke”); c) They need to be time-oriented (You need to schedule a time limit to achieve each goal); 5. Check what obstacles you need to overcome to achieve your goals; 6. Establish a plan to overcome such obstacles; 7. Act on your plan, imagine it as a “construction contract” that needs to be acted upon as soon as possible; otherwise, you will pay a huge penalty. Any starting point is a good one provided that you have an idea of what you want to reach or achieve. Most of us choose to plan the year ahead. Therefore, now is the perfect time. What better month than January to sit down and write your goals for 2011? As Oliver Wendell Holmes once said, “What lies behind us and what lies before us are tiny matters compared to what lies within us”.

127

TREND SETTING, EXAMPLE LEADING MGM Macau gathered more than 2,000 people at the Grande Praça for their New Year’s countdown party. Over time, it has become one of the Festive Season’s most popular events. But while some celebrate others work – beginning at the top. MGM Macau’s president Grant Bowie set the example for his troops, keeping a close eye on operations throughout the evening. Sometimes these small but significant acts can muster the support of your staff. It might be a timely lesson to other gaming operators in town facing problems in closing the ranks.

PEOPLE PROBLEMS AND THE PANDA PRICE PREMIUM We all love pandas, particularly those that come in boxes saying “From Beijing, with love”. But MOP90 million (US$11.25 million) for a pavilion to house them in, seems just a little too expensive. Especially so when residents living in squatter huts in Ilha Verde are obliged by a developer to leave their homes to make way for a public housing complex. Compensation in some cases has been as little as MOP10,000. Our newly adopted pandas clearly deserve first-class stuff but surely residents should be paid attention to too. Frozen Spy notes that the government could use the amount spent on the panda home to buy about 10 units at One Central to house residents relocated from Ilha Verde. But that would not be fair to the pandas, would it?

PASSENGERS, YOUR 2011 SERVICE IS RUNNING LATE The winner of the tender to supply the system and rolling stock for the first phase of the Macau light rail transit system was announced last month. It is a decision that has already been delayed by months but even further delays seem likely because the losing bidders can still appeal against the decision. The Frozen Spy is no gambler but, with the final planning process to follow, you might like to lay a wager there will be additional delays. Factor in the construction and testing phases, and you have the potential for a fresh delay because, as we know, public works are seldom completed on time in Macau. And, even when they are complete, construction problems emerge, such as at the Science Centre or Macau Dome. Nevertheless, the government says the light rail system will be up and running by early 2015 – four years from now. The Frozen Spy likes their optimism. Oh, but wait a moment. Wasn’t the light rail first scheduled to start running in 2011? You know, today? When the network finally gets rolling, let’s hope the delays between trains are not as long.

AIRLINE SECURITY CHECK It is far from a new topic but from time to time Air Macau pilots voice their concerns about the lack of safety in the company’s planes. They point the finger at the firm’s operational procedures and its alleged poor maintenance performance. The issue resurfaced last month and, once again, both Air Macau and the Civil Aviation Authority dismissed claims of poor safety, telling the media that everything was okay. Frozen Spy wonders, if everything is actually fine, why have there been so many complaints? And why have there been so many pilots that have quit the airline? The pilots would seem to have little to gain from running down the image of the company that pays their salary. Unless, of course, their claims have an element of truth in them.

JANUARY 2011

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January 2011

Aristocrat

Page 10

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Bally

Page 02

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BNU

Page 21

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BMW

Page 03

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CEM

Page 41

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Fidelidade Mundial Seguros

Page 23

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Galaxy Entertainment

Page 17

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Macau Cultural Centre

Page IBC

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Macau Daily Times

Page 49

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Macau Post Office

Page 69

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Mandarin Oriental

Page 07

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Melco Crown Entertainment

Page 19

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MGM Macau

Page 01

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MGTO

Page IFC

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PokerStars Macau

Page 13

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SJM

Page 59

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Star City Hotel & Casino

Page 05

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index

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JANUARY 2011 NOVEMBER 2010