INFLATION ALERT PRICES AND COSTS FORECAST TO RISE FEBRUARY 2011
ISSN 1812-6855
Macau MOP 35 • Hong Kong HK$ 40 • Mainland China RMB 35
EXCLUSIVE INTERVIEW
POWER PACKED
Angela Leong On Kei wants to increase SJM’s competitiveness GREEN AND RED
Non-casino gaming has a 2010 to remember
RUNNING STRONG
CASINOS REDUCE, REUSE AND STAY PROFITABLE BUNNY BUSINESS
HIGH-FLYING HUGH HEFNER PLANS PLAYBOY REVIVAL
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Photo: Carmo Correia
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Economy & Finance 26 Inflation alert Prices will continue to go up this year, says the Monetary Authority 28 Learning to be free Macau climbs to spot 19 on the world’s freest economies
Transport 34 On the right track Mitsubishi Heavy Industries says it will not miss the government’s schedule for the light rail transit system
Politics 38 No small change Macau’s biggest labour association has a new president
Justice 40 In the crosshairs Graft buster probes 30 private sector corruption cases
Special 42 Chinese New Year The Year of the Rabbit from a business standpoint
Property 54 Market watch Foreign investors back to the market FEBRUARY 2011
CEO Interview 60 Angela Leong On Kei Sociedade de Jogos de Macau’s managing director talks about her new position
Gaming 66 Billions race 2011 starts off on a strong foot 69 The moneymakers The top 10 casinos in 2010 70 Sporting chance Non-casino gaming posting revenue increases 74 Stock watch Casino stocks gearing up for a new rally 76 Final countdown Galaxy Macau is preparing for its opening night – whenever that may be 80 Pass the parcels Sands China wants someone else to develop parcels seven and eight 82 Greener gaming The casino industry takes steps to reduce its carbon footprint 83 Beating the odds AutoGaming set to unveil its newest game 85 Next big deal Shuffle Master looking for growth in electronic games 86 Virtual vacuum Government still has no plans to license online casinos
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Gaming 88 Exporting expertise Macau gaming consultancy firm helps Manila to put its biggest casino project on its feet 90 Thailand’s amazing dithering Thailand may have its own casinos in five years – or it may never have any
Essential 97 Fashion Your guide to indulgence
Arts & Culture 120 Spacemen touchdown The Kronos Quartet bring their vibrant repertoire to Macau 122 Music, the food of love The Macao Orchestra offers a romantic concert
Corporate Social Responsibility 124 Cash handout for charity Macau Business Charity Golf Tournament winners present cheques to Caritas and Cradle of Hope
Tourism
Entertainment
113 New frontiers Tourist Office head expects visitor arrivals to grow by 10 percent in 2011 114 Credit card pains Travel agencies charging illegal fees
125 Green business Pearl River Delta chambers of commerce meet again in Macau
Business
12 From the publisher’s desk Paulo A. Azevedo 15 Editorial Emanuel Graça 30 Is Macau ready for democracy? Keith Morrison 37 The sweet and the sour José I. Duarte 59 Five steps forward in 2011 Michael Spence 126 Bunnies and Duracell batteries Ricardo Andorinho
116 Year of the bunny Exclusive interview with Playboy’s Hugh Hefner
Lifestyle 118 Light me up Premium handmade cigars are becoming increasingly popular
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Opinion
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Unacceptable inertia CHIEF EXECUTIVE FERNANDO CHUI SAI ON took office amidst grandeur, while ensuring and promising that his administration could be questioned. He said his subordinates would not hide behind administrative procedural opacity, technocratic mazes and the silence of arrogance or incompetence. He said that his administration would be different from its predecessor and that bridges would be built, namely with the media, to improve communication with society. With few exceptions, like the chief executive’s own office, this administration’s attempt to explain decisions, to reply to information requests and to participate more actively in initiatives that promote the common good is a near failure. The idea is good but, in order to see it fulfilled, Mr Chui would have to achieve a true revolution in the mentality of the machine that pays the best salaries in town. For decades, the Macau government has used half words, innuendo and limited transparency. Apparently, that’s the path it wants to continue following, a decision motivated more by inertia rather than by action. Either way, the result is the same. A couple of years ago, a magazine was created in Hong Kong and it is one of my favourites. It’s called “Power” and in its first issue it featured an interview with the chief executive of the neighbouring SAR, Donald Tsang. He was not shy about it and, like any self-respecting politician and one who respects the people he governs, he sold his image while passing along the messages he wanted.
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He answered some urgent questions for the development of Hong Kong and he opened the doors of his private life to the common citizen, revealing his personal tastes in books, travel and hobbies. In the end, we were left with the image of a normal citizen but with some added responsibilities. Daily, we tune in to watch Hong Kong TV stations and see publicity spots featuring the Finance Secretary explaining, in goodhumoured institutional campaigns, the fiscal rights and duties of his fellow residents.
Silence masks stupidity Anyone expecting the same to happen in Macau should pick a comfortable seat and anticipate a long wait. The tradition is “you won’t sound stupid if you keep your mouth shut”. It doesn’t matter that things must be explained or that public decisions and strategies have to be defended. In Macau, there’s this idea that you shouldn’t stand out because you will become a target. The question is, don’t they – government members and high-ranking public officials –know what public service means? They need to be visible and to uphold the strategies paid for by the public purse, or else head to the private sector where public responsibility is less onerous. Following several attempts to interview secretaries from this government – which Mr Chui says is the most transparent, available and colloquial – we again asked to interview secretary Lau Si Io. Since we understand how things work, I confess I was expecting one of their most intelligent strategies: refusal.
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I knew it, but we had to ask or we would not have an editorial. So, we contacted the media advisor for Mr Lau. We didn’t have to wait long. They did not even require a written request, which is unheard of in an administration that loves to stamp enormous amounts of paper. The secretary could not be interviewed because he was busy. As if he has ever been seriously interviewed. With a pinch of irony, which naturally went undetected, we asked how that could be, if neither party had suggested a date. With the lack of malice we are known for, we asked if a later date would be possible, between February 15 and March 15. Again, the same reply. Very busy. This is the administration we have. How sad is our fate. Poor, transparent Macau.
Outdone by the mainland Worse still – and this is just one of many stories I could tell – is the lack of cooperation from public officials in joining the private sector. Twice we have submitted requests for public officials engaged in environmental protection to participate in conferences co-organised by Macau Business and two of our partners. Our aim is to strengthen the relationship between the several chambers of commerce from Macau, Hong Kong and Guangdong province. This non-commercial initiative – with private sponsors that pay the bills because they understand the event’s importance – has been dedicated to the important task
of “building green.” It aims to find ways to develop a megalopolis while protecting the environment. Days ago, for the second conference on the subject, we had the pleasure of the presence of the official in charge of environmental affairs and construction from the Zhuhai Municipal Government. Among the individuals present, we also had the deputy director of the Foreign Affairs of Zhuhai Municipal People’s Government. They both went to the trouble of coming to Macau to participate in a small initiative from three media companies for chambers of commerce, to explain what the neighbouring city is doing in that area. We were embarrassed that not one of their counterparts from Macau was on hand to introduce them. Macau’s officials did not bother to reply to any of the numerous requests to be present. Instead, their usual lack of manners was on display. The event faced that mathematical equation, which, save honourable exceptions, has been in use for nearly two decades right across Macau. “If you don’t work, you will not commit mistakes, and if you do not commit mistakes, you will be promoted”. Perhaps it is the fact that such initiatives, like ours regarding the environment, do not cost a single penny to the government and are, thus, despised. Mr Chui needs to fight against this sort of attitude, unless he wants to end up being the main culprit. Sooner or later, a leader that doesn’t look for respect will stop being respected by others.
The tradition is “you won’t sound stupid if you keep your mouth shut”. It doesn’t matter that things must be explained or that public decisions and strategies have to be defended
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Emanuel Graça Editor-in-Chief
emanuel.graca@macaubusiness.com
Ich bin ein panda
It is not clear if “Ich bin ein panda” is a statement made publicly but, with the treatment they have received in Macau, it may certainly be a secret wish that many share
ON JUNE 26, 1963, THEN UNITED STATES president John F. Kennedy made what many consider to be his greatest speech. In West Berlin, in front of a 120,000-strong crowd alarmed by the construction of the Berlin Wall, Mr Kennedy said: “Ich bin ein Berliner”, German for “I am a Berliner”. Although the quote became a signature moment in the Cold War standoff between Communism and Capitalism, it was at first a morale booster for the citizens of West Berlin. But one should look at the entire paragraph. “Two thousand years ago the proudest boast was ‘civis Romanus sum’ [I am a Roman citizen]. Today, in the world of freedom, the proudest boast is ‘Ich bin ein Berliner,” he said. Almost half a century on, and thousands of kilometres away, it is not clear if “Ich bin ein panda” is a statement made publicly but, with the treatment they have received in Macau, it may certainly be a secret wish that many share.
An unusual haste
To the casual observer, it must be difficult to understand the resentment most hardworking people feel for the giant pandas offered to Macau by Beijing. The reason, however, is simple. They have received VIP-treatment since day one, including a MOP90-million (US$11.25 million) home. Just look at how quick and diligent the government was in getting things ready for the fluffy animals. Since the announcement, it has taken Chief Executive Fernando Chui Sai On’s team about a year to plan and build a special pavilion for them. In between, there was enough time to create contests to choose the names – Hoi Hoi and Sam Sam – and do a lot of marketing. It is not that the pandas do not deserve their creature comforts. The problem does not lie with them. They are China’s most beloved species. Besides, one knows these animals also
have significant political importance, and Beijing’s use of pandas as diplomatic gifts has a long tradition. The issue is that the government has never displayed the same kind of effort and speed in delivering solutions for Macau’s far more pressing problems.
Glitch in the system
Ironically, the panda process has demonstrated some of the government’s structural weaknesses. So much was invested on hardware that no one looked at the software. For instance, the law protecting animal rights in Macau is more than half a century old. The Civil and Municipal Affairs Bureau, the department charged with taking care of the pandas, has been working on a review for at least five years. A proposal was put to public consultation in 2007 but the process has been derailed. Under the current legal framework, if someone harmed either panda, they would face only a ridiculously small penalty. Or let’s say that one of the vets in charge puts them at risk due to a careless procedure. Perhaps the vet lacked the proper qualifications. Again, because there are no regulations in the territory that govern who can have this kind of job, there is no legal recourse. The government’s diligence in establishing a Panda Fund to channel the revenue from the panda pavilion is another example of how things have gone wrong. If the goal was to promote research and education into panda conservation, why would our leaders increase the government’s bureaucracy in an area in which it has no expertise? Wouldn’t it make more sense to direct the money to one of the mainland’s specialist organisations? For Hoi Hoi and Sam Sam, the wait is finally over. They are in their new home. Let’s hope that with the opening of the Panda Habitat, our leaders harness the public’s positive response and they channel it to the benefit of the people, making this Rabbit Year one to remember. FEBRUARY 2011
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Editorial Council Paulo A. Azevedo, Albano Martins, Duncan Davidson, Herman He Founder and Publisher Paulo A. Azevedo pazevedo@macaubusiness.com
Editor-in-Chief Emanuel Graça emanuel.graca@macaubusiness.com
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Property Editor Alan Tso tsoalan@yahoo.com.hk
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Letters to the editor
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Regular Contributors Branko Milanovic, David Cheung, Dominique Moisi, Eswar Prasad, Frank J. Fahrenkopf Jr., Hideaki Kaneda, José António Ocampo, José Sales Marques, Joseph Stiglitz, Leanda Lee, Keith Morrison, Kenneth Rogoff, Kenneth Tsang, Marvin Goodfriend, Pan Yue, Paulo J. Zak, Peter Singer, Richard Whitfield, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang
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We Deliver Decision Makers
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Money flowing away From 2002 to 2009, gross national income rose slower than the GDP, official figures say or the first time, the Statistics and Census Service has released information on gross national income (GNI). From 2002 to 2009, GNI at current prices rose to MOP150.24 billion (US$18.78 billion) from MOP54.71 billion, at an annual average growth rate of 15.5 percent; at the same time, the gross domestic product increased to MOP165.58 billion from MOP54.80 billion, at an annual average growth rate of 17.1 percent. After removing the effect of price changes, GNI increased at an annual average growth rate of 10.8 percent in real terms, of which GNI soared by 29.8 percent in 2007.
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However, GNI for 2008 decreased by 7.0 percent in real terms. Per-capita GNI rose from MOP124,800 in 2002 to MOP276,028 in 2009, at an annual average growth rate of 12.0 percent in nominal terms or 7.4 percent in real terms. Meanwhile, per-capita GDP increased from MOP125,013 in 2002 to MOP304,211 in 2009, at an annual average growth rate of 13.5 percent in nominal terms or 8.0 percent in real terms. Macau’s GDP from 2002 to 2009 was higher than the GNI, meaning that the outflows of profits and income exceed income flows back into the local economy.
Cash handout started
Involvement boost
The 2011 government cash handout started being implemented in January, the government announced. Each Macau permanent resident will receive MOP4,000 while each non-permanent resident will MOP2,400 – about one-third lower than in 2010. The measure is expected to cost MOP2.34 billion. The “wealth sharing” program, as it is also known, cost the government some MOP3.38 billion and benefited a total of 593,000 people in 2010. The program was first unveiled in 2008, when inflation in Macau peaked.
China’s two SARs will be more involved in the country’s latest five-year development plan, Wang Guangya, director of the Hong Kong and Macau Affairs Office of the State Council, said in January. The Communist Party of China Central Committee’s Proposal for Formulating the 12th Five-Year Program for China’s Economic and Social Development (20112015) stressed enhanced exchanges between the mainland, Macau and Hong Kong, and particularly deeper cooperation between the two SARs and Guangdong to promote regional economic development. Mr Wang said the country’s economic restructuring and transformation of its development mode would offer opportunities for Macau and Hong Kong. Mr Wang, a former vice-foreign minister who took up his current post in October last year, will pay his first visit to Macau and Hong Kong in the spring.
Improving civil servant’s training The Civil Service College of Singapore and the Civil Service Bureau of Macau signed in January a memorandum of understanding on training. The Singaporean side will provide support, consultancy and guidance for the development plan and strategies of the new training centre for civil service to be established by the Macau government this year. The memorandum further strengthens the ten-year partnership between the two institutions. To date, almost 3,000 high and middle level executives, supervisory, and technical officers have joined the training programs co-organized by the Civil Service College and the Civil Service Bureau. FEBRUARY 2011
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Macau Pass wants to expand Macau Pass S.A., the operator of the Macau Pass payment system, wants to increase its footprint in the city. The company wants to expand its smart card payment system to taxis, car parks as well as to the future light rail system. General manager of Macau Pass, S.A. Keith Ko, told Radio Macau that the company will begin talks with the taxi companies concerning the setting up of an e-payment service.
Changes at CGD’s offshore
Disable get card
José Braz-Gomes is the new general director of the Caixa Geral de Depósitos (CGD) offshore Macau branch. Mr BrazGomes was previously the head of BNU’s private banking division. BNU is part of Caixa Geral de Depósitos’ group. Mr Braz-Gomes will replace João Domingos who retired last year. Caixa Geral de Depósitos’ offshore Macau branch is dedicated to commercial banking.
Disability classification can help handicapped people get jobs, says government or the first time, Macau will have a disability classification system, which includes a card stating the degree of the disability. The new system is set to come into effect in March. According to the Executive Council spokesman, Leong Heng Teng, the new system will also help handicapped people to find a job in a more easy way. The government estimates that there are around 30,000 residents with some degree of disability, 70 percent of whom have mild or moderate impairments. The government estimates that Macau has a total of 9,000 people suffering from complete disability.
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Expensive leaks Macao Water’s water loss rate stood at 12.5 percent in 2010, according to the company’s executive director, Felix Fan Xiaojun. The water loss rate or non-revenue water refers to water that has been produced and is “lost” before it reaches the customer. That can happen due to leaks, malfunctioning water meters and illegal use. Macao Water expects to reduce the percentage to 12 percent or below in 2011, after pipe renewal works and other activities.
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Imported labour passes the 75,000 mark
Forex reserves up
Following a trend that started in June, the number of imported workers continues to increase month-on-month. In November 2010, the total number of non-resident workers in Macau stood at 75,098, up slightly by 0.4 percent in comparison with the previous month. This was the first time since November 2009 that the number of importer workers stood above 75,000.
Macau’s foreign exchange reserves amounted to MOP190.2 billion (US$23.78 billion) at the end of December 2010, increasing by 4.4 percent from the previous month. When compared with a year earlier, the reserves increased by MOP43.6 billion or 29.8 percent. Macau’s foreign exchange reserves at end-December 2010 represented 36 times the currency in circulation.
Deposits go down Resident deposits with the banking sector dropped in November 2010 after growing for five straight months. Their value decreased 1.7 percent from the previous month to MOP235.0 billion (US$29.38 billion). As for domestic loans to the private sector, these increased 1.8 percent in November 2010 on a monthly basis to MOP124.3 billion. Meanwhile, external loans decreased slightly by 0.2 percent to MOP114.1 billion.
Arrested illegal workers drop A total of 44 illegal workers were caught in Macau in December 2010, less than half of the number arrested in the previous month. More than 300 sites and companies were raided by the local authorities, according to a press release from the government. FEBRUARY 2011
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Economy & Finance
Inflation alert Prices will continue to go up this year, says the Monetary Authority, with factors at home providing the main pressures
he inflation rate will continue its upward trajectory this year, the Monetary Authority has warned, but the main source of price rises will not be the appreciation of the renminbi. Inflation for the whole of last year stood at 2.8 percent but prices climbed sharply towards the end of the year. The Composite Consumer Price Index for December increased by 3.92 percent year-on-year. It seems more is on the way. “Inflationary pressures are likely to intensify in 2011,” the authority wrote in its latest Monetary and Financial Stability Review, published late last month. The Consumer Council’s first Supermarket Price Survey Report for the year has confirmed the trend is continuing. Out of 223 samples surveyed, around 30 percent – including rice, cooking oil, sanitary and hygiene products – recorded increases in their
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average prices in comparison with data from last December.
Domestic dominates The monetary authority said in its report that “on the external front, rising global food prices and the renminbi appreciation would be the factors adding up price pressure from imported sources. “Nevertheless, in contrast to common perceptions, higher import prices tend to have a secondary impact on local inflationary pressures while domestically generated inflationary pressures under strong aggregate demand at full employment prevail.” The de facto central bank noted that the exchange rate of the renminbi against the pataca appreciated by only 2.5 percent from the end of November 2008 to the end of last November. The authority admits, however, a “relatively fast increase in prices of particular imported items”
such as food, clothing and footwear. “As a result, the noticeable price rises of these daily necessities could uplift inflation expectations of the general public and hence further amplify inflationary pressures.” The renminbi is expected to continue to appreciate against the pataca this year, analysts say. The local currency is indirectly pegged to the US dollar but the territory buys most of its commodities from the mainland. The state-run China Securities Journal reported in January that the renminbi is expected to appreciate 5 percent against the US dollar this year, citing unnamed industry sources. Across 2010, the renminbi rose 3.5 percent against the dollar.
Good times Aside from inflation, the authority’s crystal ball for the year shows mainly blue skies ahead.
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Employment milestone a pay problem “The economy is predicted to expand at a high-single-digit rate in 2011 under the key assumption that gross gaming receipts grow annually by an approximate 15.0 percent,” the Monetary Authority says “The economy is predicted to expand at a high-single-digit rate in 2011 under the key assumption that gross gaming receipts grow annually by an approximate 15.0 percent.” The estimate on gaming receipts may be read as conservative, given several analysts are predicting gaming revenue to increase by one-third. “Rising domestic demand, in particular a moderate rebound of investment spending, would also play a role in boosting economic growth,” said the authority, expecting investment will resume its role as an accelerator for growth. “Large-scale construction projects, primarily hotel and other tourism facilities, would be an important propeller goading investment spending back on track. In addition, public investment in major infrastructure projects, including the Zhuhai-Hong
Kong-Macau Bridge, Hengqin Island developments, light rail transit system as well as construction of public housing, would all help lift overall investment spending.” Interest rates are “likely to stay at low levels for the whole course of 2011.” The monetary authority adds a warning, saying Macau needs to keep its eyes open since the global financial crisis is not over yet. Even so, the report downplays worries about a potential negative impact on the local economy from highly accommodative monetary policies undertaken by countries still in crisis, such as quantitative easing in the United States. The monetary authority says such “hot money” is usually primarily parked in the money market and in securities, areas from which Macau is basically absent.
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he Monetary Authority of Macau has recently noted that the city has reached what it considers to be full employment, with the jobless rate below 3.0 percent. In its latest Monetary and Financial Stability Review, the authority said the lack of available manpower would push wages up. “In view of the gradual resumption of investment projects and the opening of some large flagship hotels in 2011, the employment situation is likely to become more uptight,” the authority said. “While the local labour market has technically reached full employment, importation of non-resident workers might rise in order to absorb job vacancies. The unemployment rate would therefore go down marginally by 0.1 percentage points to 0.2 percentage points in individual months of 2011 due to a larger employed population. “Correspondingly, employment earnings are likely to witness growth.”
Property market to stabilise
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he property market is anticipated “to stabilise in 2011,” the Monetary Authority of Macau says. Macau’s de facto central bank says there will be several forces to come into play over the next 12 months in its latest Monetary and Financial Stability Review. Although the authority says that the government measures to cool off the market have achieved a slow down in the number of transactions, “the favourable economic outlook and job prospects, large surplus funds generated from the buoyant tourism sector as well as low borrowing costs would limit the downside”. On the supply side, the gradual completion of public housing “would help fulfil the actual demand” for dwellings of the low-income families. FEBRUARY 2011
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Economy & Finance
Learning to be free Macau climbs one spot in the top 20 of the world’s freest economies acau is becoming a freer economy by the year. The trend is clear, according to the Wall Street Journal and the Heritage Foundation’s annual Index of Economic Freedom, which again places the city in the world’s top 20. Since it was first included in the index, in 2009, Macau’s score has seen constant improvement. In this year’s index, the city’s score increased by 0.6 points to 73.1 points, making it the 19th freest among the 179 economies surveyed. The increase was “mainly due to improvements in monetary freedom and investment freedom,” the Heritage Foundation report says. Macau is once again classified as “mostly free”, the second-highest of five categories. Its score is well above the world average of 59.7 points and
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the Asia-Pacific regional average of 57.4. The city’s economy is ranked fifth among 41 in the region, just behind Hong Kong (the world leader for the 17th year running), Singapore, Australia and New Zealand. The Heritage Foundation says: “Macau has long benefited from global trade and investment”. The entrepreneurial environment is “generally efficient and streamlined, and property rights are relatively well respected”. The report notes that foreign investors in Macau can conduct business on the same terms as residents, adding that taxation “is low and relatively efficient”. It also notes that “new measures to accelerate the registration processes for trademarks and patents were implemented”.
To arrive at a score for economic freedom, the Heritage Foundation measures 10 aspects of an economy, giving a score of between zero and 100 for each, with 100 signifying maximum freedom. The 10 component scores are then averaged to give an overall economic freedom score.
All shall benefit Macau ranks relatively high in trade freedom, government spending, investment freedom, monetary freedom and financial freedom (see table). The report says economic freedom is strongly related to economic performance and per capita incomes are much higher in economies that are economically free. Greater economic freedom is also said to be strongly correlated to
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Macau’s economic freedom scores Points (change)
World ranking
Business freedom
60.0 (unchanged)
116th
Trade freedom
90.0 (unchanged)
1st
Fiscal freedom
76.6 (down 1.2)
100th
Government spending
93.3 (down 1.9)
6th
Government expenditure equalled 13.3 percent of GDP; fiscal surpluses allowed the city to respond easily to the global financial crisis with measures such as the cash handout, tax relief, health care vouchers and increases in public works investment
Monetary freedom
83.4 (up 5.9)
13th
Inflation was relatively low, averaging 3.3 percent between 2007 and 2009; no products are subject to price controls, but bus fares, taxi fares and prices of public utilities such as water, electricity, telephone services and the postal service are administered or monitored
Investment freedom
85.0 (up 5.0)
9th
The government does not discriminate between foreign and domestic investors, although foreign investors face a few restrictions in services markets; regulations and bureaucracy are efficient and transparent
Financial freedom
70.0 (unchanged)
17th
The financial system functions without undue government influence; relatively sound regulation and supervision assure free flows of financial resources and easy access to financing is available for private-sector activity
Property rights
60.0 (unchanged)
42nd
Piracy of television signals is rampant, but the government devotes considerable attention to enforcing intellectual property rights
Freedom from corruption
53.0 (down 1.0)
42nd
Corruption is perceived as significant; a public outreach campaign has led to a significant increase in the number of complaints handled by the graft-buster
60.0 (unchanged)
95th
Although labour regulations are relatively flexible, the economy lacks a dynamic and broad-based labour market; there is a minimum wage for publicsector cleaning and security services
Dimension
Labour freedom
The Heritage Foundation remarks The overall regulatory environment is relatively transparent and efficient The weighted average tariff rate was zero percent in 2009; there are some import restrictions, services market access restrictions, restrictive labelling regulations and problems with the enforcement of intellectual property rights Except for the casino industry, taxes are generally low
Source: 2011 Index of Economic Freedom
overall wellbeing, including health, education, security and personal freedom. On a global scale, 2011’s report says economic freedom advanced over the past year, regaining much of the momentum lost during the financial crisis and global recession. “Many governments around the world have re-dedicated themselves to fiscal soundness, openness and reform, and the majority of countries are once again on a positive path to greater freedom,” it says. The world average score of 59.7 is 0.3 points higher than a year ago. “Despite the challenging global economic environment, the forces of economic freedom around the world have been resilient and even increasing,” the report says. Economic freedom has taken an upturn in most of the economies assessed – 117 to be precise. Developing and emerging economies showed the greatest improvement.
Top 20 freest economies
Hong Kong
Singapore
Ranking
Country
Score
Change from 2010
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Hong Kong Singapore Australia New Zealand Switzerland Canada Ireland Denmark United States Bahrain Chile Mauritius Luxembourg Estonia Netherlands Britain Finland Cyprus Macau Japan
89.7 87.2 82.5 82.3 81.9 80.8 78.7 78.6 77.8 77.7 77.4 76.2 76.2 75.2 74.7 74.5 74.0 73.3 73.1 72.8
Unchanged Up 1.1 Down 0.1 Up 0.2 Up 0.8 Up 0.4 Down 2.6 Up 0.7 Down 0.2 Up 1.4 Up 0.2 Down 0.1 Up 0.8 Up 0.5 Down 0.3 Down 2.0 Up 0.2 Up 2.4 Up 0.6 Down 0.1
Australia Source: 2011 Index of Economic Freedom FEBRUARY 2011
30 KEITH MORRISON AUTHOR AND EDUCATIONIST - kmorrison.iium@gmail.com
Is Macau ready for democracy? WHERE IS THE TERRITORY’S SOLZHENITSYN, MANDELA OR LIU XIAOBO? OFF ENJOYING DIM SUM here are several voices to be heard about whether or not Macau is ready for democracy. In one sense it could be argued that Macau, like the United States or Britain, is not a democracy because it is in hock to, and largely run by, big business and international commercial interests. On the other hand, that such voices are heard at all must be a signal that Macau is ready. Who decides when the city is ready? Often the powerbrokers in a non-democratic regime decide, usually by saying that a state is not ready. The question is ideologically loaded to favour the status quo. It serves the power of the elite, who may be backed by repression or suppression of dissent, or, even worse, the consent of the masses. The basic conditions for democracy are familiar, as any elementary course in politics makes clear. They include: - Regular, free, fair and transparent elections, with votes cast secretly but with open debate and more than one party standing for election; - Universal suffrage and the people’s right to form political parties or groups; - Policies decided by ballot rather than a small cabal; - The people’s power to elect and remove leaders; - Subsidiarity in governance; - Relative economic prosperity; - Equitable distribution of income, with limited poverty; - A significant middle class; - Apolitical armed forces; - An independent judiciary and the rule of law; - Guarantees of citizens’ rights and human rights, in theory and practice; - Free speech, the right to public dissent, a free press and religious freedom; - Extensive open communication, internal and external; - Basic levels of literacy and education; - Non-governmental and voluntary organisations with a political voice; and - Moral leadership.
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By these standards, Macau does not qualify to be a democracy but neither do most of the other “democracies” around the world. Macau still awaits government of the people, by the people and for the people. How free is the media? How far are writers censored? Do they censor themselves? Why is much of Macau’s media so anaesthetised and anodyne, silent on pressing social issues and only covering the sweet and the sanitised? We have had more coverage of the arrival of two pandas than of poverty, or of the barring of entry to Macau of supposed political activists, or of the issue of democracy, or any sort of ideological critique. In the name of social harmony, any mordant commentary on Macau’s lack of democracy is stifled. Where is Macau’s Solzhenitsyn, Mandela or Liu Xiaobo?
Not good enough
Democracy needs leaders who transcend economic matters and who have a burning moral imperative. FEBRUARY 2011
What we have in Macau are leaders preoccupied with economic development, neglectful of moral concerns and who have all the consummate, gossamer moral sensitivity, concern and delicacy of a brick. A moral leader must raise and answer questions about why so many people are working so hard without seeing their lives improve, about who benefits from the city’s booming economy, about what can be done to improve the lot of the poor and the vulnerable, and about why there is an increasing disparity between the rich and poor. And moral leaders must take real action. Yet what do we see? We see the over-riding concern for business, trade, nationalism and socialising by soigné leaders. Not good enough! Their moral silence is deafening. Democracy builds – and builds on – a political culture of consultation, debate, negotiation and compromise that addresses the differences and takes the populace seriously. Its social contract requires leaders to act for the common good and in the public interest, rather than for personal benefit or against the wishes or betterment of the public. If leaders do not serve the common good, they can be and must be removed. Should Macau wait for all the democratic conditions to be in place? How does it move towards democracy? Can it handle democracy? It is a no-brainer. Would India have become the democracy that it is, although still with some way to go, if it had simply waited for all the conditions to exist? Of course not. Democracy is like learning to read. Just as one learns to read by reading, one learns to be democratic by behaving democratically. Democracy is the process, the medium and outcome of democratic behaviour, creating conditions for its own sustenance. Macau’s leaders – in business and governance – must have the political, economic and moral courage to move forwards on democracy. Of course, the elephant in the room is that Macau’s parent is not a democracy but an authoritarian state.
Economic Trends by JosĂŠ I. Duarte
31
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 (2008) (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
32,221 million 244,604 million 122,307 million 239,168 million 104.07 base - 2008 0.5 %
7.9 15.9 25.7 16.0 3.93 --
Latest
% var
October October October October November 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
2.8 %
- 0.5
Notes Q3 Q3 Q3 October
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
m2
Finished
m2 tons million million
- 57.1 40.7 - 56.9 - 1.9 - 27.7
Latest
1,872 75,072 20,210 581 7,569
m2 m2 tons million million
% var
Notes
- 62.5 223.0 - 22.5 47.0 186.0
November November November November November
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
17,453 33 4,791 14,050
% var million
41.8 0 0.4 - 2.2
Notes November Q4, var, ytd Q4, ytd Q4, ytd
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
2,013,000 1,648 0.90 days 19,849 78.4 % 1.50 nights
% var
Notes
November 6.5 Q3 1.7 - 0.20 days Q3 October 7.3 October, var 4.6 October 0.01
%var - % change on homologous period; var - absolute variation; ytd - % change, year-to-date; x - discontinuous series
2010New base: 2008 (*) Important note: Values for 2009 revised. The methodology and reference period for the real GDP calculation hasAPRIL changed. (**) Important note: The inflation base period has changed ( New base: April 2008 to March 2009 = 100) FEBRUARY JANUARY 2011
Sources: DSEC (Statistics and Census Service), AMCM (Monetary Authority of Macau), DICJ (Gaming Inspection and Coordination Bureau)
2009 Population
Economic Trends by JosĂŠ I. Duarte
32
National income
GRAPH 1 - Gross Domestic Product and Income: Current and chained prices (106 mop)
GNI current
base = 2008
GNI, chained prices
GDP current
GDP, chained prices
200,000
150,000
100,000
50,000 2002
2003
2004
2005
2006
2007
2008
2009
GRAPH 2 - GNI and GDP annual change (%)
Variation GNI
Variation GDP
40
The Statistics and Census Bureau has just published a new series of national accounts. For the first time, we have estimates for Gross National Income or GNI. A series from 1982 until 2009 has been published. As some readers may have noticed, Macau’s GDP is now calculated using a new procedure, the chained prices method, and the base year has been moved to 2008. These changes raise some methodological issues, and certainly comparability issues with the national accounts. For those less familiar with the difference between the two measures, GNI is accepted as a more appropriate measure of national wealth because the basis for analysis is the income generated by assets owned by the national residents, no matter where those assets are located. Therefore, its value is obtained when the net flows of income earned by the residents is added to the GDP. Outflows bigger than inflows, as is the case for Macau, mean a national income that is lower than the GDP. GRAPH 1
Graph 1 shows the plots of the values for both GNI and GDP, both in current and chained prices. Each line essentially tells the same story. In particular, one should note the sharp increase in the national income in just seven years, implying an average growth of about 10 percent a year over that period.
35 30 25 20
GRAPH 2
15 10 5 0 2002
2003
2004
2005
2006
2007
2008
2009
GRAPH 3
GRAPH 3 - GNI per capita (100 = 2002)
Index GNI current (%)
Index GNI, chained prices (%)
250
200
150
100 2002
2003
FEBRUARY 2011
Our second graph shows two different periods. By plotting the annual growth rates it becomes apparent that 2007 is a threshold year. Until then, in broad terms, both indicators follow parallel trends. Since then, GNI yearly rates become very unstable, suggesting strong income movements possibly associated with the instability in world markets.
2004
2005
2006
2007
2008
2009
Based on the released data, we can also note a significant growth of the per capita indicators. Building a growth index and taking 2002 as the base year, we see a neat divergence between the current and chained prices measures from 2004 on. Again, the new methodology requires that some care be taken when trying to extract meaningful information from these new series.
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Income flows and FDI
GRAPH 4 - Income flows
Out compensation of employees Out portfolio investment income In direct Investment Income In other investment portfolio
(10 mop) 6
Out other investment income Out direct investment income In portfolio investment income Net Flow
20,000
An analysis of the income flows that result in the divergence between GDP and national income shows that flows have been negative in the period. GRAPH 4
10,000 0 -10,000 -20,000 -30,000 -40,000 2002
2003
2005
2004
2006
2007
2008
2009
GRAPH 5 - Foreign Direct Investment (FDI): stock and flows (106 mop)
In Stock FDI
In FDI
Out stock FDI
Out FDI
100,000
You will notice from Graph 4 that each half of the equation tells a different story. The main drivers of income flowing into Macau are portfolio and other investments while the outflow is dominated by foreign direct investment (FDI). Macau assets owned by non-residents have increased by more than five-fold in the period of our analysis. Residents, for their part, appear to derive their external income from other financial sources, either shares or loans. Of course, these observations are based on the formal classifications of residents and non-residents. One should not forget that they should be read ‘cum grano salis’, if one takes into account that a significant share of these income flows are to and from fiscal paradises whose purpose may be, in fact, to hide the owner’s identity. GRAPH 5
Reflecting the rise in the amount of inward FDI, this analysis displays a sustained growth. The trend is relatively slow at first and explosive after 2004, resulting in a four-fold increase in the FDI stock in just eight years. Not even recent instability in the world economy has made a significant dent. Not so for outward FDI. The break after 2006 is violent, showing, in relative and absolute terms, massive disinvestment.
80,000 60,000 40,000
20,000
GRAPH 6
0 -20,000 2001
2002
2003
2004
2005
2006
2007
2008
2009
GRAPH 6 - FDI income ratios In income ratio
The apparent profitability of FDI flows has always been difficult to grasp from the published figures. In an admittedly rough calculation based on the ratio between the annual average stock and the income generated, there are two significant effects. There are significant rates of inward investment and low rates, when not negative, for outward investment. It is likely we are not dealing with the same type of investment.
Out income ratio
0.5 0.4 0.3 0.2 0.1 0 - 0.1 2002
2003
2004
2005
2006
2007
2008
2009
FEBRUARY 2011
34
Transport
ard, but not impossible. That is how Japan’s Mitsubishi Heavy Industries describes the task of meeting the government’s early 2015 deadline for rolling out the first phase of Macau’s light rail transit system. The company won the contract to supply the system and the rolling stock with a MOP4.69 billion (US$586 million) bid. Now it must be able to deliver within just 47 months, plus two months for trials. “According to our extensive past experience of implementing railway systems all over the world, 49 months is challenging but achievable,” the general manager of the transportation systems business department at Mitsubishi Heavy Industries, Takayuki Hishinuma, told Macau Business. “This kind of project is technically complex and so it is fundamental for the contractor to have project management and system integration capability. We are confident that we can meet the deadline.” After beating two other consortiums, one of which included Siemens and the other Bombardier, the Japanese giant now has to begin the groundwork in earnest. Mr Hishinuma says train production will begin around 18 months after contract signing, scheduled to happen soon.
Photo: Luís Almoster | mspagency.org
H
ON THE RIGHT TRACK MITSUBISHI HEAVY INDUSTRIES SAYS IT CAN MEET THE GOVERNMENT’S SCHEDULE TO COMPLETE THE LIGHT RAIL TRANSIT SYSTEM BY ALAN TSO
35
36
Transport
The system will use Mitsubishi’s Crystal Mover trains, which have environmental friendliness as their main feature, Takayuki Hishinuma says Testing will be conducted at the company’s facilities in Japan before delivery. The first train is due to arrive in Macau in early 2014. Construction work is scheduled to start later this year in Taipa. The first phase of the project will have about 21km of track, including 2.6km of tunnels. It will connect the Border Gate to Pac On Ferry Terminal, with the travel time estimated at 38 minutes. The first line will have 21 stations and will operate 19 hours a day, with trains coming every three to five minFEBRUARY 2011
utes. Initially the capacity will be up to 7,800 passengers an hour in each direction but it will be increased to 14,100 passengers an hour by 2020.
Green machine The system will use Mitsubishi Heavy Industries’ Crystal Mover trains, made of aluminium alloy, which have environmental friendliness as their main feature, Mr Hishinuma says. “The light body of our trains reduces power consumption and contributes to reducing the life-cycle cost of the sys-
tem. In the long-term, aluminium alloy also has the advantage of higher recyclability to maximise the reuse of materials.” Crystal Mover trains also have rubber tyres instead of steel wheels to reduce the level of noise. This model has been used in six Japanese light rail systems, including Tokyo’s Yurikamome Line and the Rokko Island Line in Kobe, in Singapore and at airports in South Korea and the United States. It is fully automatic and needs no driver. With respect to the design of the trains, Mr Hishinuma says Macau’s status as an international tourist city is an important consideration. “At the front there will be a wide and large window to give passengers a panoramic view of Macau’s streetscapes. At the rear there will be spaces for wheelchairs and tourists’ baggage.” The system will go along the lower deck of the Sai Van Bridge. To allow for the passage of trains, the bridge must be adapted. “Based on the structural analysis by our bridge experts, no structural modifications will be needed to Sai Van Bridge due to the lightness of our trains,” says Mr Hishinuma. “All that is needed are some modifications to the ventilation system and the emergency walkways to improve safety”. He says modification work will not affect traffic on the bridge. To finish the job, Mr Hishinuma believes communication with the authorities and subcontractors is crucial. “Although Mitsubishi Heavy Industries’ relationship with the Macau government is that of client and contractor, we are actually in the same boat. We have to work closely together in order to get the light rail transit system up and running.” Mitsubishi Heavy Industries says it is also planning to maximise technology and skill transfers. “In Manila, we completed Line 3 in 2000 and have provided 10 years of ongoing maintenance services for the client. Even before the start of the maintenance service, we carried out training and technical transfer for local engineers. Presently only a few Japanese technicians are involved in this maintenance service in Manila. We would like to adopt the same approach in Macau,” Mr Hishinuma says. The light rail project is the company’s second major venture in Macau, after the 1992 construction of the city’s waste incinerator and its subsequent expansion in 2008.
37
JOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - jid@macaubusiness.com
The sweet and the sour FOLLOWING PUBLIC OUTCRY, THE GOVERNMENT HAS INTRODUCED SEVERAL POLICIES OVER THE PAST YEARS TO IMPROVE SOCIAL WELFARE. THE QUESTION IS WHETHER THEY MAKE SENSE hose with kinder hearts might almost feel sorry for this government. Such is the volume of money flowing through the Border Gate that even the wisest of governments might have trouble figuring out what to do with the rising tide of tax revenue. There are so many demands flowing in from various quarters – with the most variable levels of merit and virtue – that our public administration seems to be at a loss. More often than not, it is as if we were sailing without charts or landmarks, finding our way by trial and error under changeable winds. Social policies are a good example of this phenomenon. Many people have asked for the development of a modern – and some would say, decent – set of social policies. That is, policies that address the problems of poverty and, more generally, very low income levels; access to medical care; as well as addressing retirement, education and housing. We will leave aside the discussion of the ethical or the ideological underpinnings of these issues. Not because they are unimportant, that is certainly not the case. Indeed, a major element missing in the public agenda is a serious discussion about what kind of social policies we deem desirable and what is the level of public commitment that is adequate and sustainable. Let us, however, just assume that most of us would agree to some level of public involvement in these areas. And we can also accept that, ‘prima facie’, in the present circumstances, lack of resources does not appear to be a significant obstacle.
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The great giveaway
The government has been receptive, in part, to demands for action on social policies and we have seen a few changes in the past couple of years. Let us briefly look into some of them, without being too comprehensive or systematic. First, the cash handouts. As people began complaining about the uneven benefits of the economic boom, the government decided to shower some money. And the so-called wealth partaking scheme was born.
At first, even an economic explanation was put forward to justify its existence. It was to help fight the effects of inflation – an argument that if it was taken at face value, could only be a paradox. The value of the handout has changed over time but no specific explanation has been forthcoming and nobody has asked either. In the end, everybody knows you do not ask questions about the origin of gifts. However, as so often happens with populist approaches to social problems, it started as a gesture, an offering to residents, and became something else. Then there was some reluctance to take it away. People might start grumbling if it was taken away. Don’t we deserve it anymore? Then it became a habit. There was a sense of entitlement. Surely, this year we will receive less than previously. The advance warning has been given that it cannot go on forever. Noted.
Boiled sweets not chocolate
If you take away the sweets you must give something in compensation. Now we have the central savings scheme. In this case, it is neither in cash, nor in hand. The government will make a deposit each year – it was MOP10,000 last year – into an account that cannot be touched until its owner is aged 65, so that we can look forward to a somewhat safer and more restful retirement.
The management of the fund – if it is to be managed at all - or the possible accumulation of contributions from other sources, is to be left to the discretion of the chief executive. One might be tempted to add that policy-making could hardly be more paternalistic. We have also recently renewed the social security fund. Contributions are kept at MOP45 per month, which is good for our wallet. Of course, let us pray no one will ever really need the old age pension, set at MOP1,700 a month, or the sickness subsidy, at MOP55 or MOP70 a day, with or without hospitalisation. But these are just a few concerned reflections. We could add other subjects, such as the limited poverty alleviation instruments. Or the anomalous – and arguably illegitimate – marginalisation of non-resident workers, which contribute to, but do not benefit from, the welfare system. But I think there is no point in going further down that path. The fundamental question is probably becoming clear and may be a source of bewilderment for some. As a matter of fact, any outsider would be forgiven if he or she failed to grasp why we seem unable to carry on a reasoned debate on these issues and to devise social policies that are responsible, efficient, and fair – and that, plausibly, we can well afford. FEBRUARY 2011
38
Politics
No small change
Macau’s biggest labour association is in-need of an upgrade, says its new president, who also wants a general pay rise for workers
BY EMANUEL GRAÇA AND MANDY WONG
he times are changing for the Macau Federation of Trade Unions. The 70,000-strong worker’s platform has a new president, Chiang Chong Sek, and he is stressing the need for the body to reinvigorate itself. An employee’s representative for more than 20 years at electricity utility CEM, Mr Chiang was the federation’s former vice-president. He left CEM after his appointment in December in order to focus on his new role. His primary goal is to help the federation evolve in line with developments in the economy and labour market.
T
FEBRUARY 2011
“We need to improve the federation’s efficiency,” he told Macau Business. “The economy in Macau is growing very fast and the job market has changed.” Mr Chiang notes that many workers have moved from manufacturing, construction or other lowerskilled jobs into the service industry, including gaming and blue collar positions. It is a trend that the federation needs to follow to attract new members, he says. Change is not easy, especially when talking about a federation that deals with everything from traditional
union matters to social services, and operates schools, kindergartens, elderly care centres, training centres and medical centres, with the support of the government.
Skills development Upgrading the training courses provided by the federation is one way to spark change, Mr Chiang says. “We need to bet on continuous education for our workers. Otherwise, we cannot follow the economic changes.” Mr Chiang connects the issue of training with that of imported labour. “We cannot keep on importing senior
staff, with our workers only working in the lower-end jobs. It is not good not only for the workers, but for the overall society and the government, too,” he says. The president of Macau’s biggest worker’s platform stresses he does not oppose imported workers but says local interests should come first. “First, we need to protect our local people. If they have a job, then you can import,” he says. Although having been at the helm of the federation for only a month, Mr Chiang has already had talks with Chief Executive Fernando
39
Laundry list of labour laws for overhaul
T
here have been attempts from legislators to approve a law that would guarantee a worker’s right to organise under a union but still the territory remains without a Union Law – despite it being enshrined in the Basic Law. Federation of Trade Unions president Chiang Chong Sek says legislation is urgently needed. “The Union Law is very important. It is better not only for the workers, but also for the employers. We would have a channel for communication,” he says. “We should create the Union Law as soon as possible.” As for the new labour law, enacted two years ago but which is already being
Chui Sai On. Mr Chiang says both parties agreed that it is important for companies in good financial health to raise salaries. The gaming operators should be first, he adds. “Inflation is high, unemployment is low but the median income remains unchanged at around MOP10,000,” says Mr Chiang. That has had a negative impact on workers’ living standards, according to him.
reviewed by the government, Mr Chiang admits there is room for improvement, especially in the area of fighting illegal labour. The social security system could also do with an overhaul. The issue is not so much the law but the low level of contributions, set at MOP15 a month for employees and MOP30 for employers. Mr Chiang says there is room for increases on both sides, to make the system healthier and allow for higher allowances and pensions. “I don’t think that having only the government [ensuring most of the system’s funding] is the best solution,” he says.
“The Macau workers, the Macau citizens, we are the owners of Macau. We want it to improve. According to this thinking, we support the government. Of course, if it makes a mistake, we should criticise it and point it out but we should also give suggestions on how
to solve problems.” As for the constellation of small labour unions in Macau, known for holding several protests every year, Mr Chiang plays down their actions. “Everyone has their freedom, [but] for us, we think negotiation is better than just shouting.”
All in it together
“The economy in Macau is growing very fast and the job market has changed,” Chiang Chong Sek says
“The Macau economy has grown but the workers are not benefiting from that increase. If the companies have the financial capability, especially the gaming companies, they should increase wages,” he says. During the financial crisis, Mr Chiang says workers shared the burden with their employers by accepting wage cuts. Now that things have improved, the benefits should be shared as well, he says. The Macau Federation of Trade Unions, with two directly elected legislators and two elected indirectly (one of them being the president of the Legislative Assembly, Lau Cheok Va), has been historically regarded as a government ally. Mr Chiang sees the relationship as a constructive one. FEBRUARY 2011
40
Justice
In the crosshairs White collar-crime commission probes 30 private sector corruption cases since its brief was expanded
he Commission Against Corruption or CCAC has received about 100 reports of corruption in the private sector since its powers were extended to this area last March. “Among the reports received, about 30 cases have the conditions to commence investigation,” a CCAC spokesperson said. “These cases involve employees receiving commissions or collaborating with outsiders to defraud their enterprises for their personal gain.” The commission said it has encountered some difficulties during its investigations. For instance, some cases involved “large-scaled enterprises which are registered outside Macau”. As a result, cross-border collaboration and evidence gathering was necessary. “This may involve sending investigators overseas for information gather-
T
ing or inviting personnel of the enterprise to Macau to provide information, which adds to the challenges of investigating those cases,” the spokesperson said. “For these kinds of cross-border cases, the CCAC is supported by the mechanism of mutual-case assistance co-established with the neighbouring regions.” The commission says tackling corruption in the private sector will be strengthened this year with the establishment of a task force.
Top reshuffle ‘normal’ Meanwhile, recent shifts at the top of the commission have meant changes to who leads inquiries. Deputy commissioners Afonso Chan Seak Hou and Endy Tou Wai Fong
Few changes to asset disclosure rules A
draft proposal that revises the rules for asset declarations for Macau’s public officials is open for consultation until the end of this month. Prepared by the Commission Against Corruption, the document introduces no significant changes as most of the information in the declarations’ register will not be made public. Only the official’s position, monthly wage and personal data will be disclosed, according to the draft. However, the declaration will also cover non-pecuniary interests, obliging officials to declare their position and function in associations and any other nonprofit organisations in which they are involved. FEBRUARY 2011
left on December 20. Mr Chan and Ms Tou’s decisions were due to “personal reasons”, the commission said. Both have returned to their original positions at the Public Prosecutions Office. To replace them, Kuan Kun Hong has been appointed deputy commissioner, as well as head of the anti-corruption segment of the commission, to be restructured this year. He was previously an advisor to the commission and is an experienced crime-fighter, with expertise in tracking down money laundering operations. Mr Chan and Ms Tou’s departure announcement was widely criticised for being made public two weeks after the fact. Former Legislative Assembly president Susana Chou said the delay raised questions about the government’s transparency policies. Legislator Au Kam San has also requested a further explanation of the issue. CCAC commissioner Vasco Fong Man Chong dismissed the criticism, saying the announcement had been delayed until there was a replacement ready, and that the commission was focused on ensuring the departures would not affect its operations. Chief Executive Fernando Chui Sai On said personnel changes were normal. He added the government would “relentlessly” support efforts to wipe out corruption.
41
FEBRUARY 2011
Photo: LuĂs Almoster | mspagency.org
42
FEBRUARY 2011
43
CHINESE NEW YEAR
SPECIAL FEBRUARY 2011
44
Chinese New Year Special
Holiday payday Casinos and restaurants are set to cash in over the Lunar New Year holiday but the effects of a tourist influx are not spread evenly BY LUCIANA LEITÃO
I
n the West, Christmas is the season to spend as much as you can. In Macau, can the same be said of the Lunar New Year holidays? It seems profiting from the Lunar New Year festivities depends on the nature of the business. Vittorio Acconci, the owner of Italian restaurant Pizzeria Toscana says business will be very good. “Many shops and restaurants close during those three days because they would have to triple the salary of the staff during the holidays but we’re open,” he says. Usually Toscana caters to residents but during Lunar New Year Mr Acconci
FEBRUARY 2011
expects to welcome people from Hong Kong, as well as Japan. “And more locals will choose to go to the restaurant, instead of staying at home,” he says. Iuri Volcato, the general manager of Fogo Samba, a Brazilian restaurant, believes it will be a very busy time. “The restaurant is usually packed. Seventy percent are Asians and 30 percent are Westerners,” Mr Volcato says. Compared to a typical working day, the clientele is different. “Our customers are 60 percent Westerners and 40 percent Asians,” he says. “From what I have understood from living here, Chinese save their money to spend during Chinese New Year with
their family, and they love extravagance during this season.” To attract more diners, Fogo Samba is preparing a seafood promotion.
Wine and rabbits
Annaliza Cheung is the co-owner of several businesses, including a restaurant called Ana, a wine shop called The Grape, a Wine Museum shop and a wine bar called Portal. Ms Cheung says it is mostly wine sales that increase. “In Chinese New Year, we have more business than during Christmas, mostly because more Chinese come here and there are more parties during this time,” she says. As early as January, she was receiving orders from the government
45
FEBRUARY 2011
46
Chinese New Year Special
for wine. She also expects her restaurant and her bar to be busier, given that there are more tourists around. Tessie Fong, co-owner of an interior decor shop, City Square, thinks Lunar New Year is a busy time for some businesses, such as supermarkets, wine and chocolate shops, but not for her store. Over the holidays her Chinese clients usually change some of their furniture and that could mean more business for her shop but it is never as busy as it is at Christmas. “It is as normal as any other time, except for special objects, such as the ones with rabbits,” Ms Fong says. Of course, there is an increase in the number of tourists that come from various parts of the world, many from the mainland. “But tourists don’t usually buy from us. We have nothing for tourists,” she says. The manager of the Dora Tam Design gift and jewellery shop, Savio Cheang, says Lunar New Year is not as profitable as Christmas. “However, Chinese New Year is also a vacation which brings a lot of tourists, and this
FEBRUARY 2011
leads to more sales than on regular days,” Mr Cheang says. “Usually we will close the Macau shop, which is more local, regular customer-oriented, but will keep the Taipa shop open during the festival, which is more targeted at tourists.”
Travelling light Cammy Wong, the sales manager of the Vista Alegre and Atlantis Crystal shop, also feels that Christmas is more profitable. “According to tradition, Chinese usually give ‘lai si’ to people which means good luck so Chinese New Year won’t help us to increase sales,” Ms Wong says. But there are more tourists in town and they do buy from her shop. “There are more people from the mainland that come to Macau to travel and they come to have a look, since the price of crystal there is much more expensive than in Hong Kong and Macau,” she says. “However, our pieces are quite heavy, so the tourists don’t buy that much. Sometimes, they buy small pieces just for souvenirs.” The casinos certainly cannot complain.
“Traditionally Chinese New Year is one of the biggest holidays of the year and represents a big spike in visitor arrivals. Consequently, this will have a positive effect on our business,” a Wynn Macau spokesperson said. A StarWorld spokesperson said the Chinese New Year holiday was “a good time for our casino and restaurant business”. None of the other gaming operators was prepared to comment on how major holidays affected their business. Last year, the casinos together raked in table gaming revenue of some MOP9 billion between February 1 and 21, a period that covered the Lunar New Year holidays. The highest table gaming revenue on any one day during that period was at least MOP900 million. Chinese New Year holidays usually also mean dearer prices, as demand surges, says economist Albano Martins. According to Mr Martins, that means inflation for that period will skyrocket, because restaurants will be more expensive, supermarket prices will be higher, apart from the sharp rise that will happen in the price of goods and services for visitors.
47
FEBRUARY 2011
48
Chinese New Year Special
Bunny bounce In this superstitious part of the world, even the most hardened investors are looking to the Chinese Zodiac for insight
C
an the zodiac influence stock performance on Hong Kong’s stock exchange? According to CLSA AsiaPacific Markets, one of the city’s leading independent brokerage and investment groups, you bet it can. Last month, the company published its light-hearted 17th CLSA Feng Shui Index report. The report takes a tongue-incheek look at what this year holds for equities, commodities, property, celebrities and the signs of the zodiac. It is wildly popular with the firm’s clients. The year of the Metal Rabbit promises plenty of luck and material gain for investors on the Hong Kong stock exchange, with many signs favouring the accumulation of indirect wealth, the colourful report says. But with a continuation of last year’s conflict between heavenly metal stem and earthly wood branch, get set for more volatility – although less than in 2010. Now, you might be wondering if this is really the truth. Well, in last year’s Golden Tiger Year, CLSA predicted the performance of the Hang Seng Index so precisely that even the brokerage says it was a little surprised. “Although past performance is no guarantee of future returns, we are confident that the Hang Seng Index will provide great opportunities for investors to buy and sell their way to profit over the months ahead,” it says.
Crystal ball gazing For the Hong Kong stock market, this month should see a slow start to the year, with the Rabbit reluctant to emerge from its hole for fear the tiger still lingers. Next month calls for patience as opposing forces test investor’s metal. As the Rabbit finds his feet, wealth will come from the West in April and prove a great month for those with stamina. May begins with one of the year’s four most auspicious dates, May 14, but CLSA expects a tumble in June, FEBRUARY 2011
providing a great buying opportunity for the savvy. Investors on the Hong Kong stock exchange may want to rethink their summer-vacation plans. The company sees markets rising sharply over July and August. Money will flow. With Autumn comes a fall, a sharp decline in September, but not for long. October marks a sustained market rally with money flowing abundantly through to the end of November. However, investors should remain focused as markets decline during December. Come January 2012, the Bunny will bounce back to close the year on a high.
Good for games So detailed is CLSA Feng Shui Index, that the company even makes some industry predictions. Sector-focused investors should pay attention to the five elements, it says. “Metal is hot, water is bubbly, fire is on fire, wood would if it could and earth is soiled.” So where to invest? It will be a great year for financials, gaming, gold, resources and transport. While gold didn’t break US$2,000 (MOP16,000) per ounce as the CLSA Feng Shui Index predicted last year, the company says it is confident the Rabbit will chase the carrot this year. It will also be a good year for oil and gas, technology, telecoms, Internet and utilities but an unexciting time for the earth-related property sector. In terms of the zodiac, this year most favours those born in the years of the Cow, the Sheep, the Dog and the Pig, while Tigers and Roosters will experience a bumpy year. CLSA’s Feng Shui Index foresees a great year for Kim Jong-un, North Korea’s well-fed heir apparent, a water dog whose birth date has been amended to make it more auspicious. This year’s most auspicious dates are May 14, August 4, November 15 and January 16, while the least auspicious are June 16, June 22, September 23 and December 15.
49
FEBRUARY 2011
50
Chinese New Year Special
Old school marketing Amidst the Lunar New Year festivities hides the potential for companies to improve brand awareness
G
one are the days when parents would wrap one pataca in red paper before handing it to their children as “lai si” on special occasions, including Lunar New Year. The combination of the red-coloured envelope representing good luck, and gold trimming representing wealth, has always been representative of good fortune. The modern lai si is fancier than ever
FEBRUARY 2011
before, with several companies making use of it to promote their own brands. As a marketing tool, it is a widespread practice among some of Macau’s biggest companies to issue branded envelopes, especially those in the banking and finance industries. They send the packages to their agents or branches for them to give out to clients. The envelope itself typically bears a Chinese calligraphy design with a New Year’s blessing message and the Chinese name of the company. There are also an increasing number of different shaped envelopes and red is no longer the only colour available, as many firms have adopted their corporate colours.
Several companies have moved to use recycled materials in the envelopes they offer to the public to make this tradition more environmentally friendly. In Hong Kong, green groups estimate up to 9,000 trees are used to make red packets at Lunar New Year. For banks, the lai si tradition also means extra work exchanging new banknotes for old, as it is almost unheard of to offer used notes in the Chinese New Year holidays. Usually, clients will flock to branches to get the new bills to put inside the lai si envelopes they will offer to family and friends. Again, printing billions of dollars of fresh currency is hardly the most environmentally friendly tradition. In Hong Kong, the government has promoted the “ying-san note” or goodas-new note, hoping to lower the cost of printing up to 400 million new notes and supporting environmental protection.
51
FEBRUARY 2011
52
Chinese New Year Special
Stylish entrance
The best events and places to be seen during the ten days of the festival to welcome in the Year of the Rabbit
A night out Mandarin Oriental
W
hy not be a tourist in your own city during the Chinese New Year festival? At the Mandarin Oriental, the Lunar Celebration Package starts from HK$3,500 (MOP3,600), including a night in a room with a view, a welcome bottle of red wine and special Chinese New Year in-room treats. Vida Rica Bar, with views of Nam Van Lake and Macau Tower, will provide festive cocktails and a Chinese New Year Special Tapas Tower for guests to enjoy, while the Mandarin Oriental Cake Shop has Chinese New Year hampers starting from HK$1,888 and a selection of traditional festive cakes to choose from. Over the New Year period, a series of festive activities will take place in the lobby, including fan calligraphy, paper silhouettes and flour doll making. Expect a traditional Chinese lion dance procession to spread good fortune throughout the hotel.
Leading tastes Sofitel Macau
T
o celebrate the Year of the Rabbit, Sofitel Macau brings a festive journey of fine dining. From February 2 to 6, Mistral restaurant will offer a Chinese seafood buffet to match the flavours of the season. Positioned on Macau’s picturesque waterfront, Sofitel Macau at Ponte 16 can also be the starting point for a walk through Macau’s charming historical quarter, since the property is within walking distance of the Ruins of St. Paul’s and A-Ma Temple.
Family time Fisherman’s Wharf
T
o welcome the Year of the Rabbit, Macau Fisherman’s Wharf will host a Dragon and Lion Dance Parade on the first day of the year, February 3 at 4 pm. The park will also organise a Lunar New Year’s bazaar in the Roman Amphitheatre, which will run until February 6. Finally, to ensure a proper blessing for its customers, Macau Fisherman’s Wharf has invited the God of Wealth to share his favours between February 3 and 5. FEBRUARY 2011
Property
FEBRUARY 2011
53 53
54
Property | Market Watch
Land rush
Foreign investment outstrips money from Macau in latest housing data as the market rolls-on to new records BY ALAN TSO
ovember was the second-best performing month in the first 11 months of last year in terms of transaction volume for Macau’s housing market. According to the latest official data, 1,818 homes were sold in November, 33.7 percent more than a year before. The real cheer for market watchers comes from another figure. The total transaction value of residential property in November was a staggering MOP7.57 billion, which is an eye-popping figure even during a boom. November’s total is
N
FEBRUARY 2011
121 percent greater than October’s, and pushes the aggregate transaction value for the first 11 months of last year to MOP40.93 billion – just a bit shy of the 2007 record figure of MOP42.06 billion. In all likelihood, the December housing sales data will show that last year smashed the 2007 record. A close look at the data reveals that November’s housing sales were mainly propped up by investor money. Foreign buyers accounted for MOP4.35 billion (57.5 percent) of the month’s home sales by value. It was the first time in more
than two years that the influence of foreign buyers outweighed local buyers in the sales figures. November’s bumper sales were partly due to homebuyers rushing to beat new mortgage regulations, which took effect in December, that cap housing loans at 70 percent of a home’s value for properties priced at MOP3.3 million or more, says Chong Sio Kin, president of the Macao General Association of Real Estate. The brisk sales also coincided with the launch in mid-November of 92
55 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 September
940 1,505
October
1,312
November
1,818
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
Record fine for developer C
onstruction of the long-unfinished building adjacent to the New Yaohan is set to resume, finally. The head of the Lands, Public Works and Transport Bureau, Jaime Carion, said last month a new construction license would be issued soon. The developer applied to the government to postpone a deadline for putting the land to use, after a lawsuit involving the company was resolved. The request was approved, Mr Carion said. However, the developer will have to pay a MOP1.8 million penalty for failing to follow the development schedule for the plot. The penalty is the highest so far issued by the bureau, Mr Carion said. The government has given an assurance that although construction stopped around a decade ago, there are no concerns about the safety of the structure.
299
February
372
March
594
April
2010
VALUE (MOP million)
980
May
1,156
June
1,627
July
2,767
August
1,730
September
3,161
October
2,130
November
2,643
December
4,057
January
3,140
February
1,995
March
2,806
April
6,180
May
4,281
June
3,319
July
2,642
August
1,889
September
3,687
October
3,421
November
7,569
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.
FEBRUARY 2011
Property | Market Watch
56
serviced apartments at the Mandarin Oriental – the first branded luxury residences in Macau. The joint venture between Shun Tak Holdings and Hongkong Land is expected to scale new heights in the top-notch residential segment by fetching an average of MOP10,000 per square foot. Apart from the strong rebound in the housing market, the past year has also seen exceptional sales of commercial property, owing to the
boom in the retail sector. According to official statistics, the price of retail premises nearly doubled last year. A total of 1,939 shops were sold for MOP4.69 billion between January and November, compared to 1,703 shops sold for MOP2.23 billion during the equivalent period of 2009. The steep price growth in commercial property is definitely another clear indicator of strong investor confidence in Macau.
Average transaction value of residential properties Value (MOP thousand) 5000 4000 3000 2000 1000 0
Sep
Oct Nov 2009
Dec
Jan
Feb
Mar
Apr
May
Jun 2010
Jul
Aug
Sep
Oct Nov
Average transaction price of residential units per square metre
More zip for ZAPE C
hina Star Entertainment has announced a HK$550-million deal with Sociedade de Turismo e Diversões de Macau (STDM) to acquire four building sites in the ZAPE area. The sites are adjacent to the Hotel Lan Kwai Fong, Macao Polytechnic Institute, Forum Macau and Golden Lotus Square. The deal is awaiting government approval but China Star intends to build office and apartment buildings on the sites. The buildings will be surrounded at street level by an area of restaurants, bars, nightclubs and art galleries in order to lure people to the Hotel Lan Kwai Fong neighbourhood. Stanley Ho Hung Sun, until last month STDM’s biggest shareholder (see more on CEO Interview) is chairman and director of the holding company that owns the hotel, Lan Kwai Fong, Macau, and China Star has a 50-percent stake. The four sites were granted to STDM by the Portuguese administration but the company did not develop them within the agreed deadlines. The government has in turn pushed back the development deadline for 36 months. It ends on April 14, 2013.
Value (MOP)
3500 3000 2500 2000 1500 1000 500 0
Q3
Q4
Q1
2007
Q2
Q3
Q4
Q1
2008
Total number of buyers in residential transactions in the first 11 months of 2010:
22,124
Q2
Q3
Q4
Q1
2009
Q2 2010
Q3
Proportion of buyers
10% 90%
Non-Residents
Residents
More land auctions on the way
T
Proportion of buyers
Total value of residential transactions in the first 11 months of 2010:
MOP
40,929,000,000 FEBRUARY 2011
25% 75%
Non-Residents
Residents
he Macau government says it will put more land plots up for auction later this year. Secretary for Transport and Public Works, Lau Si Io, said last month that more land plots will be auctioned during 2011. The government announced last year that a 3,400 square-metre land parcel in Fai Chi Kei would be auctioned in the second half of December but the process has been delayed.
Property | Market Watch Notable residential property rentals - 16/12, 2010 to 15/01, 2011
57
Source: Centaline & Midland
District
Building/Street
Unit
Macau
L’Arc
H/F, unit C
3,557
40,000
11.25
Macau
One Central Macau Residences
Block 2, M/F, unit A
2,299
30,000
13.05
Floor area (sq. ft)
Rent price (HK$)
Price per sq.ft. (HK$)
Macau
Vista Magnifica Court
M/F, unit D
2,800
28,000
10.00
Macau
L’Arc
H/F, unit J
2,803
26,000
9.28
Macau
Vista Magnifica Court
L/F, unit H
2,500
22,800
9.12
Macau
L’Arc
H/F, unit K
2,261
22,000
9.73
Macau
L’Arc
H/F, unit K
2,261
22,000
9.73
Macau
Vista Magnifica Court
M/F, unit D
2,500
22,000
8.80 8.00
Macau
Vista Magnifica Court
M/F, unit E
2,500
20,000
Taipa
Nova City
L/F, unit D
2,505
18,000
7.19
Macau
La Oceania
M/F, unit A
1,451
16,000
11.03
Taipa
Supreme Flower City
H/F, unit E
2,060
15,000
7.28
Taipa
Nova City
M/F, unit B
1,983
14,500
7.31
Taipa
Nova City
Block 11, M/F, unit C (with car park)
1,975
13,000
6.58
Taipa
Supreme Flower City
M/F, unit F
2,060
12,500
6.07
Macau
Wan Yu Villas
M/F, unit H
1,183
12,000
10.14
Taipa
Nova City
H/F, unit C
1,343
12,000
8.94
Taipa
Treasure Garden
L/F, unit J
1,406
12,000
8.53
Taipa
Nova City
Block 13, H/F, unit D
1,561
12,000
7.69
Taipa
Prince Flower City
Block 2, M/F, unit F
1,685
11,300
6.71
Macau
Wan Yu Villas
L/F, unit AH
1,290
11,000
8.53
Macau
Edf. Va Iong
M/F, unit A
1,550
11,000
7.10
Macau
Edf. Va Iong
L/F, unit E
1,680
11,000
6.55
Macau
The Praia
Block 3, H/F, unit N (with car park)
1,558
10,500
6.74
Macau
The Residencia Macau
Block 5, H/F, unit C
1,207
10,000
8.29
Taipa
Nova City
Block 13, M/F, unit A
1,734
10,000
5.77
Taipa
Nova City
Block 6, M/F, unit F (with car park)
1,339
9,678
7.23
Taipa
Nova City
Block 13, H/F, unit F
1,326
9,500
7.16
Macau
The Praia
Block 1, L/F, unit C
1,558
9,500
6.10
Taipa
Nova City
Block 6, L/F, unit E
1,318
9,193
6.97
Macau
La Baie du Noble
Block 3, M/F, unit N
1,570
9,000
5.73
Macau
The Bayview
Block 1, L/F, unit E
1,603
9,000
5.61
Taipa
Edf. Nova Taipa Garden
Block 25, L/F, unit A (with car park)
2,167
9,000
4.15
Taipa
Nova City
Block 6, M/F, unit F (with car park)
1,339
8,860
6.62
Taipa
Nova City
Block 6, M/F, unit F (with car park)
1,339
8,830
6.59
Macau
The Praia
Block 4, H/F, unit U (with car park)
1,046
8,800
8.41
Taipa
Nova City
Block 6, L/F, unit F (with car park)
1,340
8,630
6.44
Taipa
Treasure Garden
M/F, unit L
1,197
8,500
7.10
Macau
The Residencia Macau
Block 4, M/F, unit D
1,209
8,500
7.03
Macau
The Residencia Macau
Block 5, L/F, unit D
1,222
8,500
6.96
Taipa
The Pacifica Garden
M/F, unit C
1,226
8,500
6.93
Macau
The Praia
Block 4, M/F, unit AA
1,234
8,500
6.89
Taipa
Edf. Chun Hung Garden
Foe Iun, M/F, unit H
1,433
8,500
5.93
Taipa
The Greenville
Block 2, L/F, unit M
1,453
8,500
5.85
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Notable commercial property rentals - 16/12, 2010 to 15/01, 2011
Source: Centaline
Type
Property
Unit
Floor area (sq. ft)
Rent price (HK$)
Price per sq.ft. (HK$)
Shop
Rua de S. Paulo
Shop
1,134
120,000
105.82
Shop
Avenida de João IV
Shop
639
80,000
125.20
Shop
Pátio de Fernão Mendes Pinto
Shop
2,718
75,000
27.59
Office
Macau Finance Centre
M/F, unit N
1,008
8,500
8.43
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
FEBRUARY 2011
58
Property | Market Watch
Notable residential property transactions - 16/12, 2010 to 15/01, 2011 Unit
Source: Centaline & Midland
Floor area (sq. ft) Sale price (HK$) Price per sq.ft. (HK$)
District
Building/Street
Macau
The Residences & Apartments at Mandarin Oriental
M/F, unit F
3,133
24,569,850
7,842
Macau
L’Arc
M/F, unit H
3,571
18,926,000
5,300
Taipa
One Grantai
Block 3, M/F, unit K
2,320
16,240,000
7,000
Macau
L’Arc
H/F, unit J
2,803
15,417,000
5,500
Taipa
One Grantai
M/F, unit J
2,019
14,133,000
7,000
Taipa
Jardins do Oceano
Rose Court, L/F, unit B (with car park)
3,707
14,000,000
3,777
Taipa
Jardins do Oceano
Rose Court, L/F, unit B (with car park)
3,707
14,000,000
3,777
Macau
The Residences & Apartments at Mandarin Oriental
H/F, unit C
1,483
13,765,000
9,282
Taipa
One Grantai
Block 3, M/F, unit J
2,019
13,729,200
6,800
Taipa
One Grantai
Block 3, M/F, unit J
2,019
13,729,000
6,800
Taipa
One Grantai
M/F, unit J
2,019
13,325,000
6,600
Taipa
Pearl On The Lough
M/F, unit B
2,839
12,800,000
4,509
Macau
L’Arc
M/F, unit D
2,411
12,055,000
5,000
Macau
L’Arc
H/F, unit D
2,411
12,055,000
5,000
Taipa
One Grantai
M/F, unit J
2,019
11,912,000
5,900
Taipa
One Grantai
L/F, unit U
2,165
11,908,000
5,500
Macau
L’Arc
H/F, unit F
2,261
11,531,000
5,100
Taipa
Jardins do Oceano
Cypress Court, M/F, unit B
3,153
11,500,000
3,647
Taipa
One Grantai
L/F, unit V
2,158
11,222,000
5,200
Macau
The Residences & Apartments at Mandarin Oriental
H/F, unit C
1,017
11,085,000
10,900
Taipa
Pearl On The Lough
Block 1, L/F, unit B (with car park)
2,839
11,000,000
3,875
Macau
The Residences & Apartments at Mandarin Oriental
H/F, unit H
971
10,080,000
10,381
Macau
L’Arc
M/F, unit A
2,261
10,000,000
4,423
Taipa
One Grantai
Block 3, L/F, unit N
2,283
9,931,050
4,350
Taipa
Jardins do Oceano
Begonia Court, H/F, unit D
2,637
9,800,000
3,716
Macau
The Residencia Macau
Block 3, L/F, unit B
1,767
9,584,000
5,424
Macau
One Central Macau Residences
Block 7, M/F, unit F
1,301
9,041,950
6,950
Macau
The Residencia Macau
Block 3, L/F, unit B
1,767
8,880,000
5,025
Taipa
Nova City
H/F, unit D
2,505
8,768,000
3,500
Macau
One Central
H/F, unit A
1,269
8,629,000
6,800
Taipa
Nova City
Block 7, M/F, unit D
2,503
8,500,000
3,396
Macau
One Central
M/F, unit H
1,178
8,482,000
7,200
Taipa
Jardins do Oceano
Begonia Court, M/F, unit C
2,637
8,320,000
3,155
Macau
One Central Macau Residences
Block 7, L/F, unit A
1,269
8,249,000
6,500
Taipa
Nova City
L/F, unit A
2,505
8,200,000
3,273
Macau
One Central Macau Residences
Block 7, M/F, unit H
1,178
8,128,000
6,900
Macau
One Central Macau Residences
Block 7, M/F, unit G
1,178
8,000,000
6,791
Taipa
Pearl On The Lough
M/F, unit E
2,055
8,000,000
3,893
Macau
One Central Macau Residences
Block 7, L/F, unit G
1,178
7,890,000
6,698
Taipa
Pearl On The Lough
M/F, unit A
2,055
7,809,000
3,800 3,796
Taipa
Pearl On The Lough
M/F, unit H
2,055
7,800,000
Taipa
Nova City
Block 7, L/F, unit A
2,505
7,800,000
3,114
Macau
Edf. Tai Keng Yuen
L/F, unit R
2,545
7,800,000
3,065
Macau
Wan Yu Villas
M/F, unit P
2,103
7,571,000
3,600
Macau
The Residences & Apartments at Mandarin Oriental
H/F, unit C
695
7,106,000
10,224
Macau
The Bayview
Block 3, H/F, unit C (with car park)
7,100,000
4,488
1,582
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Notable commercial property transactions - 16/12, 2010 to 15/01, 2011
Source: Centaline
Type
Building/Street
Unit
Shop
Avenida Horta e Costa
Shop
2,400
22,000,000
9,167
Shop
Rua de Sacadura Cabral
Shop
1,484
6,600,000
4,447
Shop
Rua Cinco de Outubro
Shop
1,530
6,500,000
4,248
Shop
Rua da Barca
Shop
1,250
6,000,000
4,800
Shop
Avenida Conselheiro Ferreira de Almeida
Shop
662
5,280,000
7,976
Shop
Rua de João de Araújo
Shop
-
3,500,000
-
Shop
Avenida Conselheiro Ferreira de Almeida
Shop
367
3,400,000
9,264
Shop
Rua de S. José
Shop
900
2,700,000
3,000
Floor area (sq. ft) Sale price (HK$) Price per sq.ft. (HK$)
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
FEBRUARY 2011
59 MICHAEL SPENCE PROFESSOR OF ECONOMICS AT THE STERN SCHOOL OF BUSINESS, NEW YORK UNIVERSITY
Five steps forward in 2011 NONE OF THESE STEPS ARE EASY. THEY WILL TAKE TIME. BUT, TAKEN TOGETHER, THEY WOULD HELP REDUCE UNCERTAINTY AND RESTORE A PATTERN OF STABILITY AND INCLUSIVE GROWTH TO THE GLOBAL ECONOMY he worst of the financial/economic crisis seems to be over. Asset markets performed reasonably well in 2010. Growth in the United States and parts of Europe returned. Private sector de-leveraging continued, but was counter-balanced by rising public sector deficits and debt. And emerging market growth returned to pre-crisis levels and appears to be sustainable, helped by unorthodox policies designed to “sterilize” massive capital inflows. But continued high growth in emerging markets depends on avoiding a second major downturn in the advanced economies, which continue to absorb a large (though declining) share of their exports. Slow growth is manageable. Negative growth is not. Thus, for the emerging economies, advanced countries downside risks and the spillover effects of their recovery policies are the key areas of concern. In several advanced countries, including the United States, growth and employment prospects are starting to diverge widely, endangering social cohesion and economic openness. This situation is largely the result of predictable post-crisis economic dynamics, as firms and households in advanced countries repair their balance sheets. But it also reflects noncooperative policy choices. Indeed, attempts to coordinate economic policy across the G-20, which accounts for 85 percent of global GDP, fell short of what was hoped for in 2010. So what would a coordinated set of global economic policies look like?
T
Credibility needed
First, it would include credible plans in Europe and the United States to restore fiscal balance. In Europe, that means agreeing on burden-sharing for re-capitalizing countries where deficits and debt have cut off market access or led to prohibitively high borrowing costs. Restructuring damages the euro, and fiscal consolidation in the distressed countries, while necessary, is probably not sufficient. That leaves Europe’s stronger countries, particularly Germany, with the residual liability. Greater fiscal centralisation and political unification seem inevitable, but it may take time to muddle through to that outcome. In the United States, the main challenge is to restore fiscal balance without damaging the recovery and future growth. Getting the balance correct is complicated by the fact that the right fears the left will use fiscal stimulus as a path to permanently larger government, a path that the right (and apparently the general public) is unwilling to follow. The second item on the agenda is a pullback from quantitative easing in the United States, which is subjecting the emerging economies to a flood of capital, rising commodity prices, inflation, and asset bubbles. Intervention may be needed in fragile sectors of the United States economy, like housing, where faltering performance could produce another downturn. But such intervention can and must be far more precisely targeted than QE2. America’s reluctance to target areas of weakness or fragility leaves the impression externally that QE2’s real goal is to weaken the dollar. Beyond that, it is unclear whether or how QE2 will produce much growth. Its proponents argue that it is the main policy instrument left, and that it will work by increasing credit or lowering the discount rate, which will raise asset prices and
hence consumption via balance-sheet effects. But do we really want to see the United States leveraged up to its ears again? Probably not. On the balance-sheet side, even if a temporary decline in long-term interest rates pushes up asset values, debt-burdened households with uncertain employment prospects are unlikely to rush to consume. After all, the wealth effect works only when people believe that the wealth is permanent.
It’s time to spend, China
Third, advanced and emerging economies that are running chronic surpluses must get rid of them. The policies needed to do so vary by country and involve structural shifts. In the case of China, a key part of its 12th five-year plan is to shift income to the household sector, where the savings rate is high but still lower than the corporate rate. The economy can then use household savings (with appropriate financial intermediation) to finance corporate and government investment, rather than the United States government. That structural shift, in combination with the renminbi’s strengthening effective real exchange rate relative to the dollar, owing to inflation and rapidly rising wages in export sectors, offers hope that China’s surplus will fall. The fourth item concerns the fact that the global economy will be out of balance so long as the United States runs large current-account deficits. With the post-crisis resetting of domestic consumption and savings, United States aggregate demand will remain depressed. In the longer run, that gap needs to be filled by higher foreign demand and increased export potential. The United States tradable sector is growing. Its major subsectors – increasingly, high value-added (per person employed) services – are highly competitive and growing. But they are not big enough to fill the gap. Imports could fall, as they did during the crisis, but that was due to declining demand, not to a shift in demand in favour of domestic producers. The tradable sector accounts for just 30 percent of the United States economy (by value added), and employment growth in the tradable sector is negligible. If employment growth in the non-tradable sector – dominated by government and health care – falters, the tradable sector will have to take up the slack. The problem is that it can’t, even with a depreciating currency. If exports are to grow substantially, the scope of the tradable sector must expand. Fifth, and finally, major holders of reserves must agree to deploy them in a way aimed at maintaining global financial stability and preventing excessively volatile exchange-rate and capital movements. With periodic bouts of contagion in the eurozone and residual uncertainty about America’s commitment to a strong dollar and fiscal discipline, major reserve holders in Asia and the Gulf need to become a stabilizing counterweight. None of these steps are easy. They will take time. But, taken together, they would help reduce uncertainty and restore a pattern of stability and inclusive growth to the global economy, thereby bolstering its continued openness. In avoiding second- or third-best outcomes and policy accidents, international economic policy coordination, though difficult, has a vital role to play. FEBRUARY 2011
60
FEBRUARY 2011
CEO Interview
61
BUSINESSWOMAN AND LEGISLATOR ANGELA LEONG ON KEI TALKS ABOUT HER NEW JOB AS MANAGING DIRECTOR OF SJM AND HER VIEWS ON THE FUTURE OF THE WORLD’S GAMING CAPITAL BY ALAN TSO PHOTOS BY CARMO CORREIA
an industry still dominated by men, Angela Leong On Kei is a rarity. The new managing director of Sociedade de Jogos de Macau (SJM), the licensed gaming subsidiary of Stanley Ho Hung Sun’s SJM Holdings, is one of the gaming sector’s rising stars. Mr Ho happens to be her husband. “I sat on the board of SJM as a director before,” she told Macau Business in an exclusive interview.
“The fact that he appointed me to the post of managing director implies that he believes in my dedication to the company and my ability to make it stronger. It also reflects the board of directors’ trust in me.” Ms Leong, who is also the acting chairman of Mr Ho’s Macau Jockey Club, admits that there is a learning curve in her new position but she vows to improve the gaming operator’s competitiveness and promote a level playing field in Macau’s gaming industry. She would not comment on whether
her new appointment, which came on the heels of the transfer of 7 percent of Mr Ho’s stake in SJM Holdings to her, gives some hint of her husband’s succession plan. He has largely retired from public life since his long spell in hospital beginning in 2009. But Ms Leong did say his health was improving and remarked that he is a man who always plans ahead [Interview done before it was announced Mr Ho’s stake in STDM had been transferred to members of his family – see box]. For now, it is unclear what the impact of her appointment on
“IN THE FUTURE, I HOPE EVERY GAMING CONCESSIONAIRE CAN HAVE A PRESENCE ON COTAI, WHICH IS THE NEW CENTRE OF ACTIVITIES. THIS WILL ENSURE FAIR COMPETITION IN THE INDUSTRY” FEBRUARY 2011
62
CEO Interview
the gaming operator’s day-to-day management will be. Since Mr Ho went into hospital, SJM Holdings chief executive, Ambrose So Shu Fai, has been widely regarded as the casino concessionaire’s main helmsman. At any rate, Ms Leong is no stranger to the business world. Long before she was put in charge of Macau’s biggest gaming operator, the 50-yearold made her own investment forays. Her ventures include L’Arc, a five-star hotel casino that opened in Macau in 2009, real estate in Hong Kong and an ambitious plan to build the first theme park in Cotai. Macau Theme Park and Resort Ltd, headed by Ms Leong, wants to build a MOP10.4 billion (US$1.3 billion) family-oriented amusement park.
Filling a gap The park will sit on 200,000 square metres adjacent to the Macau Dome and be developed in three phases over a decade. It will feature one five-star, four four-star and one three-star hotels with more than 6,000 rooms, shopping malls, convention facilities, an indoor beach and wave pool, amusement rides, a 4-D theatre, an equestrian centre, a horse carriage trail as well as a water sports performance centre. There is no casino in the plan. “With this integrated project, we
“LEGAL REFORM IS LAGGING FAR BEHIND THE PACE OF ECONOMIC AND SOCIAL DEVELOPMENTS. THIS HAS HINDERED MACAU’S GROWTH TO A CERTAIN EXTENT” want to play a part in Macau’s drive to diversify its economy,” says Ms Leong. “The theme park will fill a gap in the local tourist industry, which currently does not have similar offerings and will promote leisure travel in Macau. We also hope that it will help make visitors stay longer in Macau. “When the park opens its doors, it will add about 9,000 jobs to the market.” She confi rms reports that SJM Holdings is talking with Macau Theme Park and Resort Ltd to see if the two companies can cooperate in Cotai but will not elaborate. The plan
is still waiting for the government’s green light. SJM Holdings announced it applied for a 70,000-square-metre site next to the Macau Dome, near where Ms Leong’s theme park will be built. Earlier, the SJM Holdings chief executive told reporters that his company was trying to find a way to integrate the two resorts to achieve synergy.
Straddling two worlds Ms Leong reaffirms SJM’s interest in parcels seven and eight in Cotai, saying that “it is the right time to develop the sites” to take Macau’s development to the next stage. Sands China applied for the two plots of land but the government rejected its application in December. A similar “no” was handed out to a request from SJM. “In the future, I hope every gaming concessionaire can have a presence on Cotai, which is the new centre of activities. This will ensure fair competition in the industry,” says Ms Leong. At present, of the six local gaming concessionaires, only Sands China, Melco Crown Entertainment and Galaxy Entertainment Group have facilities on Cotai. Ms Leong straddles the worlds of business and politics, as she is also a
Step up and dance A
ngela Leong On Kei was born into a humble family in Guangzhou, and it was dancing that changed her life. At the age of 13, she was already a dancer in the Guangzhou Song and Dance Ensemble, after her father died of cancer. Later she moved to Macau to teach dancing. At one stage, it was one of four jobs she held down. But it was through dancing that she met her husband, Stanley Ho Hung Sun, at a private ball in 1986. Before entering the Legislative Assembly and before her appointment to lead Sociedade de Jogos de Macau, the mother of three sons and two daughters was known to the world mainly as the fourth wife of Mr Ho. Nevertheless, her years spent at the side of the casino mogul have sharpened her potential, she says. “I have learnt many things from him over the years. He is like a great teacher to me.” Ms Leong says she sleeps an average of only four hours a day because of her heavy schedule. FEBRUARY 2011
63
FEBRUARY 2011
64
CEO Interview
member of the Legislative Assembly. Asked if there are any conflicts between her roles as managing director of a gaming operator and as a legislator, she shrugs off the question by assuring that she is dedicated to each of her positions. She points out that when she is wearing her managing director’s hat, she tries her best to promote the growth of the company and contribute to the development of Macau’s tourism industry as a whole. On the other hand, Ms Leong says she works for the wellbeing of ordinary folks and fights for better social welfare in her capacity as a legislator. “I don’t see any conflict there. I just do what is required of me in each of my different roles,” she says.
Learning from Singapore Wearing her legislator’s hat, Ms Leong says Macau’s biggest problem is that many of its laws are obsolete. “Legal reform is lagging far behind the pace of economic and social developments. This has hindered Macau’s growth to a certain extent.” Regulations for the gaming industry
“WHEN THE SOCIAL CONDITIONS ARE RIPE AND WHEN THE MACAU PEOPLE HAVE REACHED A CONSENSUS ON THE ISSUE, DIRECT ELECTIONS ARE POSSIBLE AS LONG AS THE BASIC LAW IS UPHELD” and urban planning especially need urgent review, she says. Ms Leong also wants more help for low-income families, as well as the middle class, whose budgets are being squeezed by rising prices. As the government is expecting a handsome surplus due to booming casino revenue, she believes the authorities can afford to offer better social welfare and
BLOODLINE BRAWL S
tanley Ho Hung Sun’s lawyers have accused part of his family of having seized his stake in STDM, the parent company of SJM Holdings, without his consent. Mr Ho was ready to take legal action against his family members his lawyer Gordon Oldham, the senior partner of Oldham, Li and Nie, told South China Morning Post late last month. When Macau Business went to print, there was a lot of contradictory information on this matter. Eventually, in a interview with TVB, Mr Ho confirmed he had approved the share transfer and that he had sacked Mr Oldman. The latest revelation from Mr Ho’s fractious family comes as he has embarked on divesting his wealth, estimated at more than US$3 billion (MOP24 billion) by Forbes, among his wives and children. On January 24, SJM Holdings announced Mr Ho had transferred his 31.7 percent stake in STDM to Action Winner Holdings Ltd and Ranillo Investments Ltd. The transfer was done through Lanceford Co., a company that has been a vehicle for Mr Ho’s dealings. Mr Ho handed out 49.5 percent of Lanceford to Ranillo and FEBRUARY 2011
improve people’s quality of life. She says Macau can learn how to solve some of its social problems from Singapore. “I recently made a study trip to Singapore as part of a delegation led by Chief Executive Fernando Chui Sai On. I think the Singaporean government has done a great job in providing affordable housing and retirement security to its people. We can definitely learn from their experience, since Macau and Singapore are quite similar,” she says. Commenting on the Chui administration, which has been in office for a little over one year, Ms Leong says she is happy with the government’s performance so far, adding that Mr Chui has brought a new approach to governance. Contemplating Macau’s political future, the two-term legislator believes the region may see the direct election of the chief executive one day. “When the social conditions are ripe and when the Macau people have reached a consensus on the issue, direct elections are possible as long as the Basic Law is upheld,” she says, echoing the opinion of many members of the local elite.
50.5 percent to Action Winner, according to the Post. Action Winner is 100 percent owned by Mr Ho’s third wife, Ina Chan Un-chan, while Ranillo is owned by Mr Ho’s five children to his second wife, Lucina Laam: Pansy, Daisy, Maisy, Josie and Lawrence. A statement from Lanceford, which is now controlled by Mr Ho’s relatives, said all the transactions “were approved or authorised in writing” by Mr Ho. Mr Oldham said that “obviously he signed something but it wasn’t explained what the effect of that would be. Certainly he would never sign what this purports to be.” STDM owns a 55.7 percent interest in SJM Holdings. In a filing to the Hong Kong Stock Exchange, SJM Holdings said the company remained of the view that the change in Lanceford’s shareholding structure had “no significant effect on the overall ownership” of the gaming operator and that “there will be no material change in management”. SJM Holdings also confirmed that it was aware that Mr Ho disputed the Lanceford arrangement and that he was “seeking a means by which such matters can be resolved”.
65
FEBRUARY 2011
66
Gaming | Billions race
Data déjà vu Record revenue results for the city’s casinos appear ready to repeat this year t is a new year and there are new records to be set by the city’s casinos – and 2011 has got off to a smashing start, analysts say. So strong is demand that estimates indicated that January was set to be another record-breaking month. By January 20, the casinos had taken in MOP12.9 billion (US$1.61 billion) in gross gaming revenue from table gaming alone, sources told Macau Business. At that rate, last month should have set a new record of MOP19.5 billion for casino gross gaming revenue, the sources estimated. [Editor’s note: owing to the Lunar New Year holidays, the February issue of Macau Business went to print before official figures for January were available.] The bar was last raised in December last year, when casino gross gaming revenue amounted to MOP18.88 billion. January also brought shifts in the
I
FEBRUARY 2011
market shares of gaming operators. As of January 20, Stanley Ho Hung Sun’s Sociedade de Jogos de Macau continued to lead the rankings, with a market share of 33 percent, but Sands China, with 18 percent, had regained the second spot from Wynn Macau, down to 14 percent. Slightly behind, Melco Crown Entertainment remained in fourth position, with a market share of just less than 14 percent. Galaxy Entertainment Group had got off the ground floor, with 12 percent of the market, changing places with MGM Macau, with 10 percent.
Gravy train There is wide agreement from analysts that there will be a new record for annual casino revenue set this year. Last year, revenue was MOP188.34 billion, 57.8 percent more than in 2009, the previous record.
The new rail link between Zhuhai and Guangzhou will help further boost gaming revenue, says Citigroup. The investment bank expects the reduction in the rail journey to 90 minutes from four hours, will increase the number of daytrippers from the mainland. Citigroup predicts a 20 percent increase in the number of visitors from the mainland this year, and a 25 percent increase in gross gaming revenue. CLSA is more bullish, having already revised its early-January projections for the growth of the gaming industry this year. A note to clients by Hong Kong-based analysts Aaron Fischer and Ng Huei Suen forecasts a rise of 30 percent in annual casino gross gaming revenue. CLSA had previously forecast a 20 percent rise. For next year, CLSA estimates that casino gross gaming revenue will increase by 25 percent to US$38 billion, Bloomberg reported. “Improvements in the macro environment, as well as China’s tourism push, should result in higher average spending and hence revenues,” the note says. JP Morgan estimates that strong demand may boost gaming revenue by as much as 29 percent this year.
67
Gaming Results: Gross Revenue
In Million MOP (1HKD:1.03MOP)
20,000 19,000
17,075
18,000 16,000 14,000
14,186
13,937
13,445
13,569
Jan 2010
Feb 2010
Mar 2010
19,500*
18,883
18,869 17,354
16,310
15,773
15,302
Aug 2010
Sep 2010
13,642
12,000 10,000 8,000 6,000 4,000 2,000 0
Apr 2010
May 2010
Jun 2010
Jul 2010
Oct 2010
Nov 2010
Dec 2010
Jan 2011 *Estimate
Gaming Results: Market Share Per Operator 2010
2011
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan*
SJM
30%
32%
34%
34%
32%
30%
32%
29%
30%
32%
31%
30%
33%
Sands China
22%
20%
20%
21%
19%
22%
19%
20%
20%
19%
15%
17%
18%
Galaxy
10%
11%
11%
11%
11%
10%
12%
13%
12%
10%
10%
10%
12%
Wynn
13%
15%
13%
14%
16%
17%
15%
14%
12%
14%
17%
17%
14%
MPEL
16%
14%
13%
13%
14%
13%
15%
17%
17%
14%
15%
15%
14%
MGM
9%
9%
8%
7%
7%
8%
7%
8%
10%
11%
11%
12%
10%
TOTAL
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
40
SJM
Sands China
Galaxy
Wynn
MPEL
MGM
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
Jan 2011*
* As of January 20
(Figures are rounded to the nearest unit, therefore they may not add exactly to the rounded total)
VIP baccarat seated at head of table
V
IP baccarat generated gross revenue of MOP135.65 billion (US$16.96 billion) last year, accounting for 72 percent of the Macau casino sector’s overall revenue. Revenue from VIP baccarat increased by 69.91 percent last year, according to official data from the Gaming Inspection and Coordination Bureau. This means VIP baccarat grew faster than the overall market. Gross gaming revenue increased by 57.78 percent last year. Mass-market baccarat was the second most popular casino game, generating revenue of MOP34.92 billion, 36.94 percent more than the year before. Slot machines had the third step on the podium, with MOP8.62 billion in revenue, a jump of 32.52 percent. Slots
accounted for 4.58 percent of overall casino gross gaming revenue. The casino sector generated 99.34 percent of total gross gaming revenue, which includes receipts from betting on greyhound racing, horse racing and other sports, and from the Chinese lottery and instant lottery (for more on these, see the report later in this section). By the end of December, Macau had 4,791 gaming tables, 47 fewer than at the end of September. It also had 14,050 slot machines, fewer than the 14,316 it had three months before. Last year was the first year since 2004 in which no new casinos opened their doors. Wynn Encore was not counted as a new casino by the government, as it and Wynn Macau are regarded as a single property. FEBRUARY 2011
68
Gaming | Billions Race
Gross revenue from different gaming activities 4Q 2010
3Q 2010
2Q 2010
55,398 55,106 40,472 9,698 2,407 947 627 265 222 57 64 43 38 38 21 24 88 7 1 n/a 0.4 n/a 98 72 92 29 2 0.0005
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 0.0006
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
1Q 2010
4Q 2009
3Q 2009
2Q 2009
1Q 2009
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
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
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%
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%
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
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 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
16.1% 16.3% 18.9% 9.2% 7.6% 7.1% 18.8% 3.9% 44.2% 9.6% 23.1% -17.3% 0.0% 15.2% 5.0% 4.3% 158.8% -12.5% 0.0% n/a 0.0 n/a - 8.4% -15.3% - 31.3% 163.6% 100.0% -16.7%
Source: Gaming Inspection and Coordination Bureau FEBRUARY 2011
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% - 40.0%
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%
Gaming | Stock Gaming Watch
69
The moneymakers
Wynn Macau was the property posting the highest gross gaming revenue for 2010 ynn Macau casino was the biggest single generator of gross gaming revenues in the city in 2010. Wynn Macau’s casino take was MOP28 billion (US$3.5 billion), sources told Macau Business. Wynn was the best property throughout last year, a lead strengthened with Encore coming online at the start of the sec-
W
ond quarter. Local regulators consider it an extension of the Wynn Macau casino. The Venetian Macao sat in second place with MOP20 billion in revenue, while MGM Macau ranked third, with MOP16.8 billion. Note that the number of gaming tables and slot machines differs from property to property.
NÂş
Property
1 2 3 4 5 6 7 8 9 10
Wynn Macau Venetian Macao MGM Macau StarWorld City of Dreams Grand Lisboa Sands Macao Altira Lisboa Legend
FEBRUARY 2011
Revenue (MOP) 28 billions 20 billions 16.8 billions 16.6 billions 16.5 billions 16 billions 11.5 billions 10.7 billions 10.2 billions 6 billions
Photos: LuĂs Almoster | mspagency.org
70
Gaming
FEBRUARY 2011
71
SPORTING CHANCE
It was an unforgettable year for non-casino gaming companies, with record revenues and profits headed to the coffers of the Ho empire BY SOFIA JESUS
he sky may well be the limit for Macau’s casino industry but the casinos were not the only game in town last year. Government statistics show almost all kinds of non-casino gaming registering increases in their revenue last year. The difference in revenues between the casinos and outside them is, of course, astronomical. Casino gross gaming revenue surpassed MOP188 billion (US$23.5 billion) last year, growing more than 50 percent. Noncasino gaming revenue was only MOP1.24 billion, but nonetheless almost 23 percent more than in 2009.
T
FEBRUARY 2011
72
Gaming
There is a considerable difference in the way the two arms of the gaming industry are taxed. While casino operators must pay taxes amounting to 39 percent of their gross gaming revenue, the tax paid by non-casino gaming companies depends on their revenue, the highest rate being around 25 percent. Non-casino gaming in Macau encompasses betting on greyhound races, horse races and other sports, plus the Chinese lottery and the instant lottery. In each case the operator has a monopoly and in each case the operator is part of Stanley Ho Hung Sun’s business universe. Although non-casino gaming is not nearly as fiscally lucrative as casinos, FEBRUARY 2011
the government is still interested in supporting it, if only for the sake of tourism. “The Macau government wants to give more choices to visitors, so we also want to keep the non-casino facilities,” Gaming Inspection and Coordination Bureau deputy director Anthony Leong Man Ion told Macau Business. He says greyhound racing, for instance, attracts many mainlanders. The director of the University of Macau’s Institute for the Study of Commercial Gaming, Davis Fong Ka Chio, agrees. “Greyhound racing [in Macau] is quite unique in Asia,” said Mr Fong. What started out as a local sport, relying on local gamblers, has benefited from
the tourism boom of the last few years, he says. Greyhound racing at the Macau Canidrome generated gross revenue of MOP340 million last year, 4 percent more than the year before, according to government figures. Horse racing organised by the Macau Jockey Club generated gross revenue of MOP439 million last year, an increase of 31.83 percent. However, last year’s total was less than the MOP636 million generated in 2005. Mr Leong says that in the past most Macau Jockey Club punters lived in Hong Kong but several years ago the government there prohibited Hong Kong
73 residents from placing bets on Macau horses over the telephone, which reduced revenue. Revenue recovered when Macau residents were allowed to bet on Hong Kong horses through the Macau Jockey Club. Mr Fong believes an investment in marketing may explain some of last year’s surge in gaming revenue from both greyhound racing and horse racing. What about breaking the racing monopolies? It is “not easy”, says Mr Leong. He says the costs would be too great for new entrants because they would need land and trainers for the animals.
New pressures
“The Macau government wants to give more choices to visitors, so we also want to keep the non-casino facilities,” Gaming Inspection and Coordination Bureau deputy director Anthony Leong Man Ion says
Revenue from betting on other sports has also surged. Revenue from betting on football jumped by 36.2 percent to MOP380 million last year, probably because of the World Cup. Revenue from betting on basketball increased by 14.49 percent to MOP79 million. At present Macau Slot has the only sports betting concession but the gaming bureau deputy director thinks this may eventually change. “Maybe in the future sport could be liberalised, maybe have one more operator,” he says. But the government still needs to study this, he emphasises, adding that there is no schedule and that “nothing is confirmed”. Mr Leong says the government may eventually consider allowing sports betting in casinos. This could “solve some social problems” because there are a few betting centres in residential areas now. But, again, he stresses that nothing has been decided. He just happens to think it might be “a good idea”. Mr Fong believes Macau Slot already faces competition from underground betting in the mainland, and points out that more and more Asian countries permit betting on football. The central government would like to ease restrictions in Hainan on betting on football, he says, and this might “put some pressure on Macau”. Several of the non-casino gaming companies are also licensed to allow internet betting. Mr Fong can give no exact numbers but he says research by his institute indicates that Internet betting is increasing. Among the reasons for this are that the Internet allows people to go abroad and yet still gamble, and it allows them
to use other people’s accounts. A minor, for example, can use a parent’s or an older friend’s account to gamble. Mr Leong points out that gambling on the Internet is subject to approval by the authorities, as is telephone betting. What most worries the government, Mr Leong says, is online casino gambling. So far, Macau has issued no online casino licences. However, if a company’s servers are abroad, the authorities have no control over it. Mr Leong argues that Macau would need comprehensive regulations to monitor the Internet gambling business and time to study it before the government decided to issue any online casino licences (for more on online casinos in Macau read “Virtual vacuum” further ahead in this section).
Traditional pursuits As for the Chinese lottery, better known as Pa Ka Pio, revenue last year was steady at MOP6 million. The only kind of non-casino gaming that saw a drop last year – albeit a slight one – was the instant lottery. It took in less than MOP1 million. The instant lottery will keep going, Mr Fong says. “But it is not very significant, maybe because there are many other options to bet on.” Mr Leong says that this market could be liberalised but that, yet again, nothing has been decided. There is a third kind of lottery, which seems to be popular among locals even though it is illegal to sell tickets in Macau: Hong Kong’s Mark Six. Mr Fong’s data says 40 percent of Macau residents have bet on the Mark Six at least once in the past year. “It’s kind of a tradition,” he says. Mr Leong says the gaming bureau sometimes works with the police in cracking down on it but overall he believes selling Mark Six tickets is a “small business”. Although it is casino gaming that fills the government’s coffers, non-casino gaming seems to be here to stay, and the government welcomes it. As Mr Leong says, casino gaming carries a social price: problem gamblers. Currently the “problem is not serious” but he says the government needs to do something to help solve it. Macau Business contacted the Macau Jockey Club, the Macau Canidrome and Macau Slot but none of the organisations would comment. FEBRUARY 2011
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Gaming | Stock Watch
Run on
Predictions for another strong year for casinos mean investors might want to stay at the table a little longer BY RAY CHAN
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Wynn Macau Ltd. Hang Seng Index
US casino stocks performance vs S&P 500 Index (Base=US$10) 40 35 30 25 20 15 10
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5 0
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Las Vegas Sands Corp. Penn National Gaming Inc.
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Wynn Resorts Ltd. Melco Crown Entertainment-ADR
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fter the surge in gambling stocks last year, investors are wondering if they can expect another sustained improvement this year. Industry insiders and investment analysts anticipate the rally could reach as far as a 60 percent gain for this year. Macau-related stocks outperformed the Hang Seng Index by 118 percent last year, driven by 58 percent gaming revenue growth last year. The 2011 stellar performance is attributed to two main drivers: earnings and plans to expand. Over the past three years, gaming revenue in December and January has risen steadily, underpinned by the Chinese New Year holidays. The stock rally last month excluding the Spring Festival was about 30 percent, calculated by a simple average across the five listed casino stocks. Investors continued to underpin the gaming stocks by buying those equities, with the conviction that gaming revenue would drive earnings even further in the medium term. January’s performance may not be an indicator of the full year forecast but it is equally important for positive market sentiment. The near-term momentum will most benefit Galaxy Entertainment Group (0027.HK), SJM Holdings (0880.
A
Macau casino stocks performance vs Hang Seng Index (Base=HK$10)
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MGM Resorts International S&P 500 Index
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The 2011 stellar performance is attributed to earnings and plans to expand HK) and the laggard Melco International Development (0200.HK) thanks to the opening of a new integrated resort, a chance at another land concession and cheap valuations, respectively. Galaxy’s recent share price performance might demonstrate that investors have already priced in the opening of the Galaxy Macau resort. The development in Cotai is set to open early this year. SJM was updated to a buy rating from outperform with a new share-price estimate of HK$18.40 by CLSA Asia-Pacific Markets. A possible land concession in Cotai may drive another positive surprise for
investors. The company is still waiting for the government’s answer on its application for two plots there. On the downside, Stanley Ho Hung Sun’s recent accusations that his family allegedly seized his stake in the parent company of SJM Holdings without his consent, as reported by South China Morning Post quoting Mr Ho’s lawyer, may impact on the stock’s performance if legal action goes ahead. Melco, which has historically lagged behind, is up nearly 40 percent year-todate. American investment bank Morgan Stanley says it expects Melco Crown Entertainment to beat consensus expectations due to inexpensive valuations and betterthan-expected fourth quarter 2010 EBITDA. Melco is one of Melco Crown’s controlling shareholders.
14-day Relative Strength Index 90 80 70 60 50 40 30 20 10 0
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Galaxy Entertainment Group Ltd.
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Sands China Ltd.
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Wynn Macau Ltd. 90 80 70 60 50 40 30 20 10 0 Jan 2010
As of January 21
as Vegas Sands is the world’s largest listed company in the gaming industry, according to a ranking compiled by British-based Global Betting & Gaming Consultants. Las Vegas Sands’ market capitalisation of US$25.5 billion (MOP204 billion) points toward a “remarkable turnaround” for the company, said Warwick Bartlett of Global Betting & Gaming Consultants. Its local subsidiary, Sands China, took third ranking on the list (US$16.7 billion), after Genting Singapore (US$19.1 billion). There are two other local concessionaires in the top five: Wynn Macau (US$12.4 billion) in fourth and SJM Holdings (US$9.0 billion) in fifth. Inside the top 10 was eighth ranked Wynn Resorts (US$5.2 billion) and Australia’s Crown Limited (US$5.0 billion) in 10th. Crown is one of the two controlling shareholders of Macau concessionaire Melco Crown Entertainment. The significance of the Asian market is demonstrated by the fact that 15 companies based in Asia are now included in the top 50. There were just 10 in the same survey in 2008. “Five of the top 10 ranking spots are now taken by Asian companies, up from one in 2008. Their inclusion in the index is also aided by their increased visibility and more data available on their performance,” the report said. The ranking is based on market capitalisation adjusted for the percentage of gambling revenues. It includes both land-based and online operators.
SJM Holdings Ltd.
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Neutral FEBRUARY 2011
Oversold
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Gaming
Final countdown Galaxy Macau is gearing up for its opening night – whenever that may be – with plenty of big promises to live up to BY EMANUEL GRAÇA
alaxy Macau, Galaxy Entertainment Group’s new flagship property in Cotai, is speeding up preparation to open its doors, although officially the company continues only to say it will open in “early 2011”. “There is still no concrete date we can possibly reveal at this moment,” Raymond Yap, senior vice-president for international premium market development told Macau Business. “We are still sticking to our promise that it will be early 2011.” Besides Galaxy Macau, parcels five and six from Sands China are the only two other gaming properties currently under development. Last August, Sands delayed the opening of the first phase to the fourth quarter of this year. Then in November, it said “until adequate labour quotas are received, the timing of the completion of phases I and II [parcels five and six in Cotai] is currently not determinable with certainty.” It is likely Galaxy Macau will be the only property to debut this year, which can only further increase the property’s potential. Mr Yap admits Galaxy Entertainment has a “bullish outlook” for the resort but he doesn’t disclose estimates. Mr Yap says the company is now completing the last touch-ups and cleaning up the site. “Fit out is almost completed and we are marching into the inspection stage,” he says. “Very soon, we are going to announce the definitive opening day.” In advance of the launch, the company is in talks with junkets to operate VIP rooms. Negotiations are “running smoothly,” says Mr Yap, without elaborating. However, he confirms the company will also be targeting premium direct business at the property.
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Staff training is also wrapping up with the resort needing close to 8,000 workers to operate at full speed. For now, the company can import up to 2,000 workers, with the condition it hires at least 4,000 Macau employees in return. “We hope to have enough manpower,” says Mr Yap. “The Macau labour market is certainly quite tight but we will fully follow the government guidelines in providing a lot of job opportunities to the locals.”
Rooms and restaurants Sitting adjacent to the Venetian Macao, the property will include the 1,500-room Galaxy Hotel, a 500-room Hotel Okura Macau and Banyan Tree Macau, which will offer 246 suites and 10 floating villas. The resort will also feature about 50 restaurants and food stalls. Adding to that, there will be 10 bars and nightclubs and more than 30 boutiques and stores. With an investment of HK$14.9 billion, the 550,000-square-meter Galaxy Macau includes a resort deck with a 350-ton, white-sand beach and what is dubbed the world’s biggest rooftop wave pool. In the beginning, the pool will be for stay-in guests only. On the gaming side, the casino will have “probably 500 tables” and “about 1,500 slots,” says Mr Yap. Galaxy Entertainment expects the resort to be fully functioning from the opening day but Mr Yap admits there will be some “phasing”, especially in hotel rooms, although all three hotels will open at the same time. “In any large integrated resort with this size, no one will say that we will completely 100 percent open the facility.
Photos: Carmo Correia
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“Fit out is almost completed and we are marching into the inspection stage,” Raymond Yap says. “Very soon, we are going to announce the definitive opening day” FEBRUARY 2011
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Gaming
But you will not feel we are not completely open,” he says. “In the hotels, there is no reason to open all the 2,200 rooms on day one because you need to have the demand for the additional supply to the market. But all the essential facilities that we want to show to the public and that are important to our visitors, for our stay-in guests will be made available.” The property will also include “some” meeting and convention facilities but not on a large scale. “We will be able to cater to all type of functions,” says Mr Yap. “In future development phases, we might be thinking of about expanding into building more MICE facilities.” It is important to remember that FEBRUARY 2011
“We hope to anchor on the food; food as being an integrated part of the Asian traveller experience. Food will be the anchor that we will aggressively market on”
Galaxy Macau only occupies one third of the plot that it sits in. The company is currently drafting future development stages for the rest of the land.
Asian flavours Galaxy Macau’s marketing strategy is anchored by the slogan “World Class, Asian Heart”. World class is a reference to the hardware, the hotel operators’ credentials and Galaxy Entertainment itself as a gaming operator. As for Asian heart, it is supposed to represent the goal of Asian hospitality, according to Asian tastes, sensibilities and design influences. “We are very Asian centric,” Mr Yap says. While not enjoying a first-mover
79 advantage like the Venetian Macao or a strong entertainment offering like City of Dreams with The House of Dancing Water, Galaxy Macau says it has its own wild card. “We have more than 50 food and beverage outlets of which more than half are very much Asian cuisine. We hope to anchor on the food; food as being an integrated part of the Asian traveller experience. Food will be the anchor that we will aggressively market on.” The property’s amenities are aimed squarely at middle to upper class Chinese. “It has to be the key focus in an integrated resort of such a scale. This resort will obviously very much be a mass market driven property,” says Mr Yap. He adds he is confident that there is enough demand for a huge property such as Galaxy in Cotai, which is already home to the two biggest properties in town. “We obviously have done a very detailed study of the market. We certainly will not fall into the trap of over-building, over-supplying.”
Critical mass With Galaxy Macau, Galaxy Entertainment will extend its footprint in Cotai to two properties. The company also operates the casino at the Grand Waldo (but doesn’t own the property, as stressed by Mr Yap), the first resort to open in Cotai, in September 2006, but which has so far lacked eye-catching results. Mr Yap says Grand Waldo’s problem was the lack of critical mass in Cotai four years ago. There was simply not enough to attract people away from the peninsula. As more properties open and the gaming zone matures, he is predicting a “spill-over effect among all properties” in Cotai. It is an impact Sands China is unfazed by. Sands boss Sheldon Adelson said last month that Galaxy Macau’s opening would not have a big impact on Cotai since the company had been there for the past four years with the Grand Waldo and it could not be considered a success. He also added that Galaxy was not a good operator, as most of the company’s gaming operations were in the hands of third parties (see report in this section). Mr Yap did not comment in the criticisms. “Every company has its own business model,” says Mr Yap. “We have a very successful business model, which we are proud of.”
Big green machine G
alaxy Entertainment Group says it wants Galaxy Macau to be the most environmentally friendly resort in the territory. The company has created a special programme, “Galaxy Green”, to promote operational sustainability and environmental conservation. It encompasses all aspects of the property’s operations, featuring more than 100 measures to minimise energy and water consumption, reduce waste and to promote recycling. Initiatives include full insulation along the exterior of the building, to reduce heat transmission and the need for excessive air conditioning. A green design was used across the property’s resort deck, including lush landscaping, gardens and water features to also reduce overall heat load. The resort uses LED lighting in entertainment areas and fluorescent tubes in back-of-house areas. As for its huge swimming pool, Galaxy Macau has installed a filter system to recycle the water in use. Any wastewater will be used for irrigation and car park cleaning, according to the company. The group’s deputy chairman, Francis Lui, said Galaxy was employing “international best practices and innovative ideas” to create a green resort. FEBRUARY 2011
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Gaming
Pass the parcels Sands China wants someone else to develop parcels seven and eight but is still pursuing legal proceedings to get its hands on them BY EMANUEL GRAÇA
ands China would like someone else to develop parcels seven and eight in Cotai, company chairman Sheldon Adelson said. The gaming operator has not yet abandoned its efforts in the courts to reverse the government’s refusal to grant it the two plots of land. “The legal proceedings are still ongoing. There is no information that the case will be dropped,” a Sands China spokesperson told Macau Business. The government announced its refusal to grant Sands China the land in December. Sands took its case to court early last month. There have been reports that the government’s new plans for parcels seven and eight do not include casinos. Instead, Chief Executive Fernando Chui Sai On and his team are eyeing projects related to economic diversification. “If somebody else builds on seven and eight, I will be happy. Happier than if I were going to build on it,” Mr Adelson said last month at the Bank of America Merrill Lynch Global Gaming
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Conference in Las Vegas. “I don’t care who develops seven and eight.”
Critical mass According to Mr Adelson’s timetable, it will take Sands “a year and a half or so” to complete work on parcels five and
six. Afterwards, the company will start developing parcel three, which could take “about three years”. “By the time I get to seven and eight, I think it is too close to the end of the exploration of our gaming concession,” Mr Adelson said. “There is not enough time to build it and take a benefit out of it.” However, he stressed that he expects the government to extend Sands’ gaming concession. “If somebody builds it today, it is going to help to create more critical mass immediately. And I don’t want to build seven and eight today. The design that we have is not the right design for that property.” As for the progress of construction on parcels five and six, Mr Adelson said the economy and finance secretary, Francis Tam Pak Yuen, had assured him at a recent meeting that Sands would get the labour it needs to finish the job. Mr Adelson said his company would absorb about 3,300 resident workers that will be released by the Galaxy Macau project between January and February as the property gears up for its opening.
No threat Commenting on the eventual impact Galaxy Macau might make on the gaming landscape, Mr Adelson predicted a bleak future, saying Galaxy had been in Cotai for the past four years with the Grand Waldo and it could not be considered a success. “I am not that excited about them contributing so much to the growth of Cotai because they are not themselves
Global Goldstein
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as Vegas Sands promoted Rob Goldstein to president of global gaming operations last month. He will have overall responsibility for the company’s gaming operations in the United States, Macau and Singapore. Las Vegas Sands is the parent company of Sands China. Mr Goldstein joined Las Vegas Sands in 1995 and was previously its executive vice-president and president of the Venetian and Palazzo resorts in Las Vegas. “Rob is one of the gaming industry’s most knowledgeable executives and we have been privileged to have him with us for so many years. This new role will allow him to focus solely on this important segment of our business and, in turn, make our industry-leading gaming operations even more formidable,” said Las Vegas Sands chairman Sheldon Adelson. Mr Goldstein said the company faced “unprecedented” opportunities. “The company’s geographic advantages, especially our positioning in Asia, combined with the quality of our assets, gives Las Vegas Sands the chance to do something very special over the next couple of years,” he said.
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Multiplication tables
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aking the best of both worlds, Sands China has found a way to increase the number of players per table by making use of technology. The company’s biggest casino, the Venetian Macao unveiled what was described as Macau’s biggest electronic table games stadium last month. The facility is a mixture of real tables and electronic games. The stadium has three roulette tables, operated by fleshand-blood croupiers, each connected to 50 touch-screen electronic stations for players. Officially, the stadium is licensed to have three gaming tables. Combining real croupiers with electronic stations means “players can enjoy the benefits of electronic games’ rapid speed together with the smiley faces of their familiar lucky dealers,” the company says. The Venetian will promote the new system during the Lunar New Year holidays. Its sister property in Singapore, Marina Bay Sands, already has a similar stadium. Meanwhile, Sands China announced last month that the
good operators,” he said, adding that most of Galaxy’s gaming operations were in the hands of third parties. Mr Adelson said Sands China would not actively chase more direct VIP business and would focus instead
first phase of a comprehensive refurbishment of the Plaza casino, at the Four Seasons property, has been completed. Phase two is scheduled to be completed by the third quarter of 2011. In addition to refreshing and upgrading food and beverage options, service personnel have undergone two months of intensive training, the company said.
on improving its relationships with VIP operators, in contrast to the approach of Steve Jacobs when he was Sands China’s chief executive. A probable sign of this shift in strategy was the company’s invitation
to junket operator Charles Heung to attend the launching of the Venetian Macao electronic table games stadium (see report on these pages). “The junket representatives own Macau,” said Mr Adelson.
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Gaming
Photo: Renato Marques
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Greener gaming The casino industry is taking steps to arrest, then reduce waste and its enormous carbon footprint asinos in Macau say they are reducing their electricity and water consumption levels, as well as increasing recycling. The move brings three benefits: good public relations, a better environment and sounder bottom lines. The issue was the main topic of January’s Delta Inter Chamber Event, which included a conference devoted to “Building Green” and a networking session (see Entertainment section in this edition). The event was organised by the regional publication Delta Bridges, Macau Business and event production house Work In Progress Productions. Melco Crown Entertainment is one of the city’s gaming operators to go green. In the second half of last year, the company’s City of Dreams complex reduced electricity consumption by 5.82 million kWh year-on-year, according to engineering services manager Gerald Cheung. It is a saving of 4,889 tons of carbon dioxide equivalent emissions from burning fuel. About 212,600 trees would have been needed to absorb the same volume of emissions, he said. In the same period, the City of Dreams complex saved a total of 300,000 cubic metres of water. That is roughly equivalent to four cups of coffee for every Macau resident or enough to fill 120 Olympic-sized swimming pools. City of Dreams is intensifying its efforts this year, looking to reduce over-
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all electricity and water consumption by a further 2 percent. The company will replace light bulbs with energy saving lamps in the casino, Crown Towers and Hard Rock Hotel. The initial outlay is substantial but one that Melco Crown hopes will pay for itself in electricity savings within 18 months.
Recycling limits Sands China is also aware of its environmental responsibilities, according to Michael Naylor, executive director of facilities at the Venetian Macao. The group is implementing awareness and training programmes and using more energy efficient lighting, Mr Naylor said. The changes have resulted in a 9 percent decrease in electricity consumption at the Venetian in less than two and a half years, even as the number of rooms and size of the retailing area has increased. The company is also looking at using alternative energies, although on a small scale. Sands China is also recycling solid waste, even if, as Mr Naylor said, the ability to recycle in Macau is limited by the lack of supporting infrastructure. “In Las Vegas, we send food waste to a pig farm. In Macau, that is not possible,” he said. If further gains are to be made, Mr Naylor said monitoring is essential, and this is part of the reasoning behind Sands China’s parent company Las Ve-
gas Sands linking each of its properties worldwide to improve monitoring and to share best practices. “There were some lessons learned over these years. We are trying to implement some on parcels 5 and 6 [on Cotai] and then on parcel 3. As we move forward, some technologies that were very expensive when we built Sands Macao and the Venetian are becoming more accessible,” he said.
Positive competition Meanwhile, Galaxy Entertainment Group is aiming to have green practices in place for the opening of its Galaxy Macau resort in Cotai this year (see report in this edition). John Walker, the vice-president for property services and engineering, nongaming, has been intimately involved in Galaxy Macau’s construction. He said the company was currently drafting environmental practices for the property so unnecessary waste would be avoided from day one. Mr Walker said that since his arrival in Macau from Australia in 2006 there has been an increasing interest in more sustainable practices among casinos, a turn of events he calls a “positive competition”. He said that the gaming industry worked around the clock and this poses an additional challenge that will require continual improvement.
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Beating the odds
uestion: What can be more exciting that betting on roulette? Answer: Betting on two roulette tables at the same time, says AutoGaming. The company is gearing up to unveil its newest multi-station automatic roulette solution, called Super Odds. Macau will host the game’s world debut in early March, according to the company’s chief executive, Tony Lynch. The game has two roulette wheels, operated automatically – one green and one red. Using an electronic terminal, players can play each game alternatively with the press of the button. The real game, along with the odds, kicks in when you select the Super Odds mode. Once there, the player can only bet on numbers, either through simple bets, split betting or corner bets. Outside bets are not allowed. Mr Lynch told Macau Business the betting process is simple once the Super Odds mode is engaged. “What players are doing is betting that the ball finishes up in the same pocket on both wheels, which gives them a 1000/1 odds. So, if they bet HK$1,000 (MOP1,030), providing the casino decides that is the level they wanted to go to, the player could win HK$1 million in one round.” In the same play, the punter can simultaneously place individual bets on each roulette wheel and also in the Super Odds mode. It’s not surprising that the house wins the most. The theoretical house edge on roulette in Macau is 2.7 percent but with Super Odds the value can be substantially raised. Including bonus features to increase the attractiveness of play, Mr Lynch estimates the house edge – averaging all bets in different modes – will increase to five percent. The machine features an “in-line” layout that allows for better use of floor space. The machine also ups the speed of play normally allowed by live roulette: one game each about every 60 seconds.
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AutoGaming is gearing up for the global debut of its new Super Odds roulette game
Photos: Carmo Correia
Refreshed vision
Tony Lynch
Mr Lynch patented Super Odds about 10 years ago but has only recently started developing the machine. Super Odds is currently going through final technical approvals by the Macau office of Gaming Laboratories International, an independent laboratory that tests gaming FEBRUARY 2011
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MACHINE MAN T
ony Lynch opted for a second life in the gaming industry after coming out of retirement. “I have been in the gaming industry all my life, since I was 19. I manufactured machines and I had a group of companies,” he said.
equipment and recommends approval for regulatory agencies. “We assemble everything here in Macau. What we do is to design everything in Wales and contract it out in diverse countries,” says Mr Lynch. “I like to think we can label it as ‘made in Macau’.” AutoGaming is currently in negotiations with operators and expects to sign deals soon. The company is also looking at taking Super Odds to other Asian markets. A licence has been applied for in the Philippines. “Later this year, we will progress into Singapore,” Mr Lynch said. Surprisingly, he is not eyeing the United States market where “the application for a license is a very extensive and expensive” process. Super Odds is the upgrade of RaceFEBRUARY 2011
“I sold off over the years. I sold my last company and retired. After two years in retirement, I got fed up and decided to make machines again.” AutoGaming was born about seven years ago. The initial goal was to provide multi-station automatic roulette solutions for native Indian casinos in California. Around 2006, changes in the regulatory environment saw the company turn its efforts to Macau.
“We assemble everything here in Macau. What we do is to design everything in Wales and contract it out in diverse countries,” says Tony Lynch. “I like to think we can label it as ‘made in Macau’”
Track Roulette, another multi-station automatic roulette game. According to Mr Lynch, the machine is currently in use at Grand Lisboa, City of Dreams and Wynn Macau, among other casinos. “It has been in Grand Lisboa and it has been one of the best machines there for four years. It has a track record of taking very good profits and the return on investment is extremely high. I think this new game [Super Odds] will take that to new levels.” AutoGaming is also readying new products. “We are designing a new game, which is a dice machine, which won’t be available until the end of the year,” says Mr Lynch. “The multiplayer has been good for the last 18 years. I think it is growing in use in Asia and also in Macau.”
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“In the long run, I believe that electronic games will add more excitement to the casino floors,” Ken Jolly says “Looking at the media and analysts, they are all talking very positively [about Macau’s gaming market in 2011]. We are talking about a growth of between 30 to 40 percent.” Shuffle Master is not only aiming for organic growth but also plans to capitalise on the government’s gaming table cap. Mr Jolly expects the restrictions will have the casinos seeking out products that maximise speed of play and that seat more players at a table. To attract customers, Shuffle Master is providing face-lifts for its products, mainly electronic table games. “Also, we have revamped the graphics on the screens. Before it was all digital and now we are putting in a video dealer,” says Mr Jolly.
Going electronic
Ken Jolly
Next big deal
With every indication the gaming market will continue expanding, Shuffle Master is getting down to work and tapping new growth in electronic games BY ALEXANDRA LAGES
aming equipment maker Shuffle Master is expecting growth on the gaming floor will translate into the spread of electronic gaming tables and hybrid solutions that combine a dealer and live game with an electronic betting interface.
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The opening of Galaxy Macau in Cotai will be one of the biggest drivers of the trend. “In Macau, we have started to see customers showing more interest in it. We believe that during 2011 we will be rolling more of that out,” says the company’s vice-president for Asia Ken Jolly.
The company introduced its rapid table game products in Singapore last year, which combine an electronic betting interface with a live dealer. He describes the launch as “very successful”. It is a different scenario in Macau where live gaming tables are on the top of gamblers’ preferences. However, Mr Jolly says times are changing. “I believe that over time the acceptance in the market will grow, as the market gets more mature,” he says. “As the market establishes itself more, people will look more at electronic games and become more comfortable with these products. In the long run, I believe that electronic games will add more excitement to the casino floors.” Players in Singapore are far more open to electronic gaming – where they represent one-third of the market – partly because gamblers from Indochina, Malaysia and Singapore have been exposed to the concept, he says. Last year, Shuffle Master’s revenue topped a company record of US$201.3 million (MOP1.61 billion), a year-onyear increase of about 12 percent, from US$179.4 million the year before. Net income increased to US$23.1 million compared to US$15.0 million in 2009. FEBRUARY 2011
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Virtual vacuum
Macau government still has no plans to allow local companies to establish a foothold in the booming business of online gambling BY LUCIANA LEITÃO
fter becoming the world’s No 1 gambling destination, many are looking at the potential to make Macau a leading home to online casinos. The issue, however, does not top the government’s agenda. According to the Gaming Inspection and Coordination Bureau’s legal adviser, Duarte Chagas, it is incorrect to suggest that online casinos are forbidden, however the law does not allow bricks-and-mortar casinos the option to operate online. The Gaming Industry Regulatory Framework law rules that the concessions for online gaming are independent from land-based ones. “It is a legal limitation for the current concessionaries and sub-concessionaries that are already operating [land-based] casinos, but it is not absolutely forbidden for other concessionaries that want to explore online games,”
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says Mr Chagas, who will speak on the issue at the next iGaming Asia Congress and Expo, to take place in Macau in early March (see box). The problem is that the government has never spelt out the licensing details for online casinos.
Lacking will Mr Chagas believes “it is fair to say that it is not a priority for the government” especially “when there are still more important things” to do in regards to the current gambling landscape here. That does not mean online casinos are not already operating in Macau or, at least making use of the territory’s fame as a gaming destination – even if that is illegal. “Firstly, there is the abusive use of brands or names of casino concessionaires through fraudulent sites, whose
The Asian perspective on Europe T
his year’s iGaming Asia Congress & Expo at the Grand Hyatt Macau from March 1 to 3 has a new insight on the gaming industry, according to organisers Beacon Events. The company’s general manager, Rosalind Wade, said the focus on European opportunities from an Asian perspective will be unique. “It’s always been about Western companies coming to Asia to see the opportunities here. But a lot of Asian companies are now operating in Europe,” says Ms Wade. “It will be a two-way exchange of information; Europe from an Asian point of view but also looking at the different Asian jurisdictions and getting people that are working for land-based [casinos] to talk about these countries.” According to Ms Wade, this year more manufacturers are expected to attend the conference, with the majority of attendants again coming from Asia. FEBRUARY 2011
The topic for the conference’s first day, March 2, is “Asian markets in focus – bridging the gap between East and West” with debates covering regulatory issues, experts analysing the opportunities in Europe for Asian bookmakers, and the key challenges for foreign operators launching in Asia. The first day’s programme also includes updates on the mainland, Taiwan, the Philippines, Australia, Korea, Japan and India. The second day’s programme focuses on different platforms and gambling options. There are also panel discussions planned for the topic: “Sports betting and casino games – bridging the gap between landbased and online”. “The focus is on social gaming, looking at how to create social games and how different the social platforms are in Asia. But also looking at where land-based meets online,” Ms Wade says.
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servers and all the logistic operations are located outside the Macau SAR,” Mr Chagas says. A second type of situation arises in which the hardware and logistic operations for an online casino are located in the territory and it is operating without a license. The government’s policing of online gaming “falls into the general plan for combating illegal gaming,” he says. The founder of the World Mahjong Tour and former online consultant for the World Poker Tour, Pierre Wuu, sees many pluses in online gambling. “For many European-centric gaming companies, they see the biggest growth opportunity in this region,” he says. “The mainland has the largest po-
“It is a legal limitation for the current concessionaries and sub-concessionaries that are already operating [land-based] casinos, but it is not absolutely forbidden for other concessionaries that want to explore online games,” DICJ’s legal adviser Duarte Chagas says
tential followed by South Korea, Japan, Taiwan, Hong Kong and Singapore.” The obstacle is the lack of regulation. “We are seeing positive movement in the United States, and Europe has led the way in regulating their online gaming markets. I see Asia eventually following, especially with added tax revenue as a result of it,” he says. In regards to the future of gambling in Macau, Mr Wuu believes “ideally there will be a regulated online component”. “Fifteen years ago, no one could have predicted what has happened to Macau and in another 15 years the online landscape for gaming in China will be nothing like it is today.” FEBRUARY 2011
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Exporting expertise A Macau company helps put the biggest gaming project in the Philippines on its feet BY MAX V. DE LEON IN MANILA
sia Pacific Gaming, a Macau gaming consultancy and management services company, will co-manage what is to become the biggest gaming facility in the Philippines, set to open in the fourth quarter. Asia Pacific Gaming’s head, Ciaran Carruthers, will be the casino’s general manager of the US$1 billion (MOP8 billion) resort-cum-entertainment complex being established by the SM Group of Filipino mall magnate Henry Sy, developer of high-end properties Belle Corp and gaming operator Leisure and Resorts World Corp. The casino and hotel complex is now under construction in the 800-hectare Bagong Nayong Pilipino Manila Entertainment City, more popularly known as Pagcor City because it is the flagship project of the Philippine Amusement
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and Gaming Corp, or Pagcor. The developers hope it will rival Macau and other gaming destinations in East Asia in its appeal to junkets and high-end players. Belle and SM are paying for the hotel and casino structure, while Leisure and Resorts World will fit it out with the gaming equipment and slot machines, with the help of Asia Pacific Gaming. About US$300 million has already been spent on developing the property. Another US$350 million has been budgeted for the next three years for the first phase of the hotel and casino. The developers are committed to investing a total of US$1 billion to complete the project.
Voice of experience “It’s the biggest of its kind in the Philippines. It’s a huge project and we are very
delighted to be a part of it,” Mr Carruthers told Macau Business in Manila after witnessing the signing of a deal appointing AB Leisure Global, a whollyowned subsidiary of Leisure and Resorts World, to operate and manage the casino. The management deal is for 10 years and may be extended. Mr Carruthers declined to give details of Asia Pacific Gaming’s role in the project, saying he is leaving it up to the managements of Belle and Leisure and Resorts World to issue statements to the media. He did mention, however, that Asia Pacific Gaming will provide consultancy and management services. “We’ve had this experience and we are bringing some of that expertise here,” he said. Leisure and Resorts World’s vicepresident, Renato Nuñez, said the deal
89 with Asia Pacific Gaming to co-manage the casino was scheduled to be signed late January, after Macau Business went to press. He said the overall deal among SM, Belle and Leisure and Resorts World needed to be closed first before Leisure and Resorts World could strike the co-management deal with Asia Pacific Gaming. This is because it is Leisure and Resorts World that will hire Asia Pacific Gaming for the job.
Rock rolls into town T
All good chums “We will manage the casino together. Asia Pacific Gaming – through its principal, Mr Carruthers, who was instrumental in the success of Galaxy in Macau – is helping us in the design of the casino floors, will help us in choosing the combination of slot machines and in bringing in the foreign clients,” Mr Nuñez said. “Mr Carruthers will be appointed general manager of the casino. He will be based, most of the time, here.” He said Asia Pacific Gaming had been helping with the design of the casino since October. Leisure and Resorts World, through its subsidiary First Cagayan Leisure, first engaged the services of Mr Carruthers in 2001 to help establish the gaming regulation regime in the Cagayan Special Economic Zone, a free port area in the northern Philippines. Mr Nuñez said Leisure and Resorts World had been aware of the expertise of Mr Carruthers in Australia’s gaming scene, so the company had hired him to make sure the zone would have world-class gaming regulations. Mr Nunez said the work Mr Carruthers had done on that project had been instrumental in making Asia Pacific Gaming famous and had allowed it to be noticed by gaming investors in Macau. “So we already have developed a good working relationship,” he said. The deal that Leisure and Resorts World Corp was scheduled to sign with Asia Pacific Gaming provides for the Macau company to be paid up to 4 percent of Leisure and Resorts World’s net profit, or 1 percent of its gross. Leisure and Resorts World expects up to US$46 million in net earnings from the casino operations in the first year.
Mixing and matching The vice-chairman of Belle, Willy Ocier, said it expected to have fewer than 100 special VIP suites ready in the casino
“It’s a huge project and we are very delighted to be a part of it,” Ciaran Carruthers says when it opened later this year. The casino will have 15,000 to 20,000 square meters of gaming space, with about 1,600 slot machines and 320 tables, making it the biggest of its kind in the Philippines. “Our casino will be focusing on the Asian market. We are not aiming for the local market, which is already being serviced by Pagcor casinos,” Mr Ocier said. Mr Nunez said the aim was for 80 percent of customers to be foreigners and 20 percent Filipinos. He said there would be charter flights with limousine services from the airport for the high rollers. “The forte of Leisure and Resorts World Corp is the local market, so Asia Pacific Gaming will help us bring in the foreign clients. Asia Pacific Gaming’s current market is the Chinese Macau junkets. We are relying on Asia Pacific Gaming to bring in the Chinese players,” Mr Nunez said. Mr Nunez said the facility is targeted for a soft opening in the latter part of 2011, with the grand opening scheduled in the first quarter of 2012. At least three more groups are planning to put up integrated entertainment facilities in Pagcor City. These are Aruze Corp of Japan, Genting Group of Malaysia with Philippine firm Alliance Global, and ICTSI, from the Philippines.
he developers of Manila’s biggest gaming facility are now shopping around for international brand names to adorn the walls of the hotel and casino complex that will rise in Bagong Nayong Pilipino Manila Entertainment City, or Pagcor City. One brand name under consideration is Hard Rock Hotel. Leisure and Resorts World Corp is one of three Philippine companies investing in the project, and its vice-president, Renato Nunez, said negotiations were in progress with the management of Hard Rock for the use of its name in branding the casino or one of the hotel towers. Hard Rock was previously a candidate to manage the casino operations. “We are still talking with them about a branding arrangement for the casino and hotel. Nothing is fi nal yet. We can also probably use Hard Rock in naming one of our six hotel towers,” Mr Nunez said. Leisure and Resorts World has also had talks with Caesars Entertainment Corp, formerly Harrah’s Entertainment, and Planet Hollywood about branding and the operation of the hotel and casino. The talks with Caesars became bogged down because it wanted the developers to invest US$500 million in the casino immediately. The developers believe that the project should proceed more gradually, with an initial investment in the casino and hotel of only US$350 million over three years. Talks with Planet Hollywood stopped after it was acquired by Caesars. “We are still shopping around for an international brand to help us attract foreign tourists,” said Willy Ocier, vice-chairman of Belle Corp, another of the Philippine MVL companies involved.
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Thailand’s amazing dithering Thailand may have its own casinos in five years – or it may never have any. The love of tourists and Thais alike for gambling is a good reason to legalise casinos and just as a good a reason why not to legalise them BY MUHAMMAD COHEN IN BANGKOK
o country in Asia offers as many sound reasons for the legalisation of casino gambling as Thailand. But the very arguments in favour of legalisation also make a strong case against it. Casino legalisation proposals have been a hardy perennial of Thailand’s vision of the future for decades. In the late 1980s, there were reportedly plans to turn the Ambassador Hotel in Pattaya, a beach retreat not far from Bangkok, into a casino-resort with up to 3,000 rooms. A 1992 coup scuttled those plans. In 2003, former Prime Minister Thaksin Shinawatra proposed casino legalisation and commissioned feasibility studies. But a 2006 coup deposed Mr Thaksin, leaving Thais divided to the point of deadlock, on politics in general and casino legalisation in particular. Many experts believe that Thailand will eventually succumb to the trend toward gaming in Southeast Asia. Thailand, Indonesia and Brunei are now the only members of the Association of South-
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east Asian Nations without legal casinos. But knowledgeable observers disagree on many important questions, including how long it might take for the first casino to open in Thailand. “I think within five years,” says Euro-Asia Consulting president and chief executive Steve Karoul, whose company studied casino legalisation for the Thaksin government. “It would be 10 years from the start of formal consideration of casino legalisation for a project to even begin the construction process,” says Tourism Authority of Thailand board member Pornthip Hirunkate.
A sceptical public In a series of exclusive interviews, Macau Business found that hospitality industry experts and observers agree on a number of points. They agree that casinos, if built, would be in resort destinations, not Bangkok (see story). Thais would be allowed to patronise casinos, probably after paying an entry tax – like Singaporeans do in their own country, only the FEBRUARY 2011
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tax would be higher than Singapore’s S$100 (MOP617). To make casinos acceptable to a sceptical public, the government should earmark gaming revenue for a specific purpose, such as education. Surprisingly, despite Thailand’s sometimes bloody political turmoil since the 2006 coup – anti-Thaksin demonstrators closed Bangkok’s main airport in 2008 and pro-Thaksin forces occupied the capital’s downtown shopping hub for two months last year – casinos are not viewed as necessary to boost tourism. Experts say that only when there is broad agreement among divided politicians, plus endorsement by the royal palace, will casinos be legalised. Forging a consensus could take decades.
The case for casinos in Thailand is persuasive. Last year the kingdom welcomed around 15.5 million foreign visitors, so there is a ready market. “Thailand already attracts substantial international tourism, so a legal casino would help increase inbound traffic and also generate substantial new tax revenue or income for the government,” says Mr Karoul.
Enduring appeal Initial research suggests casinos would increase arrivals by 15 to 20 percent. “But that could be higher, based on what we see in Singapore,” Mr Karoul says. “It would be a win-win situation for all.” But others fear that introducing casinos might diminish Thailand’s enduring appeal to visitors. Tourism
Crime pays, handsomely C
hulalongkorn University economics professor Pasuk Phongpaichit estimates that 70 percent of Thai adults gamble regularly. For “Guns, Girls, Gambling, Ganja”, the 1999 book still widely considered the definitive word on Thailand’s illegal economy, Ms Pasuk valued Thailand’s underground gambling industry at 344 billion baht (MOP110 billion). The main forms of illegal gambling are the underground lottery, football betting and casinos, ranging from backalley dumps to posh penthouses. “Those places tend to be pretty well localised,” says Christopher Moore, who writes about the seedy sides of Thai society in his crime novels. “It’s not like you can just walk into these places, especially as a “farang” [foreigner].” Thais also gamble on cockfights and kickboxing. Ms Pasuk wrote that Thais are no more prone to gambling than other nationalities. However, in 2004, former Prime Minister Thaksin Shinawatra’s government valued illegal gambling at 1.8 trillion baht or about 8 percent of gross domestic product – an extraordinary figure for a country with such limited legal betting. Even that estimate was likely to be incorrect, put forward as it was by a government that advocated casino legalisation. Gamblers’ losses were pegged at 353 billion to 415 billion baht. With such sums at stake, the beneficiaries of illegal gambling – including criminals in charge and the authorities they pay off – will not go down without a fight. You can bet on that. FEBRUARY 2011
“It would be 10 years from the start of formal consideration of casino legalisation for a project to even begin the construction process,” says Tourism Authority of Thailand board member Pornthip Hirunkate
accounts for 6 percent of Thailand’s gross domestic product and 15 percent of employment, so the sector is too vital to risk mistakes. “Casinos are not part of Thailand’s sales proposition to tourists,” says Ms Pornthip, who is also managing director of regional tour specialist Destination Asia. “Thailand is about culture, beaches, golf, cuisine, service. If we concentrate on those factors, then we don’t need gambling.” The case for casinos is strengthened by the potential domestic market. “Thais love to gamble,” Ms Pornthip says. And they like to gamble whether or not it is legal (see story). Casinos in neighbouring Cambodia, Laos and Myanmar, strung along their borders with Thailand, cater mainly to Thais. Legal casinos in Thailand would keep their spending at home and generate tax revenue for the Thai treasury. “Casinos would be good for tourism. Look at what
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“Thailand already attracts substantial international tourism, so a legal casino would help increase inbound traffic and also generate substantial new tax revenue or income for the government,” says Euro-Asia Consulting president and chief executive Steve Karoul, whose company studied casino legalisation for the Thaksin government
they’ve done for Singapore and Macau. But I don’t think casinos would be good for Thai people,” says Doug Harrison, managing director of Bourbon Street, a Bangkok hotel and restaurant. The popularity of gambling among Thais means that fear of the socially adverse effects of legalisation might increase opposition to it. Legalisation efforts will have to overcome determined anti-gambling forces that portray themselves as protectors of Thailand’s dominant Buddhist traditions. Monks and their supporters have thwarted three attempts since 2004 to list Thai Beverage, maker of Chang beer and Mekong whisky, on the Bangkok stock exchange.
Philosophical issues Observers note an increased appetite in recent years for public displays of moral propriety amid widely tolerated vices, including prostitution, illegal gambling and drinking. Thailand has the highest per capita alcohol consump-
“Casinos would be good for tourism. Look at what they’ve done for Singapore and Macau. But I don’t think casinos would be good for Thai people,” says Doug Harrison, managing director of Bourbon Street, a Bangkok hotel and restaurant
tion in Asia. “You could write a book about the cultural and social issues entwined with gambling here,” says author Christopher Moore. Mr Moore writes about the cultural roots of the Thai language and studies the darker fringes of Thai society for his crime fiction series featuring detective Vincent Calvino. “You’re dealing with a set of philosophical issues that people have very strong feelings about. That doesn’t encourage logical discussion,” he says. “Opposition is driven by religious and royalist considerations,” says Nigel Cornick, chief executive of real estate company Binswanger Brooker. “It’s not about politics. There’s been opposition to casinos long before Thaksin came into power.” But he says casino legalisation “might move higher up the agenda” after parliamentary elections due within a year. “Everyone in Asia is aware of the success of both FEBRUARY 2011
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Macau and Singapore. I think sentiment has changed dramatically over the past two years,” says Mr Karoul. “I think the Thai people would support legalised casino gaming, especially if the tax revenues could be controlled and go towards social programmes for the poor, elderly, and sick,” says the gaming consultant. As well as religious opponents, those that cater to the propensity among Thais to gamble would fight hard to stop casino legalisation. These include predominantly rich and powerful investors in border casinos, and the backers of pervasive illegal gambling. The only legal forms of gambling are betting on the occasional race meeting and the government-run lottery, which had sales of 91.8 billion baht (MOP24.5 billion) in 2006, the latest year for which data is available. An underground lottery, which accepts smaller bets and offers a wider variety of options, reportedly does 10 FEBRUARY 2011
times more business. Mr Thaksin, a former police officer, has said he advocates casino legalisation to combat illegal gambling and the corruption it breeds.
Open access
“You’re dealing with a set of philosophical issues that people have very strong feelings about. That doesn’t encourage logical discussion,” says author Christopher Moore
“The only way you remove the illegal gambling, and the corruption that goes with it, is via open access,” says HSBC regional gaming analyst Sean Monaghan. This means letting Thais gamble legally, which is likely to inflame domestic opposition. “To get the legislation passed, the government would need to preach the value of legalisation,” he says. “The value argument is only credible when the casinos come with major infrastructure builds and are targeted to drive international tourism.” Mr Cornick, with his knowledge of the property business, agrees. “If Thailand goes for it, they’ll go for it in a big way to leverage a lot of infrastructure for MICE, community facilities,
“Opposition is driven by religious and royalist considerations,” says Nigel Cornick, chief executive of real estate company Binswanger Brooker. “It’s not about politics. There’s been opposition to casinos long before Thaksin came into power”
95 and other tourist amenities,” he says. He doubts that Thailand’s frequent political upheavals will deter investment. “People tend to overestimate the political risk in Thailand,” he says. “People who’ve been coming here for a long time have seen it all before.” Mr Monaghan says finance would not be an obstacle to the development of casinos. “Investors would back casinos in Thailand if they had the opportunity,” he says.
Free enterprise The degree of investor enthusiasm and shape of any facilities depend on ownership and licensing decisions that are unlikely to be taken for years. Investment rules that require majority Thai ownership in many cases are due
“Thai tourism authorities think the country needs gambling to be competitive with other destinations in the region,” says InVision Hospitality chief development officer Charles Blocker
for reform. They do not, however, apply to US companies because of a 19th century bilateral treaty. “If it’s an international operator, they would most likely want an integrated resort,” Mr Cornick says. “But it could go to a local company, and existing structures could get upgraded.” He estimates that it would take five years to construct a new integrated resort, while an upgraded resort could open much faster. As for licensing arrangements, he says: “It would make sense for the government to have control of the revenue stream to ensure that the casino delivers social good. If it’s in the hands of the private sector, there’s bound to be leakage.” A one-time legalisation consultant, Mr Karoul sees the other side of the same coin. “Thailand might like to hold the licence and find an operator but I do not see that as a viable option for attracting large, qualified international operators, due to Thailand’s past reputation for having a very high level of corruption,” he says. “Free enterprise will be far more acceptable, as long as all of the regulations and procedures are well documented in advance and remain highly visible to the public at all times.” InVision Hospitality chief development officer Charles Blocker imagines another arrangement. “Maybe the state would own the land and/or the bricks and mortar and lease it to an operator,” he says. “Thai tourism authorities think the country needs gambling to be competitive with other destinations in the region,” adds Mr Blocker, whose company specialises in hospitality investments. “It’s more of a defensive measure than about wanting to have casinos here.”
Location, location, location I
f Thailand legalises casinos, whether or not integrated resorts are developed to house them depends on where they might be built and who wants to build them. “I do not think that the government will approve a casino in Bangkok, in order to protect the poor,” says consultant Steve Karoul, who studied casino legalisation for the government of deposed Prime Minister Thaksin Shinawatra. Casinos in Bangkok would also increase the imbalance of economic activity between the capital and the provinces, where 80 percent of Thailand’s 65 million people live. “The question for Thailand is who gets it, which province,” says realtor Nigel Cornick. “There would be a lot of political jockeying for position,” Mr Karoul says. “However, I do think that they would approve Pattaya initially and possibly add on Phuket and maybe Chiang Mai.” “If you want a place where its visitor profile fits gambling, that’s Pattaya,” Mr Cornick says. The seaside resort, a twohour drive from Bangkok, attracts 6 million foreign visitors a year and is the top tourist spending destination in Thailand, he says. Its airport handles a steady flow of international charter flights for group tours and is being upgraded. Pattaya has plenty of luxury accommodation and condos for weekenders from Bangkok, plus a burgeoning expatriate population. It is best known as a raucous, raunchy holiday spot for Europeans. “There’s plenty of real estate along the northeastern seaboard where you could put in a casino,” Mr Cornick says. Phuket, an island off the southwest coast about one hour by air from Bangkok, has recovered from the December 2004 tsunami and gained popularity among buyers of second homes and extreme telecommuters. But Phuket’s tourism business remains seasonal, running from November to April. A casino resort could boost off-season occupancy rates. It would also be relatively insulated from Thailand’s poor, in line with previous proposals to isolate casinos on islands off Pattaya. Any benefit would, however, come at a cost. “If a casino went to Phuket, you might get a different kind of tourist that might be a detriment to Phuket,” Mr Cornick says, pointing to the island’s quiet, classy reputation. There is double the danger of values clashing in Chiang Mai, in the northern highlands, considered the nation’s cultural capital. Defenders of the country’s Buddhist tradition would blanch at the idea of a casino there. But as the only viable candidate in the north, Chiang Mai could be a key card in any political deal over casino legalisation, because it is in a region where Mr Thaksin finds his popular support and where there is resentment of the richer, more developed south.
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The house always wins Stanley Ho up on Forbes Hong Kong’s richest 40 people list
tanley Ho, the chairman of SJM Holdings, went up to the 13th spot on Hong Kong’s 2011 40 Richest list organised by Forbes magazine, from the 17th position one year before. Mr Ho’s net worth is now estimated to be US$3.1 billion
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(MOP24.8 billion). On 2010’s list, Forbes evaluated his net worth at US$2.1 billion. One spot behind Mr Ho is Lui Che Woo, the chairman of Galaxy Entertainment Group, with a net worth of US$3 billion. Mr Lui was 24th on 2010’s list, with a net worth of US$1.47 million. Both casino moguls saw their net worth increase mainly due to the rebound of Macau’s gambling industry, which helped to boost SJM and Galaxy Entertainment’s profits and share price, according to Forbes magazine. The list’s 40 richest are worth US$163 billion, up from US$135 billion, but still below the 2008 peak of US$178 billion. Hong Kong’s richest person is still Li Ka-shing, with a net worth of US$24 billion.
Unhappy dealers Casino staff are the unhappiest workers in Macau. According to the Happiness Index Study on Macau Residents, conducted by the Macao Polytechnic Institute and the Macau Association of Economic Sciences, casino workers scored 6.77 points on a scale of 0 to 10. Also very close were construction workers (6.78 points) and civil servants (6.80 points). A bit surprisingly, manufacturing workers were the happiest group (7.65 points), concluded the study that interviewed 1,010 residents aged 18 and above. Overall, the happiness level of locals stood at 70.3 points on a scale from 0 to 100, a “relatively high” score and “above average” worldwide, according to the study promoters.
VIP operator targeting expansion
More casino-related crimes
Asia Entertainment & Resources Limited (AERL), a Nasdaq-listed company that operates three VIP rooms in Macau, is looking at doubling its presence in the local gaming market. The company chairman Man Pou Lam said in an interview with Forbes China that AERL aims to increase the number of rooms that it operates in Macau to six. AERL now operates VIP rooms at StarWorld, MGM Macau and the Venetian Macao. AERL’s rolling chip turnover for 2010 was US$10.42 billion (MOP83.36 million), up 101 percent year-over-year.
The number of crimes related to gaming in Macau increased last year. According to the Judiciary Police, this follows the opposite trend for the overall number of crimes, which stood at 9,898 in 2010, a 9.42 percent drop year-on-year. Gaming-related crimes increased to 1,655 in 2010 from 1,601 the previous year. These refer to cases occurring within a casino or any other gaming establishment, or that are directly related to the gaming industry, like loan sharking.
Wynn Macau’s employees get raise Chairman and Chief Executive Officer of Wynn Macau, Steve Wynn announced a 6 percent salary increase for all the company’s non-management employees, effective February 1. Mr. Wynn commented: “This is our grateful response to the leadership provided by Chief Executive Fernando Chui Sai On and Secretary Francis Tam concerning the rise in the cost-of-living for Macau residents.” The Macau government had previously said that private companies with the financial capability should give wage increases to their employees, particularly those from the gaming sector. “We are dedicated to providing an appropriate level of compensation to our employees in this very dynamic and rapidly expanding economy,” said Mr Wynn. FEBRUARY 2011
Haute and local couture International and local fashion designers’ pieces for the season
The Macau jeweller Dora Tam unveils her new collection and the source of her inspiration
Rings, pendants and bags Cartier and Bulgari present their new products
Shanghai Tang
BREAKDOWN BY THE NUMBERS
THE INTERNET WISDOM ON FASHION, BEAUTY AND JEWELS
2010
Marked the debut of the Macau Fashion Festival, held concurrently with the 15th Macau International Trade and Investment Fair (MIF). Three local designers showed their collections.
12
The number of years that the bachelor degree in Fashion Design, at the Macau Polytechnic Institute, has been running.
3
The number of main types of traditional Chinese clothing: the pien-fu (a long tuniclike top, paired with a skirt or trousers that extend to the ankles), ch’ang-p’ao (a one-piece shoulder-to-heels garment) and shen-i (a tunic and a skirt or trousers sewn together).
4
The number of sisters from the Pedruco family who won the Miss Macau beauty pageant and who competed at both the Miss International pageant and Miss World pageant. Until today, this record has not been broken.
MOP1.92 billion
The value of retail sales of watches and jewellery during the third quarter of 2010. From a total of MOP7.54 billion in retail sales, this sector took the largest share of 25 percent. 98
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owadays, fashion means more than just clothes or jewellery. It can also be applied to design, architecture and even beauty. It means that you’re up with the current trends and are not being left behind. So with that being said, in this edition we focus on fashion and everything related to it. For starters, we have an exclusive interview with local jewellery designer Dora Tam. We discover her sources of inspiration and we even take a peak at her beautiful and exquisite pieces for Spring and Summer. Moving on, we bring you the fashion trends for the season from some of the major luxury brands that are sold in Macau. Just read on if you want to keep up with those who dictate fashion. We didn’t forget about local fashion designers either. We take a sneak peek at what they have to offer for the Spring and Summer season too. It’s definitely worth a look. Then come the jewels. We never fail to remember them! We search around and find some exquisite new products. Finally, we show you the new trendy options at Square Eight, because even restaurants need to be up to date. So, if you’re into fashion and want to know the trends, just read on.
Fashion in Asia
Women believe white skin will hide other physically unattractive features they might have. And they use whitening products to do so.
Fashion in Europe
Women still prefer to be tanned. Even though there are dangers, they still attempt to get that darker look and they will buy all kinds of products to do so.
Curly hair is fashionable. Since Asian women have straight hair, they buy all kinds of products on the market to get their curls.
Straight hair is trendy. Women in the West try to tame their wild locks in order to have perfectly shiny and curl-free hair.
Within Asian style, Japanese have the most diverse range of styles in clothing, combining the hip hop street style with the more clean and hip, the slick style, the cute and pretty girl and the cool boyish style. But Japan also has the punk/rock street fashion style as well as the more crazy over-the-top fashion style.
Fashion has a quite diverse range of styles, combining the hip hop street style with the more clean and hip, the slick style, the punk/rock street fashion style. However, the Lolita style is almost exclusively a Japanese/Korean look. It is still rare to see the more crazy over-the-top fashion in the West.
Particularly in Korea and Japan – but the trend is spreading throughout Asia – men’s dress shirts are tight fitting and there are more v-necks and u-necks. It’s all about slimming down the clothes revealing more of the masculine figure.
Usually, men wear larger shirts, looser pants and bigger shoes. Men’s fashion is not so revealing as in Asia – they still prefer comfort.
Men’s bags are definitely in fashion in Asia – especially in China. Spend a day looking at what men are carrying and you’ll see they have as much Louis Vuitton as the ladies.
In Europe, only the boldest men use bags. Men still prefer not to carry them and it’s very rare to see a man with a Louis Vuitton bag.
TEN COMMANDMENTS FOR SHOPPING IN MACAU I You must head off to Senado Square or some of the city’s hotel-casinos if you like luxury brands when buying clothes. There you will find some of the main brands at duty-free prices.
You must spend some time searching for the best offer in different shops, since prices vary a lot from place to place. II
III You must bargain in small shops, because you can secure some large discounts. IV You must confirm you’re not buying a fake article before handing over your money in pawnshops. Even though the prices are appealing, sometimes it can be deceiving. V You must go to Rua de São Paulo if you’re looking for traditional-style rosewood Chinese furniture, such as porcelain ware, lacquer, bronze ware, woodcarvings, as well as Chinese paintings. It’s the right place to go.
VI You must see the certificate confirming the provenance when buying a Chinese antique. Otherwise, it might not be authentic. VII You must make sure you have the correct size at small shops, since many will not have fitting room facilities and refunds are not given on clothing. VIII You must purchase brand name cameras and electronic appliances and do so in shops of good standing (certified shops by the Consumer Council). IX Remember to always ask for the warranty certificates and receipts in the event of any after sales problems. X You must shop at the markets near S. Domingos Church and in the Three Lamps district if you’re looking for traditional Chinese style clothing - updated to a high fashion look, of course.
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FEATURE
F
ashion is also in design. MGM Macau’s Square Eight relaunched two months ago with a new face that reflects the diversity of its cuisine. Square Eight now has new trendy decorations combined with a better use of space and new cuisines on the menu. “As we changed the menu, we had to change the kitchen to keep the quality. That was the main driver to take the position after two years
BIG SPENDER
to renovate the restaurant,” says the vice-president of hotel operations, Robbert Van Der Maas. On the menu, there are some novelties such as the introduction of “Chu Chow Specialties” and “Shanghai Specialties”. As for the changes made to the interior design of the restaurant, they are aimed at an overall efficiency. “The front has barely changed, it is almost the same as it was. We closed
The perfect colour T
hey say diamonds are a girl’s best friend. Well, some like “The Perfect Pink” are not for just any ordinary girl. The 14.2-carat gem was sold three months ago for US$23 million (MOP184 million), at a Christie’s Hong Kong auction, setting
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in the open kitchen,” says Mr Van Der Maas. “We needed to concentrate the [main] kitchen, [so] we made it actually smaller than it was, but much more efficient,” he continues. Also, by moving the bar into the area where the kitchen was, “everything is now closer together”. By combining the two concepts of a la carte and the buffet, moving the buffet closer to the regular restaurant, the number of seats has also increased. Being a Michelin recommended restaurant for three consecutive years, Square Eight has been popular for its Southeast Asian classics, Macanese favourites and Chinese cuisines.
a new record for Asia. An anonymous buyer snatched it up after an intense bidding war. “The Perfect Pink” is a rare diamond that generated interest from collectors worldwide. The selling price was actually higher than the US$14 million to US$19 million it was expected to reach. Christie’s says that in more than 240 years of auction history, only 18 pink diamonds bigger than 10 carats have ever
been put to bidding. This one was a perfectly shaped diamond showing an intense pink coloration. The revenue from Christie’s seven-day sale, which featured a vast collection of art, jewellery, wine and Chinese antiques, almost doubled that of its autumn sale in 2009. Along with “The Perfect Pink” there were several other items up for grabs, such as Burmese rubies and Kashmir sapphires or jade stones.
INTERVIEW
Dora Tam
is one of just a few jewellery designers in Macau. In this interview, she shares some of her perceptions on the trade and unveils part of her Spring/ Summer collection By Luciana Leitão
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here do you get your inspiration for your jewellery pieces? Dora Tam - I would say from the beauties of life, the things around us. It can be from very tiny things like smiles from children, nature or it can be from some colours. It’s just a mood or a feeling; it can be very simple but also complicated. It can change from time to time. Just like everybody, I have different feelings from different things. I just try to grab that feeling, put it on paper and then make it into a shape so we can wear it. You moved from Hong Kong to Macau. As a jewellery designer, given the difference in size of both markets, wouldn’t you say that was a strange choice? I wouldn’t compare it like that. These two places are different in size, culture and living. Just like everything has good and bad things, and if you see things globally, there isn’t much difference from one place to another. What are the advantages of Macau’s market compared to Hong Kong’s? The size of Macau has become an advantage, since I can meet my friends very easily (most of my longterm customers have become my friends) which has saved me a lot of time in traffic.
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The artist Local artist Dora Tam studied jewellery and metallurgy at the Georgian College of Art in Canada, before returning to her native Hong Kong. There she began her career and worked at respected jewellers including Tse Sui Luen (TSL). After winning a number of competitions like the De Beers Diamonds International Awards in 2000 with the work depicted here, she decided to strike out on her own. She moved to Macau and established Dora Tam Design in 2001. Now in a more peaceful environment, her creativity is at its peak. She feels that the pace of life in Macau has fired her imagination, and she enjoys working with materials such as stainless steel. As for her likes, she admits a preference for designing rings.
Did you have to adapt your jewellery to Macau’s tastes? Like any international city, Macau has people from different places and different cultures. It’s not necessary and not feasible to limit the design and adapt it to one taste or two. I do adjust the pieces for individuals because I also do custom made design - unique pieces for my special clients. In this case, I like to know the person before and understand what she or he loves and hates.
A preview of the new collection Signature D, by Dora Tam D for Dora. This set of rings, earrings and pendants are available in silver and black and white gold plating. Where: Dora Tam Design Gifts & Jewellery, Ex-Libris Pisces Dora Tam’s Life and Love rings These rings are available in different colours, gold plating and gemstones. The Life collection uses round stones, while the Love collection uses square ones. Where: Dora Tam Design Gifts & Jewellery, Ex-Libris Pisces
Is there room for a jewellery designer in Macau? Honestly speaking, it’s never easy to be a designer or an artist anywhere. Art is something really personal and it doesn’t have rights or wrongs. We have to create our space and there are no guarantees. Usually, who are your clients: locals, expatriates or tourists? In the beginning, most of them were Portuguese and then Chinese that included people from Hong Kong and Macau. Now, they are mainly tourists from places like Japan, Taiwan, Europe and North America. For your Spring/Summer collection what did you prepare? I do have some new designs for this Spring/Summer - the Life and Love combination rings, the Signature set and I will have a Doily set coming really soon. Also, I have something in mind for Valentine’s Day. I just want to share some joyful things in life and love with friends. Inspiration is everywhere - always around us.
How about other markets in Asia, are you thinking of expanding? In Asia, I really like Taiwan. It’s just so open-minded and with very nice people. Japan is also very good. They respect design and have great appreciation for artwork. Expanding is just a matter of my own time management. Luckily, my customers like travelling a lot! Are you aiming to enter some Western countries? Around or even more than 50 percent of our customers are Westerners. Again, it is also a time issue for a physical expansion. What will your strategy be to enter these markets? I have been doing jewellery fairs in Germany, Italy and so on. Also, I had some private sales in Paris. When talking about strategy, I use common sense: I show up, I am there and I do promotion work. It’s important to let people know you. We always plan for expansion but unfortunately at the same time I’m always tied up with schedules and design works. Maybe such strategy might require special jewellery pieces? I never do anything for any specific country, but I’ll do things for some special events. What I just always want to do is what I really like and what I think it is beautiful. Also, being a creative person, one should not restrict creativity and imagination by certain boundaries! In Macau, there are few well-known jewellery designers. Why do you think this happens? I do see quite some talent here but they choose a different path for their career. They may not be that popular to the general public but academically they are well known.
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HAUTE COUTURE
Fashion trends Check out what the international fashion designers reserve for the season
Valentino Vibrant, moving overlaps of textures, transparencies and shades contrast with a sensual and aggressive interplay in the Valentino Spring/Summer 2011 collection. Ruches and flounces, folds and embroideries, pleated
or frilled constructions all add movement to the long and short dresses. Adorned with light toned layers of lace in rafia or crin, liaisons of the finest chantilly and macramĂŠ, ton-surton floral and polka dot applications in relief, contrasting details of ribbon collars and leather carrĂŠ, the dresses almost deceive the eye seeming to be an ensemble of skirt and shirt. It has a three-dimensional character given the fine see-through organza, tulle or chiffon layers in shades of ivory, cocoa and cinnamon.
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Vivienne Westwood Energetic as always. For the men’s Spring/Summer 2011 collection, Vivienne Westwood brings coloured graphics smashed into fragments, checks plus stripes, and checks plus checks. For the women, she has prepared a youthful collection based on the iconic
styles of the 1970s and 1980s, with everything from punk, pirate, mini crinis and bondage being re-invented. The collection includes eight new jean styles: Skinny Jeans in bright and metallic; Stretch denim Jeggings in tiger stripe print; Slim Jeans in marble and hologram effect; Bent Jeans in copper and black shine; over the heel Salon Jeans in painted and marble effect; the Crop Authenik slashed jeans influenced by the Westwood Spring/Summer 1991 “Cut & Slash” collection; Bummy Jeans in splash paint effect; and the Artifice double front drop crotch jeans, an adaptation of Westwood’s famous Alien trousers. There is also a unisex style, the Authentik Jean adorned with patches and badges or offered in the iconic Westwood ‘Anarchy’ stripes.
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HAUTE COUTURE
Fashion trends
The pioneer Chinese luxury lifestyle brand Shanghai Tang shows its fashion ideas for Spring/Summer 2011
Miao makeover The new Shanghai Tang Spring/Summer 2011 collection transforms the traditional costumes of the Miao, one of China’s ethnic minorities, into contemporary luxury collections. As the Chinese luxury brand that serves as ambassador of contemporary Chinese chic, each season Shanghai Tang presents aspects of China’s culture. For the women’s collection, Shanghai Tang uses Miao batiks and prints traditionally coloured by natural indigo dyes and featuring symbols from nature. For the accessories, intricate embroider and silver beading give a new look to scarves, clutches and handbags. The men’s collection makes subtle references to Miao culture using mainly blue and indigo colour shades.
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LOCAL COUTURE
Fashion trends
We search around for Macau’s fashion designers and ask about their ideas for the season. Here they are
Stella Tang The latest collection by local fashion designer Stella Tang is inspired by the phoenix. In Chinese culture, the phoenix is the queen of birds. It conveys a message of strength and resilience in order to achieve fruitful results. The theme is included in the collection through the extensive use of black and red, representing the difference of the phoenix from the beginning until it achieves its full potential. The designer uses fabric with Chinese patterns and Chinese feeling to produce a modern work, enforcing the idea of “East meets Western culture”.
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Lines Lab’s precollection for Spring/Summer 2011 focuses on Chinese traditional silk. According to Clara Brito, the fashion designer, the works make use of very ancient techniques, with the fabric dyed using traditional methods. This makes the pieces very rare and the fabric hard to find elsewhere. “It’s a great fabric for summer. It’s structured silk, that you don’t understand if it’s really black or brown”, Ms Brito explains. As a contrast, the Lines Lab team has prepared some accessories with intense and bright colours.
Photo: Lines Lab | Vincent Sin
Lines Lab
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JEWELS AND ACCESSORIES
Fashion trends
Check out the new products from Cartier and Bulgari
Hexagonal minaudière, by Bulgari Trinity diamond ring, by Cartier
Part of the collection for Valentine’s Day by Cartier, this diamond ring is from the Cartier Trinity Gold series. Where: Grand Lapa, DFS The Shoppes at Four Seasons, City of Dreams
Part of the new collection of accessories for Spring and Summer, this Matthew Williamson for Bulgari Hexagonal minaudière is in pink kaleidoscope-print satin with snake chain strap and light gold finish diamond shape closure. It promises to enchant elegant women. Where: Wynn Esplanade, The Venetian Grand Canal Shoppes
Sterling silver cufflinks, from Bulgari Bulgari’s Papillon
The Bulgari Papillon Chronograph watch for men features creativity and sophistication in the dial displays as well in the mechanism itself. Where: Wynn Esplanade, The Venetian Grand Canal Shoppes
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These are part of the new collection of jewels designed by Bulgari. The sterling silver cufflinks with black ceramic are the jewel solution for men. Where: Wynn Esplanade, The Venetian Grand Canal Shoppes
SEX AND FASHION
Bulgari’s white gold pendant
In white gold and with pavé diamonds (0.94 carats) and chain, this pendant for women is a part of a new set of jewels launched by Bulgari. Where: Wynn Esplanade, The Venetian Grand Canal Shoppes
Cartier’s Captive watch
Included in the Valentine’s Day Cartier collection, this watch from the Captive series is elegant and a perfect fit for a woman. Where: Grand Lapa, DFS The Shoppes at Four Seasons, City of Dreams
How to be sexy One thing is for sure: sex and sexy go hand-in-hand. The concept of sexy might vary, but, in the end, some things are just more exciting than others when it comes to the bedroom. Here are our suggestions to women and men. Let’s start with women. Firstly, emphasize your best body parts. If you have a sexy derrière, then don’t try to disguise it. Use tight dresses or high-waist jeans to emphasize it. If your pride and joy is your cleavage, then don’t be shy and wear a low cut V-neck top. Finally, if your beauty is in your legs, show them off with a revealing (just to the right measure) skirt. But there are tricks for those who are less fortunate. If you don’t have curves, define your waist with a big belt. It will add instant curves and an extra dose of femininity. High heels make you more elegant – this is especially true for those who are not that tall - and working your way with the “stiletto” will make you feel sexier than ever. Now let’s look at the gentlemen. What can they do? Well, one thing is certain: they can look sexy in a pair of attractive, well-fitting jeans and a white t-shirt. But they can’t wear that everyday, can they? Jeans are great – especially if they are dark blue – but sometimes, for a chic, casual look, you can pull it off with a pair of pants. It shows you have the confidence to step out of the ordinary. But if you’re aiming at a more relaxed look, then take those loose and pocket pants out of the closet – the cargos will definitely make you sexy. Just make sure they are flat fronted. Add a belt and you’ll give the impression that you care about detail. That makes you even more desirable. For a casual chic look, then wear a blazer with some jeans, which is simple yet sexy. If you put a sweater on top of your T-shirt, it can also work. The truth is: if you feel sexy, you’ll act sexy. And that may happen even if you go against all the so-called fashion rules. 111
Next month look for Fine 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
Dining
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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
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The year has started on a high note with 300,000 arrivals between January 1 and 3, the first weekend of the year. That represents a year-on-year increase of 7.5 percent, according to official data. The mainland, Hong Kong and Taiwan were Macau’s top three visitor-generating markets last year. Visitors from the mainland and Hong Kong surged 20 percent and 11 percent, respectively. Last year, Macau was again among the 10 destinations most visited by mainland Chinese, according to Beijing authorities. However, no detailed figures have been disclosed. Although comparatively much smaller, visitors numbers from newer markets including India, Russia and the Middle East also performed well, increasing 57 percent, 49 percent and 33 percent respectively over 2009.
Photo: Carmo Correia
Sleeping over
New frontiers
Almost 25 million tourists were welcomed last year, a new record that will be smashed this year ith its fortunes closely related to gaming and mimicking that industry’s growth, the tourism sector set a new record for visitor arrivals last year. The director of the Macau Government Tourist Office, João Manuel Costa
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Antunes, said 24.97 million arrivals were recorded last year, an increase of 15 percent compared to 2009. Mr Antunes predicts the growth in arrivals will extend into this year. He estimates a 10 percent increase, a forecast he admits may be too conservative.
About-face on budget hotels A fter rebuffing comments that Macau was in need of more budget tourist accommodation, the government has done an about-face. Macau Government Tourist Office director João Manuel Costa Antunes announced last month that authorities were now eager to support cheaper accommodation options. Mr Antunes said the government was surveying the re-use of small-scale buildings and land in the city’s older districts that might be used for budget hotels. He stressed that only a small percentage of tourists sought budget accommodation. Last year, half of all visitors who stayed in a hotel, stayed at a five-star facility.
The outstanding news for the tourism industry is that the number of hotel guests, average occupancy rates and the amount each tourist spent have all increased. From last January to November, the number of hotel guests reached 7 million, up 16.8 percent over the same period the year before. They accounted for 61 percent of the total number of tourists. Currently, Macau has 62 hotels and 31 guesthouses, providing about 21,000 rooms. The average hotel room rate last year was US$138.9 (MOP1,111), an increase of 7.7 percent. Tourists are also spending more. Total visitor expenditure between last January and September hit US$18.2 billion, a significant increase of 52.2 percent over the same period in 2009. The mainland cemented its position as the highestspending market, followed by Southeast Asian countries and Japan. However, prices of goods and services for tourists increased sharply and above the inflation rate last year. The average Tourist Price Index increased by 11 percent year-on-year in 2010. Inflation increased by only 2.8 percent over the same period. The main price increases in tourist goods occurred in gold jewellery, airfares and food, as well as rising hotel room rates and charges for restaurant services. Looking at business tourism, the government’s Strategic MICE Market Stimulation Programme supported 163 events last year, involving more than 630,000 participants. The programme has been extended until the end of June. FEBRUARY 2011
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Tourism
Credit card pains Travel agencies charging illegal fees everal travel agencies are charging illegal additional credit card fees, according to a survey conducted by the Consumer Council. The survey results show that some agencies charge consumers an addition-
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FEBRUARY 2011
al amount when paying by credit card. The council states that this is against the law and the responsible department is working on this problem. Consumers paying with credit cards should not be charged any additional
amount other than the transaction sum. Regarding the use of credit cards and similar kinds of electronic money, the law states that all products and services transacted within the region of Macau should be paid in MOP, and there is no excuse for attaching any extra fees to the agreed price or transaction amount. Among the over 50 surveys received from travel agencies, 30 percent are charging extra fees to consumers who purchase tour packages, flight tickets, or hotel bookings with credit cards, the council said. Over half of the overall respondents were aware that this is against the law. Survey result has been sent to the Monetary Authority. The Macau Government Tourism Office was also informed to urge travel agencies to abide by the law and prohibit them from charging extra fees. The council said it “will pay close attention to travel agencies and other businesses regarding the matter of charging additional credit card charges�.
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February
Date: Event:
World Game Protection Conference and Casino Surveillance Technology Exhibition
Date: Event:
22nd – 24th
Venue: Organiser: Address: Tel: Fax: Website: E-mail:
Marriott, Panama City Terrapinn 96 Spring Street, 4th Floor, New York, NY 10012 (212) 379 6320 (212) 379 6319 www.terrapinn.com/2011/geslatam/ michael.weinberg@terrapinn.com
Gaming Executive Summit Latin America
March
Tel: Fax: Website: E-mail:
3rd – 5th
Venue: Organiser: Address: Tel: Fax: Website: E-mail:
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
Date: Event: Venue: Organiser: Address:
4th – 7th
21st – 23rd
Venue: M Resort, Las Vegas 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: Venue: Organiser: Address:
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 JANUARY 2011
Tel: Fax: Website: E-mail:
7th Guangzhou International Game & Amusement Exhibition
GTI Asia Taipei Expo
Taipei World Trade Center, Taiwan Haw Ji Co., Ltd. 2F, No. 17, PaoChing St., SongShan Dist., Taipei City 10585, Taiwan (886) 2 27607407~10 (886) 2 2742-0522 http://www.gtiexpo.com.tw/taipeien/ gametime@taiwanslot.com.tw
Date: 17th – 19 th Event: GIGSE Venue: San Francisco, California Organiser: Address: Earls Court Exhibition Centre, London SW5 9TA, UK Tel: (44) 0 20 7370 8579 Website: www.gigse.com E-mail: yeemay.huang@clariongaming.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 FEBRUARY 2011
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Business
Year of the
bunny
Playboy is hot again, the inimitable Hugh Hefner, the company’s founder, says in an exclusive interview BY CHRISTOPHER COTTRELL IN LOS ANGELES
used to live on this plane, between Los Angeles and Chicago,” Hugh Hefner says with a bright smile. We’re in the study of the famous Playboy Mansion. Dressed in a red silk smoking jacket and black silk pyjama pants, Mr. Hefner is holding up a 30-centimeter black plastic model plane with the iconic Playboy bunny logo on it. “It was a lot of fun and I hope to bring it back,” he says, while holding the toy plane and grinning. Mr Hefner is the founder of the 20th century’s most influential empire of softcore pornography and one can only guess at what went on in his private Playboy jet during the empire’s heyday in the 1980s. The model jet seems an appropriate metaphor for how Macau figures in Mr Hefner’s drive to re-launch his company by gambling on global gaming. Macau’s first Bunny Club opened in November. Leaning forward on his backgammon table, Mr Hefner says: “I am very excited about the Macau club.” He is very, very excited. “It’s a special time to focus on what we have now, with new Bunny Clubs and casinos. I can safely say that Macau is now the gambling capital of the world. I expect great things from it. It will be a prominent part of our return to gambling.”
I
© Glenn Francis, www.PacificProDigital.com
Fantastic revolution
“I am very excited about the Macau club,” Hugh Hefner says FEBRUARY 2011
Mr Hefner believes the Chinese zodiac will favour Playboy this year. “This is the Year of the Rabbit, and I hope it will bring customers to our new bunny destinations. Our girls have a classy appearance and a universal appeal.” What makes Macau and gambling attractive again to Playboy? To begin with, the original clubs revolved around gambling. But there is another reason for Playboy’s presence here. “In China, they’re going through a sexual revolution and things are opening up there. The time is right.” Well, almost. Attempts to launch a Playboy Club in Shanghai in 2004 were squashed by the authorities there. That was when Macau entered the picture. Initially, Playboy signed an agreement with the Macao Studio City developers to open a club there. Eventually, because there was no progress in the project, the company backed out in 2009. Playboy ended up partnering with Sands China. Now that its first club in Macau has opened its doors, the company is focusing in its next step – a Playboy
117 mansion replica on Sands China’s parcels five and six in Cotai. Mr Hefner comments: “Whatever happened there, Macau is important for us. The political climate is right.” Mr Hefner explains how his company has been playing its cards worldwide. “We have the television programme ‘The Girls Next Door’ [a reality show], which gives us wide appeal. With our Internet programming and magazines, we’re hotter than ever. So we’re turning to gambling, back to our roots. This company began with casinos and we are going back to casinos.”
A private show The goal is to continue to make people happy. “We’ve also been known [for] creating fantasy. Variety magazine said when we opened over 50 years ago that we were the Disney for adults. We’re still creating a fantasy. For our customers we still make the classiest fantasies. We’re still a phenomenon in that regard. This is an exciting time for Playboy.” Asked about his bid to take Playboy private, approved in January, a smirk
shoots across Mr Hefner’s face. “Being a public company never worked out well for us. I was always the heart of the executive decisions but it’s a better position [to be in] as a private company,” he says. “We must go private. That’s the main business opportunity now. This will give us more leverage to do what we want to do without outside interference.” What does Mr Hefner want to do? What is the direction of the company and will his two younger sons take over? Both have made recent appearances with their father and Cooper Hefner even tweeted that he was given a tour of the Chicago headquarters by chief executive Scott Flanders. “As far as legacy is regarded, let’s see. It’s nice that my sons have an appreciation and affinity for the brand. They are in college still, but are taking an interest in the company and I support them to,” says Mr Hefner.
Fun, loving guy He returns to Macau. “In China, I see unlimited possibilities for our growth. I do find it interesting that we’ve got such
fascination in China, as we have been there for over two decades with clothing and apparel. “Because the sexual revolution is part of us, we are admired and reviled. I have done my all for this cause, personally and professionally, for the sexual revolution, and am happy it is going on in Asia.” Does Mr Hefner have any advice for the management of the Macau Playboy Club? “This is the Year of the Rabbit, so it will be an auspicious year. In China, I hope people feel the love. I say: ‘Take care of the business, take care of the customers; and take extra care of the bunnies’.” Looking back, Mr Hefner is happy with what he has achieved. “I have championed for social rights, sexual rights, women’s rights and racial rights. I sponsor freedom of speech. That’s not something everybody knows, and I am proud of it. I hope the Year of the Rabbit gives us extra strength to continue to do what we do best – have a lot of fun.” He takes a long look at his model airplane and says: “If I can get it going again, I will. This is the only way to fly.”
“I used to live on this plane, between Los Angeles and Chicago,” Hugh Hefner says. “It was a lot of fun and I hope to bring it back” FEBRUARY 2011
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Lifestyle
Light me up Premium handmade cigars are becoming increasingly popular, with tourists driving demand to new levels s Macau builds its reputation as an entertainment hub, the trade in premium handmade cigars is booming. The city is already Asia’s third-biggest market, behind Hong Kong and Japan, industry insiders say. “Hong Kong and Japan represent together around 60 percent of the market, with Macau having a market share of 8 percent to 9 percent,” says Laurent de Rougemont, managing director of Bluebell Hong Kong Ltd, an importer and distributor of luxury goods that represents brands such as Davidoff. According to official figures, Macau imported MOP170.2 million worth of cigars, cheroots and cigarillos in the first 11 months of last year. This represents roughly a two-thirds increase over the figure for the whole of 2005. Mr Rougemont says the growth has been phenomenal, since Macau was one of the region’s smallest markets for premium handmade cigars just five years ago, behind Singapore, Taiwan and South
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FEBRUARY 2011
Korea. It is tourists driving the trade. “Around five percent of Macau business is done with the local crowd that knows cigars, enjoys cigars. The rest is mainly mainland Chinese, Hong Kong people that come on a regular basis, quite a bit of Taiwanese, a little bit of Japanese. But overall, I would say 80 percent is done with the mainland Chinese,” says Mr Rougemont. “Definitely, the local market will grow but it will always remain a smaller part of the overall business in Macau, which will be driven by the mainland tourists.” Brands have a strong impact on customer choices. Bluebell sells around 40 different cigar brands at its three local shops but only four account for around half of its business here.
The right stuff Macau is a leader when it comes to selling cigar boxes and humidors. “The share of accessories we sell in
Macau is the highest in Asia,” says Mr Rougemont. “In our stores in Macau, close to half of our business will be done with accessories, while in Japan, where the market is more made of a local base of customers, it is less than 10 percent.” The reason is simple. “If you work with a base of customers that has been there for many years, you don’t sell many accessories. How many cigar boxes, how many humidors can you sell to the same customer? When we get tourists, people that are starting to enjoy cigars, then they are very keen on buying the right humidor, the right lighter, the right cigar box, the right cutter.” The Macau market is also even more male-driven than others. While Japan has cigar clubs for women, here “99 percent of the cigar smokers would be men,” he says. Bluebell has been posting strong growth in the territory, especially since
119 it started opening its own shops, all in casinos, in 2006. Its business grew around 30 percent in 2008, 25 percent in 2009 and 50 percent last year. With the company looking at expanding its shop network, “there is no reason why it should stop,” Mr Rougemont said. The growth of the market for premium handmade cigars is attracting the attention of several global players. Ashton Distributors Inc. is one of the cigar companies stepping up its game in the city, where its products first arrived 10 years ago.
Caribbean luxury Robert Levin, president of Ashton Distributors, told Macau Business the US company wants to take advantage of Macau’s booming economy and the growing appetite for luxury products. Sales of Ashton products, distributed in Macau by Bluebell, have been posting two-digit growth rates here over the past three years. “We haven’t even reached, nor are we near to reaching the potential of Ashton in this market. We just introduced our two brands from Nicaragua. So we have years of growth here,” he says. “The sky is the limit.” Ashton deals only in handmade premium cigars, most made in the Dominican Republic. The company sells around 8 million to 9 million cigars per year in 52 countries. In Asia, Ashton cigars can be found in Macau, Hong Kong, Taiwan, the mainland, Japan, Malaysia and Singapore. Cigar
Aficionado, a reference magazine for cigar lovers, recently voted the Ashton VSG Eclipse one of the 25 best cigars of 2010. For Mr Levin, there is a direct connection between gaming and cigars. “People who gamble also like to enjoy fine cigars, fine wines, fine Scotches... It all goes with a luxury lifestyle,” he says. “As the economy keeps growing in Asia, people want the finest things in life and premium handmade cigars are a luxury product that people will learn to appreciate.” Although the growth rates in Macau are spectacular, the market in this part of the world for premium handmade cigars still lags behind the world’s biggest, the US, where 230 to 250 million premium cigars are smoked annually. Many industries in Asia opt to adapt their products to suit local tastes. This is the case, for instance, with wines. Mr Levin sees no need for cigars to be similarly adapted. “Cigars are very subjective but Ashton sells the same cigars in the United States, in Europe, in Asia. It is the same product,” he says. The Legislative Assembly has been discussing a more restrictive anti-smoking law for more a year already, and Mr Levin – who smokes an average of three cigars a day – admits that smoking bans hurt the industry. “But people always find a way to do what they want to do,” he says.
Smoking dragon T
he mainland is the main source of customers for premium handmade cigars sold in Macau. The country’s 300 million-plus smokers make up one-third of the world’s total, and are a great pool of potential customers for the cigar industry. The Chinese cigar industry is expanding at a much faster pace than the country’s tobacco sector as a whole. The mainland spends an average of RMB2.2 billion (MOP2.66 billion) a year on cigars, with annual sales topping 370 million, according to the latest analysis by Market Avenue, an independent market research company based in Beijing. The Chinese market is somewhat more complex than others. Lowend products, with a price per cigar of RMB0.30 or less, have the biggest share of the market, accounting for 45 percent, Market Avenue says. Most of the low-end products smoked in the mainland are manufactured domestically. Topquality brands account for about 25 percent, with cigars in the middle of the price range taking 30 percent. In Europe and in the United States, top-quality brands and mid-range products each have half the market, and low-end cigars are practically absent. Proper cigars available in the mainland fall mainly into two categories: handmade or traditional cigars, and machine-made products that are cheaper and more widely available. Foreign-made products smuggled into the mainland have about 50 percent of the market for mid-range and top-end cigars. In Shenzhen, Guangzhou and Zhuhai, smuggled cigars have 90 percent of this market, Market Avenue estimates. The mainland tobacco industry is entirely state-owned and Beijing controls the importation of cigars, making it difficult for international players to get a strong foothold in the country, industry insiders say.
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Arts & Culture
SPACEMEN TOUCHDOWN The Kronos Quartet bring their vibrant, intergalactic repertoire to Macau for the first time next month
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n the realm of orchestral music that is both modern and accessible, the Kronos Quartet enjoys a rarefied position as one of the leading string quartets of our time. They are one of the world’s most loved and successful groups on Earth and apparently in outer space, too. They will perform for one night only on March 1 in the Small Auditorium at the Macao Cultural Centre in “All Around the World with Kronos Quartet”, in what promises to be a thrilling musical experience. Kronos’ performance will provide an experience that explores contemporary international culture in this Macau premiere. Expect a programme tailor-made and that includes music assembled from different parts of the globe and sounds from outer space.
Big with aliens For more than 30 years, the Californiabased Kronos has pursued a singular artistic vision, combining a spirit of fearless exploration with a commitment to expanding the range and context of the string quartet. Kronos has been redefining chamber music by performing thousands of concerts worldwide, moving gracefully among classical, jazz, film music and rock. It has released more than 45 recordings of unusual span, innovation and creativity including Tan Dun’s “Ghost Opera” and the haunting movie soundtrack “Requiem for a Dream”, building a deeply diverse repertoire that includes works by 20th century masters, contemporary composers and world-music icons. It has developed an ongoing relationship with the world’s foremost composers and collaborated with talents, including Steve Reich, Philip Glass, Allen Ginsberg, Tom Waits, David Bowie, Dave Matthew, Nelly Furtado, Joan Armatrading and Don Walser.
The ensemble has also joined forces with many of the world’s most eclectic composers and performers, commissioning more than 650 works and arrangements for string quartets. The Macau premiere for Kronos will feature a commissioned work. “The Sun Rings” is based on radio waves gathered from the far reaches of the solar system in a project for NASA – the National Aeronautics and Space Administration. The composition was based on the space agency’s 40 years of recordings of the universe and the electromagnetic signals from planets. The end result is an intensely creative piece that is more accessible than it may sound. However the evening’s programme features more than just this space oddity. There are multicultural cross-over sounds ranging from the traditional music of Iraq to Iceland’s contemporary melodies and avant-garde tunes from Mexico. The journey spins on through Serbia, Sweden and Azerbaijan.
Long, rich history This is a group that has earned its musical chops. Founding member, violinist David Harrington had sought to create something different with his chamber music in the early 1970s. “I’ve always wanted the string quartet to be vital, and energetic, and alive, and cool, and not afraid to kick ass and be absolutely beautiful and ugly if it has to be,” he wrote on the ensemble’s website www.kronosquartet.org. “But it has to be expressive of life. To tell the story with grace and humour and depth. And to tell the whole story, if possible.” The group was born at an uncertain time, with Harrington leaving the United States for Canada to avoid the draft that sent conscripted men to fight in Vietnam. “The war was still very present in everybody’s mind. One night I turned
on the radio and heard something wild, something scary. It was ‘Black Angels’ by George Crumb, his musical response to Vietnam.” “I didn’t even know it was quartet music at first, but it was a magnetic experience. All of a sudden it felt like this was absolutely the right music to play.” And play they did. In fact, they have seldom stopped. Kronos has been responsible for creating 400 new string quartets, dwarfing anything ever brought to life by Haydn or Beethoven. In their various guises and evolutions they have played at Carnegie Hall and La Scala. Dozens of recordings have garnered numerous awards, including a Grammy for “Best Chamber Music Performance” in 2004. Along the way they have brought music to an international audience in the millions. As on previous occasions surrounding important moments at the Cultural Centre, the performance will be preceded by an art appreciation talk, “Living with New Music”. Professor Chan Hing-yan, a renowned composer and the chairman of the music department of the University of Hong Kong, will host this free seminar in Cantonese in the centre’s conference room, an hour before the curtain rises on March 1. Tickets are now available from the centre’s box office and Kong Seng outlets. The hotline for credit card bookings (853) 2840 0555. For more information, visit www.ccm.gov.mo or call (853) 2870 0699. All Around the World with
KRONOS QUARTET Date: Tuesday, March 1 Time: 8pm Venue: Macau Cultural Centre Price: MOP140. Concession tickets are available to CCM Friends, students, seniors and groups.
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Corporate Social Responsibility
Cash handout for charity F
ollowing the fourth Annual Macau Business Charity Golf Tournament, a cheque presentation luncheon took place last month at Aurora restaurant, in Altira. The Cradle of Hope Association and Caritas’ Lar de Nossa Senhora da Penha, two institutions that care for babies and children who have been abandoned, neglected or are at risk from physical or psychological abuse, were benefited. Team Wynn A, made up by Dave
Williamson, Nathan Fisher and Ryan Beauregard, was the net score tournament winner. As such, they had the right to nominate a charity to forward their winnings – HK$100,000 – to. They chose the Cradle of Hope Association. Meanwhile, the gross score tournament winners were Gunther Hatt, Cliff Chan and Ben Toh, from Sands I team. They nominated Caritas’ Lar de Nossa Senhora da Penha to forward their HK$100,000 winnings.
Sands I team forwards their HK$100,000 winnings to Caritas’ Lar de Nossa Senhora da Penha FEBRUARY 2011
Long-term patron Melco Crown Entertainment continued its support as an event partner of the Macau Business Charity Golf Tournament, sponsoring the cheque presentation luncheon. A record number of 30 three-member teams representing the cream of Macau’s socially responsible corporate citizens took part in the two-day tournament, held in October. Player count wise, the event registered a growth of around 250 percent.
Katherine Liu, on behalf of Team Wynn A, turns over their HK$100,000 winnings to the Cradle of Hope Association
Entertainment
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PHOTOS: RENATO MARQUES
Green business
M
acau Business together with Delta Bridges Publications and Work In Progress Productions hosted the third edition of its Delta Inter Chamber Event last month. Guests from Macau, Hong Kong and Guangdong province gathered at Grand Hyatt’s Salão do Teatro to network, after a conference devoted to “Building Green”, in which representatives from the Zhuhai government and from the local gaming operators exchanged views on environmental issues (read more in our Gaming section). Once again the Delta Inter Chamber Event could count on the support and presence of the European Chamber of Commerce (Hong Kong), Amcham (Macau) BBAM (Macau) Cancha (Macau) the German Chamber of Commerce (South China), the Portuguese-Chinese Chamber of Trade and Investment in Macau, the Zhuhai Chamber of Commerce, the Australian Chamber of Commerce (Macao) and the French Chamber of Commerce (Macau). A special thanks to major event sponsor Melco Crown Entertainment and patrons Sands China, Galaxy Entertainment Group and CTM.
David Nameche
Joel Rivet
Catarina Morgado, Beth Doherty and William Laurent
Dominique Lee and Mary Li
Yvette Lin and Henrik Larsen
Linda Byer, Stephanie Lo, Janice Fung and Peter Lee
Eric Crowter, JJ Verdun, Afonso Pessanha and Neil P. Johnston
Mark Clulow
Susanna Pan and Jorene Liu
Eddy Wong, Yvonne Pagliero and Cecilia Cheang
Omar Rashid Jr, Luis L., José Lupi and Jonathan Lok
Max Zeinglein and Christopher Cottrell FEBRUARY 2011
126 RICARDO ANDORINHO BUSINESS DEVELOPER | MB INTELLIGENCE CONSULTANCY LIMITED (“MBI”) andorinho@mb-intelligence.com
Bunnies and Duracell batteries n astrological crisis has occurred since it was reported that Ophiuchus would become the 13th zodiacal sign, pushing all the other signs a month forward. On this side of the planet, this discussion has less importance since until now nobody has pointed out the existence of a 13th animal sign in the Chinese horoscope. Consequently, we are about to leave the ferocious Year of Tiger and enter into the “mildmannered” Year of the Rabbit. During this festive season you should expect to see rabbits, bunnies and fluffy tails everywhere you go and, at night time, while you have a drink, you may also watch them in their hutch at Sands Macao. The rabbit, bunny or hare are similar creatures whose essence derives from the Moon. Being an icon of longevity, they have been the chosen animal to represent and promote Duracell brand batteries. You may recall the advertisements from Duracell presenting a pink rabbit - the “Duracell Bunny”. This fluffy fellow is powered by a Duracell battery, which allows him to win all races or challenges against his pink
A
rabbit opponents, who are powered by rival battery brands. The point of the advertisement is to show that the bunny powered by a Duracell battery can continue functioning for a longer amount of time before its battery runs down. However, and since these little creatures also symbolize graciousness, good manners, sound counsel, kindness, and have a huge sensitivity to beauty, they have also been selected to be Playboy’s fantasy archetype.
The strength of the Rabbit According to experts in Chinese astrology, in each and every Rabbit individual there is a strong will and a great self-assurance. They believe in their own ability to survive, relying on their judgment, which makes them at peace with themselves. They might appear slow or over deliberate at times, but this is most likely due to their sense of caution and discretion. They never use harsh words or vulgarisms, which gives them flawless credentials. They jump any obstacles that come into their paths and recover from catastrophes with extraordinary
resilience. No matter how the rabbit is tossed, they always land on their feet. That is probably why in cartoons, Bugs Bunny always gets his carrots! So, to benefit from this rabbit wisdom here are some tricks to get your carrots: 1. Admit your mistakes and quit trying to cover them up; 2. Stop blaming other people; 3. Return everything you have ever borrowed; 4. Give things away to people less fortunate than you; 5. Be kind to the unkind people in your life; 6. Wherever you go, always show up on time; 7. Be positive and speak in a positive language. We strongly believe that in the long run, these small actions will help unlock your potential, making you live a happier, more inspired and longer, bunny kind of life. Life is nothing more than a daily race or fight. So, please make sure your batteries are Duracell and that you take your battery charger everywhere you go.
It’s your daily business FEBRUARY 2011
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SPARKS FLY, NOTHING FORGED IN MEETING SINGAPORE’S MAN OF STEEL The romance continues between the leaders of Macau and Singapore. Following in the footsteps of his predecessor, Chief Executive Fernando Chui Sai On visited Singapore last month to learn the secrets of the city’s success. Perhaps the most memorable moment for Mr Chui was his meeting with the founding father of modern Singapore, Lee Kuan Yew. It is no wonder that local politicians easily fall in love with the country. Singapore shares many similarities with Macau, although the Lion City has become a cosmopolitan world metropolis in under half a century. Frozen Spy hopes that during his visit, Mr Chui took notes on the way the country welcomes foreign workers. Or that he has learned something about eliminating red tape and becoming more business friendly. Singapore is a successful city in many regards. What Macau lacks to become equally as successful, unfortunately, cannot be easily imported: political willingness to act.
FURTHER LESSONS ON LOVE Moving deeper into the topic of learning from others, maybe the chief executive could learn something from our Dutch friends. According to recent news, the government there is preparing to tax prostitutes, whose profession in Amsterdam was legalised a decade ago. Frozen Spy is not suggesting that Macau’s authorities need to tax working girls but the government could, at least, take a more coherent position on the issue. They either need to legalise prostitution, to fight it in a serious manner or just avert their eyes. What seems exactly the wrong thing to do is hold a big operation – like the one at the Venetian Macao two months ago that busted more than 100 alleged prostitutes – and then not continue the crackdown at other casinos. If Frozen Spy knew any better, we might suggest it was a vengeful act against Sheldon Adelson and his blunders. At the heart of the matter – and timely too, since the Heritage Foundation says Macau is now in the top 20 freest economies in the world – Frozen Spy thinks it constitutes a case of unfair business advantage. Some casinos can add spicy features to their offering while others cannot, it appears. Quid juris?
WIKI WANTED TO BREAK DEAFENING SILENCE
ICONIC ARCHITECTURE BEGINS AT THE TOP Still on Mr Chui’s Singapore visit, he popped into Marina Bay Sands, the integrated resort put together by Las Vegas Sands. While walking around the jaw-dropping building, Mr Chui should have wondered: “Why the hell didn’t Sheldon Adelson build something like this in Macau?” Elementary, dear chief executive. In Macau, there was no government with an overall notion of the opportunity exposed by the liberalisation of the gaming industry. So, it was easy for any gaming operator to do as they pleased. Frozen Spy only hopes that by taking parcels 7 and 8 from Mr Adelson’s control, Mr Chui is now interested not only in having more gaming parlours in the city but also in architectonic icons. It is something this city certainly needs in order to lose the label “Las Vegas on steroids”.
It is official: Chief Executive Fernando Chui Sai On did not authorise his predecessor Edmund Ho Hau Wah to testify in a trial related to the corruption scandal that disgraced former Secretary for Transport and Public Works, Ao Man Long. It was already public knowledge that Mr Ho would not take the stand but Mr Chui went one step further last month, not even allowing him to answer the court’s questions in written form. There is nothing illegal in the decision. The chief executive can authorise the disclosure or withholding of confidential or reserved information by former holders of political posts in a court of law. Nevertheless, Frozen Spy wonders what Mr Chui is afraid of. What secrets might Mr Ho hold that the Macau population cannot know? Is there more to the Ao scandal than what we have heard in previous trials? Our only hope is that Wikileaks knows something.
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Advertisers
February 2011
index
7 Luck Casino
BC
www.7luck.com
Aristocrat
Page 5
www.aristocratgaming.com
AutoGaming
Pages 6-7
www.autogaminginc.com
Bally
Page 4
www.ballytech.com
BNU
Page 23
www.bnu.com.mo
Fidelidade Mundial Seguros
Page 39
www.fidelidademundial.pt
Galaxy Entertainment
Page 21
www.galaxyentertainment.com
Galaxy Entertainment
Page 51
www.galaxyentertainment.com
IACM
Page 41
www.artmuseum.gov.mo
Interblock
Page 9
www.interblock.eu
King’s Consulting Ltd
Page 24
www.kings-consulting.com
Macau Cultural Centre
IBC
www.ccm.org.mo
Macau Daily Times
Page 53
www.macaudailytimes.com.mo
Macau Post Office
Page 81
www.macaupost.gov.mo
Melco Crown Entertainment
Page 11
www.melco-crown.com
Melco Crown Entertainment
Page 17
www.melco-crown.com
MGM Macau
Page 14
www.mgmmacau.com
MGM Macau
Page 47
www.mgmmacau.com
MGTO
Page IFC
www.macautourism.gov.mo
Morton’s The Steakhouse
Page 69
www.mortons.com
Our Dental Clinic
Page 95
www.ooioc.com
PokerStars Macau
Page 1
www.pokerstarsmacau.com
Sands China
Page 49
www.sandschinaltd.com
Seapower Trading
Page 101
www.seapower.com.mo
Shuffle Master
Page 2
www.shufflemaster.com
SJM
Page 114
www.sjmholdings.com
Sniper Capital
Page 25
www.snipercapital.com
Star City Hotel & Casino
Page 3
www.starcity.com.au
Wynn Macau
Page 45
www.wynnmacau.com
FEBRUARY2011 JANUARY NOVEMBER 2011 2010