MB 83 | March 2011 by Macau Business

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ISSN 1812-6855

Macau MOP 35 • Hong Kong HK$ 40 • Mainland China RMB 35

HELP WANTED EMPLOYERS HIT BY NEW HUMAN RESOURCES HEADACHES IN THE ERA OF FULL EMPLOYMENT

HIGH HOPES

REAL ESTATE BOOM

THE DIGITAL EDGE

Airport overhaul to boost arrivals

‘Urgent’ austerity rules in limbo

How to reap profits from Facebook

MARCH 2011

54 Economy & Finance 30 Better, not bigger Macau banks are more efficient than their Hong Kong counterparts 32 Bond of brotherhood Monetary authority buys Portuguese bonds 33 Snooze control Inflation continues to go up, but the government still hasn’t acted

Transport 38 Flying nowhere, fast Airport to get a master plan, while it continues to lose passengers 44 High life Jet Asia’s boss says it is hard to make private jets a profitable business in Macau 46 Holding pattern Sky Shuttle wants to increase its routes

Politics 48 Master plan Beijing to roll out its plan for the next five years 51 Livin’ la vida loca Public servants spare no expenses when on official trips 52 Powering down Government wants to introduce LED lamps to street lighting

Interview 54 Finding the right table Romano Prodi talks about the Sino-European relationship

MARCH 2011

Property 60 Market watch Majority of government measures to tackle speculation have still not been enacted 66 Investment Oasis One Oasis’ second phase up for sale this month

MB Report 68 Boys for the jobs With full employment achieved, Macau’s labour market is becoming even more challenging

Gaming 76 Billions race New daily and monthly records for casinos 78 Stock watch Gaming stocks endure a bumpy February 81 Macau melodrama The battle for Stanley Ho’s fortune continues 82 Fertile ground Union Gaming Group sets up office in town 84 The smokers’ clause New tobacco bill still allows smoking inside casinos 85 Upping the ante Texas Hold’em poker is an emerging player on the casino scene 86 Great expectations Aspect Gaming is preparing to reach out for a share of the booming Asian slot market 90 Melco Crown, Ho scoop awards The winners of the International Gaming Awards 2011 92 Aiming at the jackpot again Taiwan resumes casino planning and hires a Macau firm as a consultant 94 Macau on the Mekong Chinese-run casinos in Laos target mainland customers

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Essential 97 Fine dining Your guide to indulgence

Tourism

Arts & Culture 136 Danish magic Tap Seac Gallery hosts exhibition from Erik A. Frandsen 138 Classic comedy The Stuttgart Ballet brings “The Taming of the Shrew” to the Cultural Centre

114 Strained relations Brawls and stand-offs between mainland tourists and tour guides raise a lot of questions 116 Double happiness Tourists and hotel guests increase during the Chinese New Year holiday

Entertainment

MICE

Opinion

117 Meeting expectations Industry leader says 2011 will be a turning point for the sector

10 From the publisher’s desk Paulo A. Azevedo 13 Editorial Emanuel Graça 34 The illness of worsening inequality Keith Morrison 67 Wild guess chase José I. Duarte 89 Stuck in reverse: New Jersey has a rethink as play goes cold David Green 113 The Tunisian catalyst Joseph E. Stiglitz 120 New hardware, old software Gustavo Cavaliere 125 Down with “emerging markets” Jim O’Neill 134 Risky growth engines Otaviano Canuto 141 Tiger mothers or elephant mothers? Peter Singer 142 What if? Ricardo Andorinho

Management 122 Challenging business Macau plays host to this year’s Global Management Challenge international finals

Retail 124 Picture this Camera and optics maker Leica opens their Macau store

Technology 126 Nice to be liked Facebook is becoming ever more important for business 132 Roll out the welcome app Local developers working on apps for iPhone

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140 Chinese New Year celebrations Government and corporate events welcome the Year of the Rabbit

MARCH 2011

A question without answer is worth MOP8 billion THE MACAU GOVERNMENT has decided to invest in the airport’s expansion. The Macau Airport Company Ltd. or CAM could not be happier. Publicly, so far, it’s a MOP5 billion (US$625 million) project. According to some insiders, the investment could reach upwards of MOP8 billion (US$1 billion). And we know that in these kinds of projects – and nearly all public projects in Macau – that amount is likely to be surpassed. Incredulous. I have to ask, MOP5

If the airport needs so desperately to be developed, why was land opposite the site offered to the airport’s management by the government but eventually ended up in the hands of real estate developers, building a residential development that no one wants to talk about?

MARCH 2011

billion for what, exactly? For an airport that, in January, experienced a 6 percent drop in passengers and a 23 percent drop in transported cargo, year-on-year? The same airport that, last year, when Macau welcomed a record 25 million tourists, registered a 4 percent decrease in the number of passengers and a 1 percent decrease in transported cargo volumes? I am clearly too stupid to understand the math behind that development. Macau has never had so many people visiting as it has in the past five years. Daily, monthly and annual records are constantly broken. We have no idea what to do with so many tourists and yet the airport counts little in this equation. Invest MOP5 billion to develop an airport that has continuously lost passengers since the end of 2007? And that, since 2006, has entered a downward curve in cargo handling, never again to find an upward trend? If the airport is empty while the city is bursting with tourists and there is no way the government can revoke Air Macau’s monopoly – theoretically by paying compensation and thus liberalising the skies above Macau once and for all – what is the point of investing such an enormous amount of money? We will need years of strong growth to exhaust the airport’s existing capacity. We are not talking about just three or five years. There will need to be at least a decade of continuous growth to justify an expansion

investment of this magnitude. Not only is this scenario unlikely but we also risk having to invest to reduce the airport’s size, not enlarge it. So, if ours is a “toy” airport, what is really behind the investment? I do not have the answer but I have never been one of the enlightened. I, fool, confess myself. If the airport needs so desperately to be developed, why was land opposite the site offered to the airport’s management by the government but eventually ended up in the hands of real estate developers, building a residential development that no one wants to talk about? How is it possible that no one finds this unusual.

Elementary, my dear Watson I CONFESS IT IS ONE OF MY FAVOURITE TOPICS; the lack of human resources in Macau and the clear inability of our officials to address the problem. After years of defending the indefensible restrictions on imported labour and of being incapable to come up with a human resources blueprint that would allow people to know what type of workers Macau needs, a recent study has pointed to the lack of human resources. A study? The strangulation and extinction of many small and medium enterprises due to

lack of staff, and their cannibalisation by powerful companies for their workers was not evidence enough? Let’s forget that the media has been issuing alerts on this problem for the past five years. Let’s pretend that common sense has no bearing here. What else do you need? I’ll end this editorial with a real situation that, in a real country, would only be seen as an anecdote. In the government’s Human Resources Office, there is a need for translators, so the work is not being done properly. They say there is a shortage of skilled labour and that many years are needed to properly train staff. So, where are the skilled, local workers that the Human Resources Office so fiercely protects? The workers that should be available to tackle the labour shortages affecting the city? And so Macau goes on, from joke to joke. Walking, singing and merrily laughing, while gaming revenues break records, filling the government’s coffers and permitting enormous strategic mistakes. It is a situation that leads to us tolerating stories that should be investigated but are not, because they are camouflaged by our society’s “harmonious development”.

So, where are the skilled, local workers that the Human Resources Office so fiercely protects?

MARCH 2011

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

Put workers to work

A plausible answer to Macau’s human resources problem could be increasing labour productivity

IN THIS MONTH’S ISSUE, MACAU BUSINESS takes an extensive look at the city’s human resources. This is especially important at a time when Macau has reached full employment, with unemployment at its lowest level since the handover, according to official data. A lack of workers hurts small and medium enterprises (SMEs), which have less bargaining power than casinos when attracting new employees. After falling back during the global financial crisis, the gaming industry’s workforce keeps on expanding and its wages are increasing. Facing great odds, some SMEs are questioning their own survival. Many are calling for more money and other support from the government, all the while showing no inclination to adapt to the new economic environment. The most obvious solution to this problem would be for the government to relax its restrictive policy on importing labour. Although that is certainly needed, there are only so many people that Macau can cope with (think of the thousands of tourists flocking into town every day) without a sharp drop in the quality of life. A plausible answer to Macau’s human resources problem could be increasing labour productivity. Little, if any, data exists in Macau about productivity, least of all about productivity in SMEs. Owing to the domination of the economy by the casinos, any overall calculation is always skewed by the gaming industry. The gaming industry is the reason that last year, the Korea Productivity Centre ranked the Macau economy as the 24th most productive in the world.

May I help you?

A quick tour of the city shows SMEs are not making full use of their manpower for at least a considerable portion of the day despite the fact, bizarrely, that overtime is common. Shops with five employees but with no customers are a common sight. Business owners may argue that additional staff are needed for peak periods. It is a good point but the problem could easily be solved if the government got round to making rules for

part-time employment and allowed imported labour and students from abroad to work part-time. In other international tourist destinations, employers rely heavily on part-time and seasonal employees, whether local or imported, during peak periods and to ensure quality of service. This not only makes more rational use of the available labour pool, but also makes SMEs more profitable. Curiously, casinos seem to be leading the efforts to improve productivity, by training and closely monitoring employees. The government cap on the number of gaming tables is an incentive, encouraging gaming operators to increase revenue by increasing the amount of gambling done at each table. Training alone will not solve Macau’s productivity problem because several training courses already on offer lack quality. A certification system of some kind is urgently needed.

Adapt or perish

Furthermore, more skilled employees need work that makes use of their higher skill levels. It is pointless having restaurant employees learning how to use sales software if the restaurant uses paper and pencil. This brings us to another issue. To improve their productivity, SMEs must say goodbye to their technophobia. It makes no sense that more than half of local businesses make no use whatsoever of technology in their day-to-day operations, as recent official figures indicate. Any drive for greater productivity will mean that, in the early stages, some lowskilled workers will be left behind. Social policies can partially ease their woes. It will be harder to change the mindset of employees and employers. In a land ruled by monopolies and oligopolies, competition and, therefore, productivity has never been a big issue. And the paternalistic approach consistently followed by the government has done very little to change the status quo. A drive for greater productivity could easily bring about the most significant transformation of Macau’s economy since gaming liberalisation. The question is whether we are ready to transform ourselves first. MARCH 2011

14 14

VOL.1 Nº83

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

Executive Director Business Development Luis Pereira pereiraluis@macaubusiness.com

Essential Supplement Coordinator Luciana Leitão leitao.luciana@macaubusiness.com

Property Editor Alan Tso tsoalan@yahoo.com.hk

Senior Analyst José I. Duarte jid@macaubusiness.com

Hong Kong Bureau Michael Hoare (Chief), Anil Stephen michael.hoare@macaubusiness.com

Europe Bureau Joyce Pina (Chief) jpina@macaubusiness.com

Paula Joyce

Special Correspondent Muhammad Cohen info@muhammadcohen.com

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Regular Contributors Branko Milanovic, David Cheung, David Green, Dominique Moisi, Eswar Prasad, Frank J. Fahrenkopf Jr., Gustavo Cavaliere, Hideaki Kaneda, José António Ocampo, José Sales Marques, Joseph Stiglitz, Leanda Lee, Keith Morrison, Kenneth Rogoff, Kenneth Tsang, Marvin Goodfriend, Pan Yue, Paulo J. Zak, Peter Singer, Ricardo Andorinho, Richard Whitfield, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang

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Letters to the editor

Contributing Editors Alexandra Lages, Carlos Picassinos, Christina Yang Ting Yan, Derek Proctor (Bangkok), Filipa Queiroz, Joana Freitas, João Francisco Pinto, José Carlos Matias, Kahon Chan, Lois Iwase, Luciana Leitão, Ray Chan, Sofia Jesus, Steven Chan, Tiago Azevedo, Wu Yu

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Disclaimer: In Macau Business magazine, the translation of MOP amounts into US$ amounts (and vice-versa) is made at the rate of MOP 8 to US$1 for the purposes of illustration only.

JANUARY MARCH 2011

MARCH 2011

We Deliver Decision Makers

MARCH 2011

Briefing

Lap of luxury Essential Macau is the new high-end magazine from the publisher of Macau Business, De Ficção Multimedia Projects

ssential Macau, a new glossy magazine dedicated to the world of high-end shopping and leisure, is set to launch this month. The bimonthly publication, in Chinese and English, will focus on the best things in life, presenting readers with an informed and beautifully illustrated insight into the world of luxury. The new title caters to the very top end of the tourist market and the most affluent residents of Macau looking for the latest offerings on the luxury market. From fashion, jewellery and watches to gourmet cuisine, travel, art and Macau high society, Essential Macau will showcase the finest choices available to those of discerning taste, both in town and around the world. The new publication is produced by De Ficção Multimedia Projects, the publisher of Macau Business, in partnership with the Portuguese company Open Media. Open Media is one of Portugal’s leading publishers of luxury lifestyle magazines, managing several regional editions of its Essential stable of titles. The company has considerable experience in publishing

MARCH 2011

internationally, with titles for the Scandinavian, Russian, and British and Irish markets. “As the city has boomed and matured into one of the world’s most sophisticated leisure destinations, a growing number of tourists are looking for exclusive products and services when they come here,” says Paulo A. Azevedo, the publisher of Essential Macau. “At the same time, locals have seen their earnings go up dramatically and are eager to get a taste of the luxury lifestyle. Essential Macau will cater to both these publics, showing them the best the world has to offer.” Essential Macau is produced to the very highest international standards, with stunning high-quality photography, chic design and prime materials, creating a true object of desire. Besides being available at selected newsstands and bookshops, the magazine will be on offer at luxury hotels, mainly in Macau but also in Hong Kong and in the mainland. It can also be found in the executive class or business-class accommodation of airlines and ferry operators, and at the finest restaurants, spas, golf clubs and luxury boutiques.

CEM’s profits drop Electricity utility CEM saw its profits drop to around MOP500 million (US$62.5 million) last year, a nine percent decrease, according to preliminary unaudited results. CEM’s chief executive officer, Franklin Willemyns said the reduction was mainly due to the new power concession contract inked last year with the Macau SAR government. The contract formulated the permitted return rate to be decreased to 9.5 percent from the previous 12 percent. In 2010, CEM’s sales increased around 10 percent to MOP4.4 billion. Meanwhile, last month, a massive blackout hit the NAPE area, leaving 8,000 people without power for up to 14 minutes. “Customers in other areas also experienced a momentary power fluctuation,” CEM said. According to the company, initial investigation reports showed that the outage was caused by an operational fault.

International School to host youth summit The International School of Macao (TIS) will host a youth summit, from March 30 – April 1, for Grade 10-12 students from TIS and guests from the Calgary Board of Education. “The summit is a TIS initiative to expose international youth to complex global issues and empower them to make a difference in their world,” according to the organisation. The summit will focus on key areas of business development, social and urban planning, the environment and community. Several speakers from Macau businesses are invited. Students will also volunteer in community-based projects. Macau Business is the official media partner of the summit.

Cashing up Budget surplus jumps 22 percent in 2010 he Macau government ended its 2010 budget execution with a surplus of MOP41.88 billion (US$5.2 billion), a 22 percent year-on-year increase. In 2010, total public revenue (excluding the amounts from the autonomous agencies) rose by 14 percent, to a total of MOP79.64 billion. This increment was due to noticeable increases in the revenue of direct taxes from gaming, which represented 82 percent of public revenue last year. The total public expenditure was MOP37.76 billion, an increase of 6 percent in comparison with 2009, with the Macau government still very far from fully executing the expenditure budgeted for 2010.

Corruption hits funerals Four auxiliary staff at the Hospital Conde S. Januário are suspected of accepting bribes, according to the Commission Against Corruption. Evidence shows that the suspects “have colluded with some individuals running funeral businesses in an organized and systematic way for a long time,” the commission said. “First, they introduced some funeral business operators they were familiar with to relatives of the deceased. After the relatives paid the relevant funeral service fees, the auxiliary staff solicited rewards amounting to MOP2,500 each from the operators.” During the investigation, the Commission Against Corruption also discovered that some other auxiliary staff of the hospital had violated the law a number of times by entering casinos to gamble. MARCH 2011

One step at a time Minimum wage for cleaning and property management services under study mployers’ and employees’ representatives agreed last month to start a study on a proposal to set a minimum wage for cleaning and property management services, two of the lowest-income industries in Macau. For now, there is no timeline or even a tentative minimum wage proposal. In 2007, the government already set an example by demanding that all companies it outsourced cleaning and managing properties services from, pay at least MOP21 (US$2.6) per hour to its employees working at government facilities. The government is now poised to revise this value, to cope with rising inflation.

No bus drivers, says Reolian New public bus operator Reolian is worried it won’t have enough local drivers. The company will start operating in August. After two recruitment days, Reolian has received only 198 applications, while it is looking to fill 400 bus driver vacancies. The company said it will request the government to allow it to temporarily import bus drivers from the mainland while training of local drivers takes place. The government says that, for now, it is sticking to its “100 percent local bus drivers” policy.

First H1N1 flu death in 2011 A 47-year-old female patient infected with the H1N1 flu virus died last month, the Health Bureau announced. This was the first fatal case related to the influenza virus in Macau this year. The Health Bureau said it is watching the flu situation in Macau closely. MARCH 2011

Photo: Luís Almoster | mspagency.org

Imported workers get new blue card Macau’s imported workers have a new type of work permit, also known as a “blue card”, due to its colour. The new permits, in the form of a smart ID card, allow them to use the automatic border checkpoints for Macau ID holders and were introduced late last month. They will still keep the blue colour. The police estimate that it will take about two years to gradually replace all the old blue cards in Macau. Each new blue card will cost MOP100. At the end of December, the number of non-resident workers stood at 75,800, up by about 700 people over the previous month.

Court slams Bombardier injunction The Court of Second Appeal rejected last month Bombardier’s injunction seeking to cease all administrative actions related to the public tender to supply the rolling stock and system for the light rail transit system. The decision means the government can go ahead with signing the contract with Japanese Mitsubishi Heavy Industries, the winner of the tender. Mitsubishi Heavy Industries won the contract with a MOP4.69 billion (US$586 million) bid. Commenting on the court’s decision, the government said it was satisfied and that the light rail transit system’s construction should start later this year. The two losing bidders – Bombardier and Siemens – still have until March 8 to lodge an appeal regarding the tender result.

MARCH 2011

Going strong CTM posting good results on the mobile market, according to controlling shareholder ocal telecommunications company CTM “continues to perform strongly with economic growth driving improved mobile and enterprise revenues,” its controlling shareholder Cable & Wireless Communications announced in February. According to Cable & Wireless Communications, by the end of last year, CTM had 387,000 active mobile subscribers, 132,000 broadband clients and 178,000 fixed line customers. Its average revenue per user per month excluding equipment sales (ARPU) for the quarter ended in December 31, 2010 stood at US$20.9 (MOP167) for mobile customers, a 19.4 percent year-on-year increase. ARPU for broadband clients also went up by 10.2 percent, to US$32.5. Only fixed line clients numbers decreased, with ARPU falling 5.3 percent year-on-year, to US$33.9. “Mobile saw growth in smart phone sales following the launch of the iPhone 4 in December strengthening our market leadership position, and the business continues to rapidly grow its wireless broadband subscriber base,” Cable & Wireless Communications said in a press release. Cable & Wireless Communications owns 51 percent of CTM.

Russian company invests in cold Russian company MMG Production has announced plans to create a Winter Park at Fisherman’s Wharf. The total investment is estimated at US$19 million (MOP152 million). The first stage of the project opened last month, including an ice rink and an ice sculpture gallery. For this 300-square metre initial phase, the company invested US$3 million. The second phase will include an indoor winter city built on an area of 3,000 square metres, with walking and skiing tracks, and a food court. After getting all the approvals, the MMG Production expects to take 18 months to have the second phase ready. MARCH 2011

SmarTone rings up HK$16 million SmarTone’s Macau operations reported an operating profit of HK$16 million for the six months to December 2010, compared with an operating loss of HK$19 million one year earlier. Revenues rose by 18 percent to HK$132 million, driven by customer growth and higher inbound roaming revenue, the company announced. Earnings before interest, taxes, depreciation and amortisation fell by 32 percent to HK$31 million.

Accountant to head local TV broadcaster Former lawmaker and president of Macau’s Auditors and Accountants Association Leong Kam Chun was appointed as the new managing director of the local public TV and radio broadcaster Teledifusão de Macau (TDM) starting from March 1. He replaced Manuel Gonçalves. TDM is also poised to adopt a new managing system, including a new executive committee. The move comes after a governmentbacked report recommended big changes at TDM to improve standards.

MARCH 2011

Almost 200,000 vehicles on the road

Photo: LuĂs Almoster | mspagency.org

The total number of licensed vehicles reached 197,000 at the end of 2010, a year-on-year increase of 4 percent, according to official data. Of those, 54 percent were motorcycles and 39 percent were light private cars. For the whole of 2010, the total number of traffic accidents rose by 4 percent year-on-year to 13,155 cases, resulting in 5,313 victims, 10 of them fatalities.

Wages in construction surge Official data indicates that the average daily wage of construction workers was MOP619 in the fourth quarter of 2010, up by 13.8 percent quarter-to-quarter. After discounting the effect of inflation, the wage index of construction workers for the fourth quarter of 2010 was up by 5.0 percent in real terms over the previous quarter. For the whole year of 2010, the average wage index of construction workers decreased by 0.8 percent year-on-year in real terms.

More illegal workers caught A total of 70 illegal workers were detected in Macau in January. This is a sharp increase over the previous month, when 44 illegal workers were caught. Local authorities raided more than 200 sites according to a press release from the government. MARCH 2011

Exports sluggish in 2010

Boom of new companies

Merchandise exports from Macau remained sluggish in 2010, official data shows. The value of total merchandise exports fell by 9.3 percent year-on-year to MOP6.96 billion (US$870 million). On the opposite side, the value of total merchandise imports rebounded to 2007-levels, up by 19.6 percent from 2009 to MOP44.12 billion. The merchandise trade deficit widened by 27.1 percent year-on-year to MOP37.16 billion in 2010; the exports/ imports ratio went down by 5.0 percentage points year-onyear to 15.8 percent.

In 2010, the number of new companies increased by 18.3 percent year-on-year, to 2,991. The value of registered capital rose by 48.8 percent to MOP507 million (US$63 million), according to official data. Capital from Macau totalled MOP249 million, up notably by 50.0 percent over 2009, and that from Hong Kong and the mainland amounted to MOP124 million and MOP72 million respectively. The majority of the new companies were operating in wholesale and retail (1,139), business services (501) and real estate (376). In 2010, there were 492 companies in dissolution, up by 4.9 percent over 2009.

MARCH 2011

Sponsored Feature

friendly practices in the hospitality sector. The awards are organised by the Environmental Protection Bureau and Macau Government Tourist Oﬃce. They aim to demonstrate the importance of environmental management, and honour the hotels that have made a commitment.

From the top The Venetian Macao welcomes the support it has received from the government towards its green initiatives. “They are anxious for us to

implement any initiative that we can,” says Mr Naylor. “They are very supportive, obviously, of our work. So, we get a lot of encouragement.” A commitment from the top also helps to keep the company’s environmental programme in shape. “Our corporate oﬃce, acting chief executive oﬃcer Michael Leven and chairman Sheldon Adelson, are very keen to roll out all these initiatives,” says Mr Naylor. “This company wants to be a good corporate citizen in Macau. We want to do the right thing. We

are a huge energy user and it is our duty to do whatever we can to be more economical”. It is an ongoing process, as lessons learned in the past are applied to the new properties in the pipeline. “We are trying to find the best practices to give us the most environmentallyfriendly buildings that we can produce,” he said. “When parcels 5 and 6 open, from the very beginning, we will be able to monitor more accurately what we are actually consuming. We will have better control over our air-conditioning

systems, so that the area will be properly cooled more efficiently.” Mr Naylor says the effort to become greener is taking place across the entire gaming industry. It is a healthy competition between the facilities departments from the different casino operators. “It is important that, as a casino community, the department heads that are in-charge of this area share their good initiatives. At the end of the day, that is what is good for our environment and good for Macau.” MARCH 2011

Economy & Finance

Better, not bigger Hong Kong may be one of the world’s financial centres but when it comes to banking, Macau is more efficient and posts higher productivity increases acau banks are more efficient than their counterparts in Hong Kong, according to new research published by the Monetary Authority of Macau. The city’s banks also lead in productivity growth. Overall, the results suggest that banks in both SARs operate with a relatively high level of efficiency and moderate productivity growth. The research, by Maggie Fu of the University of Macau and Alden Vong of the Industrial and Commercial Bank of China (Macau), found that the average technical efficiency score of banks in Macau from 1995 to 2009 was 0.98, where 0 represents the worst and 1 the best. This was “only slightly higher, albeit statistically significant, than the average efficiency of 0.97 for banks in Hong Kong,” their report says. As for productivity, from 1995 to 2009 the average annual rate of increase in productivity among Macau banks was 2.2 percent, while at Hong Kong’s banks it was just 0.5 percent, the study found. “Although Macau banks were more productive on average than Hong Kong banks, the productivity growth of Hong Kong banks was more stable and persistent according to a year-by-year analysis,” the report says. Banking is a crucial industry in both special administrative regions. In Hong Kong, banking’s contribution to gross domestic product was on average 8.6 percent between 1996 and 2008. In

MARCH 2011

Banking is a crucial industry in both special administrative regions. In Hong Kong, banking’s contribution to gross domestic product was on average 8.6 percent between 1996 and 2008. In Macau, banking accounted for about 8 percent of GDP Macau, banking accounted for about 8 percent of GDP. “The difference in bank efficiency between Hong Kong and Macau might be attributable to the fact that Macau is a much smaller open economy, with a less developed banking sector in comparison,” the report concludes. “It seems that Hong Kong banks are more innovative, so that they could adjust their business strategy and improve their performance during the 1997 Asian financial crisis, but are less able to make exceptional profits from market prosperity due to severe competition.”

Driving force However, financial innovation is a double-edged sword. Some complicated derivative instruments offered by the banks

in Hong Kong, like Lehman Brothers mini-bonds, “led to a substantial drop in their efficiency during the recent financial crisis”. Macau’s exposure to such products was limited. Even so, the recent financial crisis hit both markets, the research found. Ms Fu and Mr Vong have another observation: “Large banks in Hong Kong and small banks in Macau were more efficient on average than large Macau banks and small Hong Kong banks”. The authors conclude that technical progress has been the main driving force behind productivity increases in both cities. By using technology and consolidating back office functions, among other measures, banks have been able to optimise cost savings. Small banks in Macau achieved the highest productivity growth between 1995 and 2009, “though their performance was more volatile than other banks in the two regions”. As for the place of the bank productivity in the global economy, the authors said: “The performance of Macau banks appeared to be more sensitive to environmental changes than that of Hong Kong banks in general”. The only exception was during the recent financial crisis which, although it affected both regions, had more negative impacts on bank performance in Hong Kong. The research, published in the latest issue of the monetary authority’s Macao Monetary Research Bulletin, analyses data from the 15 years ended in 2009, a period covering some important events, including the 1997 Asian financial crisis, the establishment of the Hong Kong and Macau SARs, and the recent global financial crisis.

Cashing in B

anks in Macau had total operating profit of MOP3.9 billion (US$488 million) last year, according to preliminary estimates by the chairman of the Macau Association of Banks, Ye Yixin. The result was 11.1 percent higher than in the corresponding period of 2009, official data shows. The Macau branch of Portuguese bank Millennium BCP was one of the financial institutions that posted a strong growth rate last year. The bank saw its net profit increase by 45.6 percent to MOP71 million. Millennium BCP was granted a retail banking licence only in May, although it had been operating in Macau through an offshore subsidiary before then. Looking ahead, the Macau branch’s head, José João Pãosinho, told the Portuguese news agency Lusa that the bank’s goal is to continue to grow “in a cautious and sustainable” fashion, through the corporate market, financial operations between China and Africa using Macau as a platform, and by supporting Portuguese companies operating in the region. He added that, in the private banking sector, his bank is looking at offering wealth management services to the affluent.

More credit cards T

he total number of personal credit cards in circulation was 427,000 at the end of December 2010, representing an increase of 6.02 percent from a quarter ago. On an annual basis, RMB cards soared 83.56 percent while MOP cards and HKD cards rose 17.56 percent and 6.92 percent respectively, according to the Monetary Authority of Macau. As at the end of last year, credit card credit limits granted by banks in Macau reached MOP7.65 billion (US$956 million), up 4.75 percent from end-September 2010. The delinquency ratio, i.e. the ratio of delinquent amount overdue for more than three months to credit card receivables, was 0.72 percent. In the fourth quarter of 2010, the credit card turnover grew by 23.99 percent quarter-to-quarter to MOP2.48 billion. The cash advance turnover was MOP130 million, accounting for 5.07 percent of total credit card turnover. MARCH 2011

Economy & Finance

Bond of brotherhood The Monetary Authority has broken its own investment rules by buying Portuguese bonds

he Monetary Authority announced it had acquired Portuguese bonds in January but has not disclosed the amount invested. The authority – in effect, Macau’s central bank – said its silence was due to “constraints to publishing information about the investment strategy of the Macau exchange reserves,” the Portuguese news agency Lusa reported. But by investing in Portuguese bonds, the authority has disregarded its own rules. The bank’s guidelines for prudent management of the exchange reserves say all investments must have a minimum rating of AA from the Standard and Poor’s and Moody’s rating agencies. The goal is to invest in financial products that sustain a significant degree of capital protection and pose a lower risk of defaulting. That is not the case with Portuguese sovereign debt which, after a torrid few months has been put on watch by Standard and Poor’s because of continuing uncertainty over the health of the economy. It is currently rated A-minus and further downgrades could occur. The Monetary Authority argues

the decision to buy bonds from Macau’s former colonial power was the result of “prior research”. The decision was based on “the investment’s value, inherent risks and the current and future situation of the Portuguese economy,” the authority said. “It can be concluded that the ratings given to Portugal of A-minus by Standard and Poor’s and A1 by Moody’s are within investment-grade ratings,” it said. A bond is considered investment grade if it is rated BBB-minus or higher by Standard and Poor’s or Baa3 or higher by Moody’s. These bonds typically provide the highest degree of principal and interest-payment protection, and the issuers are generally the least likely to default.

Minister’s influence Where Macau invests its exchange reserves is important. The reserves are assets denominated in freely convertible currencies and divided by the Monetary Authority into a liquid portfolio and an investment portfolio. The liquid portfolio supports the intrinsic value and convertibility of the pataca. The investment portfolio is meant to make

Lisbon

MARCH 2011

income, while keeping the capital safe. Macau’s foreign exchange reserves amounted to MOP192.0 billion (US$24 billion) at the end of January, according to preliminary estimates by the Monetary Authority. This sum is 35 times the amount of currency in circulation. The Monetary Authority further explained that it bought Portuguese bonds “taking into account the effort shown by the Lisbon government in implementing measures to reduce its budget deficit, that has contributed to reducing the pessimism and to promoting a gradual confidence improvement in the European financial markets”. Portugal’s bond yields hit a euroera high last month after disappointing gross domestic product figures pointed to the country sliding back into recession this year. Most economists and bond analysts believe that rising bond yields will eventually force Portugal to seek financial aid, as Greece and Ireland have had to do. But Lisbon has resisted pressure to do so for months – longer than many expected. This was the first investment by the Macau authorities in bonds issued by Portugal or any other country in financial distress due to the international financial crisis. The bonds were bought after visits to Macau by the Portuguese finance minister, Teixeira dos Santos, last September, and by the Portuguese prime minister, José Sócrates, two months later. In January, Portugal also sold €1.1 billion (MOP12 billion) of bonds to Beijing in a private placement. Previously, the Monetary Authority had mainly bought US Treasury bonds. However, to diversify its portfolio, it has also acquired bonds issued by Britain, Australia, Canada and Hong Kong. The authority said it was “committed to its investment strategy, which lies on a principle of maximum protection of principal while ensuring liquidity that, at the same time, tries to achieve reasonable long-term return rates with an acceptable adjusted risk rate.”

33 One crumb of comfort for the government is that inflation is growing at a slower rate for society’s “have-nots”. For the 12 months to January, the average level of the CPI-A was 2.8 percent higher than a year before. The CPI-A statistic measures inflation for households with an average monthly expenditure of between MOP6,000 and MOP18,999 or roughly half of all households. In contrast, the average level of the CPI-B rose by 3.37 percent. The CPI-B measures inflation for households with an average monthly expenditure of between MOP19,000 and MOP34,999 – about one third of households.

Unwanted import

Snooze control Inflation has broken through the governmentset level for immediate, remedial action but any substantive action is yet to be announced

he alarm has sounded. Inflation in Macau has risen beyond the level at which the government had said it would act to mitigate the effects of rising prices. Chief Executive Fernando Chui Sai On’s administration has taken some tentative steps but is yet to announce any important new measures. The Composite Consumer Price Index, the primary indicator, was 4.9 percent higher in January on a monthon-month basis. Significantly, the average level of the Composite CPI in the 12 months ended in January was 3.2 percent higher than the average in the preceding 12 months. The government had said it would act once the

average rose above 3 percent. There are concerns that the inflation rate may have reached 5 percent or more in February because of the customary increases in prices over the Lunar New Year holidays. The outlook for the coming months is no brighter. Economists say that without government intervention inflation could top 8 percent. The Monetary Authority has also warned that prices will maintain their upward trajectory this year. Even worse, median monthly earnings from employment were stuck at MOP9,000 in the fourth quarter of last year, exactly the same amount as a year before.

Part of the reason why inflation is accelerating is that it is being imported from the mainland. The annual inflation rate there rose to 4.9 percent in January, in large part thanks to steep increases in food prices. Macau imports most of its food from the mainland and so imports food price inflation. Figures from Guangdong’s Department of Foreign Trade and Economic Cooperation indicate that the province is Macau’s primary source of fresh farm produce. Zhongshan is a big exporter of farmed fish, for example, and supplies 70 percent of the freshwater fish eaten in Macau. To alleviate the effects of higher prices on the needy, the government has increased the income subsidy limit by 10 percent to MOP4,400. The subsidy is for full-time workers aged 40 or above with low monthly earnings. The government adds a cash allowance to their earnings so they can be sure of taking home MOP4,400 every month. The government will also revise the minimum wage for employees of contractors that clean and manage government property. At present the government insists that these employees are paid at least MOP21 an hour for working at public facilities. The government also began this year’s cash handout programme in January to help residents to cope with rising prices. The “wealth sharing” programme, as it is also known, was introduced in 2008, when inflation last peaked. The Social Welfare Bureau says it is ready to begin giving out a special subsidy for the needy in the second quarter of this year, if necessary. MARCH 2011

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

The illness of worsening inequality MONEY MATTERS ARE DAMAGING THE QUALITY OF LIFE IN MACAU AND WE’RE LOSING THE WAR AGAINST INEQUALITY AS THE ECONOMY GROWS he much-publicised, multi-country study “The Spirit Level: Why Equality Is Better for Everyone” by Richard Wilkinson and Kate Pickett, published in 2009, argues that improvements in quality of life require politicians to address the psychological and social wellbeing of societies rather than simply to focus on economic growth. The authors show that improving quality of life comes down to more than increasing average income levels or average living standards, and that income differences within a country play a major role – that is, inequality of income distribution. The report finds income differences and inequality within populations to be highly significant contributors to a range of problems found consistently in countries around the world. The authors argue that problems commonly found among those people at the bottom of the social ladder are consistently more prevalent in unequal countries than in equal countries. Such problems include lower levels of trust, mental illness, drug addiction, shorter life expectancy, higher infant mortality, obesity, children’s poor educational performance, teenage pregnancy, murders, rates of imprisonment and limited social mobility. Ill health and social problems, they argue, occur less frequently in more equal countries, whereas they are more common in countries with bigger income inequalities. If we wish to improve the quality of life, they write, we must reduce inequality, particularly in income.

Yawning gap

Income differences in Macau are enormous and growing. Macau’s Gini coefficient is worsening. The statistic ranges from zero or perfect equality of income distribution to 1.0, or perfect inequality, where one person has all the wealth. Macau’s Gini coefficient was 0.43 in 1999, 0.45 in 2004 and 0.52 in 2007. An overall median monthly earnings figure of MOP9,000 in the third quarter of last year, the latest figure available, conceals gross differences in income among Macau’s 320,000-plus workers, as the table shows. About 154,200 workers earned less than the monthly median, 63,900 workers earned half MARCH 2011

and 26,500 workers received more than double the median. There are more workers in the lowest income bracket than in the highest income bracket. Note that these numbers don’t provide detailed insight into the income of Macau’s super-rich. Not only is there gross inequality of income and increasing inequality in Macau but a huge proportion of workers are on pitifully low incomes. In the current economic boom, this is unacceptable. Little wonder then, that if we follow the logic of Mr Wilkinson and Ms Pickett, the quality of life in Macau

wage, income support, and redistribution of wealth within and from businesses. Concentrating on the economy is not enough. We hear that the government wishes to act to tackle this issue. Not before time. Why not have private sector employees or the lower echelons of government employees decide, or have a say in, the salary levels of their bosses or senior government officials? That would be interesting: 360-degree accountability with teeth. There is talk in government circles about caring for Macau society and the

Not only is there gross inequality of income and increasing inequality in Macau but a huge proportion of workers are on pitifully low incomes. In the current economic boom, this is unacceptable is deteriorating. This constitutes a challenge to those studies which indicate that Macau’s quality of life is acceptable.

Turning the tables

The message? If we want to improve the quality of life in Macau, political leaders must address inequality, improving the lot of the less well-off, the poor and the have-nots. This includes addressing taxation, benefits, pensions, housing, health services, social and psychological services, education, earnings, a minimum

development of a social and service infrastructure, but where is the action? Go visit a hospital and you will be overwhelmed by the crowds waiting for treatment. Look at the crowded classrooms; the incidence of mental illness, family breakdown and suicides; the inadequate social housing, the drug addiction, rising food prices and living costs; high rents and low incomes. Take all of society’s ailments into account and then try to say that inequality is being addressed in Macau. Where is the evidence?

Occupation

Legislators, senior officials, directors and managers of companies Professionals Technicians and associate professionals Clerks Services and sales workers Skilled agricultural and fishery workers Craftsmen and similar workers Plant and machine operators, drivers and assemblers Unskilled workers

Number Median monthly of workers earnings (MOP)

15,700 10,800 27,800 85,400 70,100 1,000 26,200 19,200 63,900

20,000 20,000 15,300 12,400 7,000 7,100 10,000 8,000 4,500

Source: Statistics and Census Service

Economic Trends by JosĂŠ I. Duarte

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

165,576

million

Consumption (in MOP)

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

million

Investment (in MOP)

Economic Activity

Government (in MOP) Trade balance: goods (in MOP) Trade balance: services (in MOP) GDP constant (2008) (in MOP)

million million million million million

% var

2.5 4.2 - 37.7 14.1 - 13.6 15.2 1.5

Latest

54,608 13,059 6,914 4,321 - 11,133 41,448 52,066

Notes

% var

31.3 11.0 - 8.3 12.9 20.7 49.7 27.1

million million million million million million million

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

33,361 million 240,466 million 124,525 million 235,006 million 106.17 base - 2008 0.5 %

4.6 13.7 25.8 13.8 3.92 --

Latest

% var

November November November November December December

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

549,500 331,000 9,000 2.7 %

1.5 2.8 -- 0.1

Notes Q3 Q4 Q4 November, var

Construction

Major sectors

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

Finished

m2 tons million million

- 57.1 40.7 - 56.9 - 1.9 - 27.7

Latest

3,065 281,266 21,623 673 5,010

m2 m2 tons million million

Notes

% var

1,300.0 20.0 - 16.9 79.7 23.5

December December December December December

Gaming 2009 Gross revenue (in MOP) Casinos Tables Machines

120,383 33 4,770 14,363

million

% var

Latest

9.6 2 18.7 21.1

18,970 33 4,791 14,050

% var million

65.7 0 0.4 - 2.2

Notes December 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

2,271,000 1,812 0.90 days 20,059 82.8 % 1.54 nights

% var

Notes

December 11.6 Q4 0.3 Q4, var - 0.20 days November 4.2 4.50 November, var - 0.05 November, var

%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) JANUARY MARCH 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 An end to the building boom

GRAPH 1 - Concrete and cement consumption Concrete (m3)

Cement (ton)

The construction sector has been one of the main drivers of Macauâ&#x20AC;&#x2122;s growth over the past few years. There are indications however that the steam has gone out of the sector and that the boom is over.

2,500,000

2,000,000

GRAPH 1

1,500,000

1,000,000

500,000

0 2002

2003

2004

2005

2006

2007

2008

2009

2010

GRAPH 2 - New and completed buildings (cumulative area) in square metres Completed

That assumption is demonstrated in the most striking manner by the figures for concrete and cement consumption in Graph 1. Construction activity, as measured by these two indicators, has returned to levels close to where they were in the crisis years of 2002 and 2003. Levels today are at about one-fifth of where they were in the peak years of 2006 and 2007. It is very clear that the boom is over and the construction sector has not been, for the past two years, as significant a contributor to growth as it had been in the previous four or five years of our analysis. GRAPH 2

New

9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000

This graph displays the cumulative figures for the floor area added in the period from 2002 to last year. It dramatically conveys the sense of cycle coming to an end, as the gap between completed and new buildings has almost disappeared. The graph also illustrates the outcome of eight years of intense effort; more than 7.5 square km of gross floor area. Such a remarkable level of construction activity is unlikely to be achieved again, as most of the big buildings, casinos, associated hotels and shopping areas are finished or in the final phases of their construction. GRAPH 3

1,000,000 0 2002

2003

2004

2005

2006

2007

2008

2009

2010

GRAPH 3 - Average size of buildings in square metres Completed

New

35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2002

2003

MARCH 2011

2004

2005

2006

2007

2008

2009

2010

This graph shows two distinctive features. First, there are the peaks associated with the construction of big structures and, secondly, there is a steep drop in the average size of new buildings towards the end of the timeframe of the analysis.

Building transactions

GRAPH 4 - Total value of transactions in MOP millions Office

Commercial

Residential

60,000 50,000

Although there are obvious connections between construction and the state of affairs in the real estate market, the two sectors are nonetheless distinct. It is clear the construction boom did not translate into a growing real estate market that was able to smoothly match demand for residential space. GRAPH 4

40,000 30,000 20,000

10,000 0 2002

2003

2004

2005

2006

2007

2008

2009

2010

The sector was relatively uneventful, so to speak, in the early phase of the years between 2002 and 2010. However, in the last few years, except for the financial uncertainties during 2009, the total value of transactions in the residential market increased by a factor of up to nine times compared to the recession years of 2002 and 2003. Growth in the value of transactions for commercial and office space also increased significantly in the period, although not as strikingly. GRAPH 5

GRAPH 5 - Average transaction value in MOP Office

Commercial

Residential

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

1,500,000 1,000,000

The average value of building transactions paints a familiar picture of growth. The average value of a flat sold in 2002 was about MOP500,000 (US$62,500). By the end of last year, the average value was five times that amount. Part of that increase is explained by a trend towards bigger and more luxurious units. That does not change the fact that such a dramatic variation in such a short period suggests a serious mismatch between demand and supply in the residential market. This has been much more pronounced in the residential sector than in the commercial or office sectors. GRAPH 6

500,000 0 2002

2003

2004

2005

2006

2007

2008

2009

2010

GRAPH 6 - Average price in MOP per square metre in the residential market Macau

Macau Peninsula

Taipa

Coloane

70,000 60,000 50,000

Taking the sum of our analysis into account, one might expect a noticeable increase in the transaction price per square metre for residential flats. In the period of our analysis, the average price per square metre in Macau increased three-fold. Although the average price for property in Taipa has always been higher than on the Macau peninsula, the rise in the latter was even more striking in relative terms. The most impressive rise, namely in Coloane last year, may be an outlier, thanks to the effects of the new One Oasis luxury development. Some might interpret that as a bad omen for Macauâ&#x20AC;&#x2122;s greenest area.

40,000 30,000 20,000 10,000 0 2004

2005

2006

2007

2008

2009

2010

MARCH 2011

Transport

FLYING NOWHERE, FAST BY LUCIANA LEITÃO PHOTO BY LUÍS ALMOSTER

After years of dwindling passenger numbers, there are hopes that a master plan could signal the airport’s revival, but success is unlikely with Air Macau a lone hand at the wheel

nly the smallest fraction of the city’s bumper tourism crowds ever enter Macau through the airport. For the majority, it is likely they are unaware the city even has an airport. Macau handled 25 million visitors last year, the airport welcomed just 1.6 million of them, a year-on-year increase of 1.7 percent. Including the city’s residents, there were 4.08 million passenger movements last year, a year-on-year decrease of 4.03 percent. It was the third straight year numbers had fallen. The combined effects of an awkward organisational structure, weak government support and hyper-competitive region-

MARCH 2011

al airline hubs do not help. Nor do the systemic issues facing Macau’s airline industry. Low-cost airline Viva Macau was grounded last year and is in receivership. Flag-carrier Air Macau has never been far from the news but has recently been involved in a credibilityshaking series of mishaps (see report on these pages). What is needed, experts say, is a financial commitment to make the aviation sector competitive and to broaden the city’s tourism base from mainland Chinese arrivals. Mr António Rato is an advisor to CAM, the Macau International Airport Company Ltd., the company in charge of de-

veloping the airport. “There is a clear lack of attention towards the aviation industry in Macau,” he says. The company is the public concessionaire having built the airport under a deal to manage its operation for 50 years. The exclusive agreement runs out in 2039. Development, financing and marketing are the main responsibilities directly executed by the company, while most of the operational and commercial activities are signed over to contractors. The company’s major shareholder is the government, with a 55.2-percent stake. Sociedade do Turismo e Diversões de Macau, the city’s original gambling company established by

Stanley Ho Hung Sun but whose ownership is currently under dispute, has a 33-percent share. The remaining shares are held by a number of businesses and institutions – based here and in the mainland – according to the airport company’s website.

Losing ground If the beginning of the problems for the airport could be traced back to cross-Strait détente between Beijing and Taipei, the global financial crisis seems to have been the ringing alarm bell. According to Mr Rato, the absence of direct flights between the mainland and Taiwan, alongside bumper low-cost MARCH 2011

Transport

flights, came together to provide the airport’s best ever results in 2007. From that peak of 5.5 million passengers, everything changed the next year. “Although local traffic was still growing, the lack of traffic resulting from the transfer flights was bigger,” says Mr Rato. “In 2007, there were 2.2 million passengers resulting from transfer flights and last year we only had 200,000.” Already hit hard by the commencement of direct flights over the Taiwan Strait, oil prices spiked, a political crisis in the crucial Thailand market led to flight cancellations, the financial crisis began to bite and then Viva Macau was grounded. All the while, the number of passengers moving through the airport kept decreasing. There was more bad news in January when Indonesia’s Mandala Airlines, a budget carrier that had recently introduced a Macau route, suspended all flights due to the company’s poor financial status.

MARCH 2011

As if to underline the ill-health of the airport, cargo throughput has also eased off, dropping by 0.6 percent last year. The 52,000 tons handled last year are less than a quarter of the amount handled yearly between 2004 and 2006.

Lacking ambition The airport company is now looking at new passenger markets to reverse the situation. There are plans to reintroduce flights to Australia, a former Viva Macau route, and to forge new routes to India, but prospects are slim. “I was in India talking with the main airline companies but for them, the passengers that are coming to Macau are already getting here through Hong Kong. They would have to double the costs to bring passengers that are already coming here anyway,” Mr Rato says. The aircrafts from India’s lowcost airlines, which may be more interested in Macau, do not have the range to reach Macau, he says.

41 If Indian airline companies are hesitant, what is the alternative? “That a local company would do it,” Mr Rato says. “But there is a lack of ambition in responding to Macau’s market.” The territory’s sole airline, Air Macau denies the substance of Mr Rato’s comments. In a written response to questions from Macau Business, the flag carrier said: “Air Macau has always been proactive in improving its services and network development to cope with the competition.” “The route development creates more opportunities and convenience for passengers and local residents.” Blame aside, the development of a substantial airline industry is a must for Macau’s tourism industry to grow, according to Jonathan Galaviz, managing director of tourism and gaming consulting firm Galaviz & Co. “Macau’s most important strategic development need is that of its airport and airline sector,” he said. If Macau wants

to diversify its tourist base “it must have vibrant direct airline connectivity to the rest of Asia,” he told Macau Business. “Every single major tourism destination in Asia has been supported by a world-class airport with global flight connectivity.” One of the main problems limiting the growth of Macau’s airport is the need for new local airlines to work under a master-concession held by Air Macau. “It will restrict the full growth potential of Macau’s airport,” he says. The sub-concession model was one of the issues that caused the demise of Viva Macau. It restricted the company from expanding into new routes, since it needed Air Macau’s approval first. Viva Macau was eventually grounded in March last year after the sole supplier of fuel at the airport withheld sales, claiming it was owed money from as far back as 2008. The case is still in court, mired in technicalities, to

New terms for old friends A

shake-up in the relationship between CAM, the Macau International Airport Co. Ltd. and one of its leading suppliers is likely to go ahead but only after significant changes, Macau Business has learnt. The airport manager’s initial 15-year contract with Administration of Airports Ltd. or ADA was renewed in 2009 until September 2011, but only after a long and often tricky negotiation process. ADA received a letter late last month saying its contract would not be renewed later this year. According to CAM, the goal of the letter was to avoid the automatic renewal of the current contract. The airport is apparently still eager to retain ADA but only under revised terms, a wellplaced source told Macau Business. CAM says the airport’s “operational mode will have to change and adapt to fit the current societal challenges and an improved management philosophy shall be implemented accordingly.” According to CAM, the current operational mode at the airport has been in place since the beginning of the infrastructure’s operation, 16 years ago. Given the socio-economic development of Macau in recent years, changes are needed, it says. Negotiations between the two parties have been hard and are on going, although the source told Macau Business that the goal was to have the contract wrangling resolved by now. ADA is responsible for maintaining most of the airport’s day-to-day functions, including logistics, safety equipment, the aerodrome and financial functions. The company is a SinoPortuguese joint venture between China National Aviation Corporation (Macau) Co. Ltd. and Aeroportos de Portugal SA.

MARCH 2011

Transport

decide if there was an administrative act from the government telling Air Macau to revoke Viva Macau’s air operator certificate and, if so, whether it was legal.

A master plan There is hope anew for the airport. Oscar Ho Man Cheng, an expert on business development at the Institute for Tourism Studies, believes if the infrastructure is reinvented as a hub for low-cost airlines, there will be opportunities to expand into new markets. Since the airport cannot compete directly with Hong Kong, Mr Ho suggests lowering the operating charges for cutrate airlines. “They could then choose Macau as the hub for their Southeast Asian routes,” he says. For its part, the government is not oblivious to the woes at the airport. It has hired an international consultant, French firm ADP Ingenierie, to create a master plan for development. The study could be ready as soon as July. The president of the Civil Aviation Authority, Simon Chan Weng Hong said the study would determine five-year, 10-year and 20-year plans for development, including the expansion of the apron and terminal, plus the most efficient use of the runway. The master plan will also have to include changes to the

MARCH 2011

present facilities, in order to deal with the proposed road transport network around the new Taipa ferry terminal in Pac On and sea-air links. Mr Chan said the plan would establish a more competitive environment for the aviation industry and draw conclusions on attracting tourists to the city. In its 2011 policy address, the government mentioned the need for a new long-term plan for the airport’s infrastructure and discussed an investment programme for upgrades.

Improved prospects According to Mr Rato, all airports must have a master plan, something that was lacking in Macau. “There was a master plan done by the same company [Ingenierie], which was not formally approved at the time. I don’t know the reasons why,” he says. There was, indeed, an expansion plan for the airport, announced in 2005 but it was put on ice. At the time, given the yearly increase in passenger numbers – direct flights between the mainland and Taiwan had not started yet – a review was urgently required. The plan was to include the enlargement of the southern area of the passenger terminal, increased capacity at the cargo terminal and more parking spaces. With the delivery of the master plan this year, Mr Rato

43 is hoping to get “clarification” as well as a significant level of financing from the government. The lack of a cohesive vision has made it difficult for the airport managers to move on with significant developments. “This allows us to define which needs have to be taken care of in terms of expansion, in accordance to the airport demand,” he says. While the master plan is still in the works, the government has already launched a project to reclaim 160,000 square metres of land in an area between the Taipa ferry terminal and the airport. “Apparently, a part of this reclaimed land will be for the airport,” says Mr Rato. “Most likely, it will become the new area for executive aviation but we are still waiting for it to be formalised.” The airport company is also investing, spending MOP130 million (US$16.25 million) on infrastructure upgrades last year. Air Macau says the announcement of a master plan and further development is good news. “The capability and capacity of the Macau International Airport facility is not enough for the future development of the air industry in Macau,” the company said. “We are glad to hear the government is going to improve the airport facility.”

Turbulent times A

stream of news headlines and evening news bulletins about failed engines and maintenance faults on Air Macau jets have been played down by the airline, which has stated they are just run-of-the-mill technical problems. In the past eight weeks there have been at least four reported incidents involving the Macau flag carrier. In a written reply to questions from Macau Business, the airline confirmed two. The airline has seldom been far from the headlines for most of its history and the most recent reports came hot on the heels of pilots complaining to Portuguese-language newspaper Hoje Macau that the company’s jets were old and needed replacing. In the first incident, a replaced engine that caught fire during its first “run-up test” on January 25 was a “typical technical phenomenon,” the company said, adding the aircraft was inspected and nothing abnormal was found. “The aircraft has been dispatched for normal operation,” the airline said. During the Lunar New Year break, a right wing tank overflowed while an Air Macau jet was on the tarmac in Beijing. “It was immediately stopped by crew action following Airbus manual guidance,” the airline said. “The aircraft was towed back to the apron and all passengers disembarked normally. After around four hours of inspection and repair, the aircraft was released to flight.” The flight was further delayed when the crew had to be replaced after exceeding the maximum number of hours on duty permitted by safety rules. The airline said “higher than normal” compensation was paid out to affected passengers. Another two incidents have hit the headlines but Air Macau either denies they occurred or were its fault.

Documented troubles

Hoje Macau reported last month that a jet broke down while taxiing in Bangkok, was unable to take off and came close to hitting parked planes as it was taken back to the terminal. “During the Chinese New Year period, there was no report about problems on flights on the Macau-Bangkok route caused by technical reasons,” Air Macau says. Several news outlets also reported on an engine problem on a flight to Seoul on February 5. Air Macau says that due to poor weather, the flight departed later than scheduled. A passenger fell ill during the flight, insisted on immediate hospital treatment and the plane turned around. “After the ambulance arrived, the passenger felt better and decided to remain on board. At this time, the operational hours of the pilots were over the limitations. The flight had to wait for the fresh cockpit crew,” Air Macau says. As for the pilots’ complaints that the jets the airline operates are too old, the airline says Airbus rates the “economic life” of its jets as 25 years, and that the “average operation life of aircraft in the Air Macau fleet is around 10 years”. The president of the Civil Aviation Authority, Simon Chan Weng Hong, says Air Macau is now conducting an inquiry into the incidents, under the regulator’s supervision. At the very least, the reports are “bad for the airline company’s image,” says António Rato, the advisor for CAM, the Macau International Airport Company. Air Macau says there has been little or no effect on its bottom line. The airline says flights to Beijing were 75.6 percent full last month. During Spring Festival, flights from Beijing to Macau were more than 98 percent full. Air Macau is expecting to close last year with a profit of at least MOP180 million (US$22.5 million), after years of running at a loss. The company’s executive committee president, Zheng Yan, told reporters that, if the company continues to post good results, it would review its pricing strategy, in order to push down fares. MARCH 2011

Transport

High life Private jets are a glamorous but barely profitable business, says Jet Asia’s boss, John Galati as he sets out to improve the bottom line at his loss-making company BY JOANA FREITAS

he chief executive of Macau private jet and aircraft management company Jet Asia does not mince his words. “It’s difficult to make a charter private jet company profitable,” John Galati told Macau Business. “Jet Asia is a private jet company designed for VIP clients and, in my point of view, it will never make money. We have never made money and will never make money.” The company is controlled by Sociedade de Turismo e Diversões de Macau (STDM), the parent company of gaming concessionaire Sociedade de Jogos de Macau. It is STDM that sustains Jet Asia, by “putting in money every month,” Mr Galati says. One of the factors holding the company back from becoming profitable is high fixed costs. “These are related to the maintenance and insurance of the fleet,” explains Mr Galati. “In airline companies, you have to fill more seats or put more cargo in to make money. There’s no other way. But private jets are totally different because we charge the same amount whether you have one or 15 passengers.” He says the global financial crisis made the company’s bottom line look even worse than it was before, but things started to improve last year. Making Jet Asia at least pay its way is one of Mr Gala-

MARCH 2011

ti’s goals. He says his first aim is to minimise costs. As part of this effort, staffing has been reduced by 25 percent. Providing a first-class service is one way to increase revenue, as is getting more charters from outside Macau. “I’m trying to seek board approval to go out of Macau to some other casino owners,” he reveals.

Small world This does not mean that Jet Asia is extending either its reach or capacity. The company has no plans for expansion because of the small customer base in Macau. The city would need to get close to 1 million people before “we could have the potential to fill up the airplanes and create more destinations,” says Mr Galati. Besides, “almost all of the VIPs here in Macau have their own jets”, he says. “That’s why most of our business initiates out of the territory.” While acknowledging these challenges, Jet Asia is not thinking of moving away from the city. Despite Hong Kong’s huge potential, operating costs are higher there, Mr Galati notes. There is another, new private jet charter company in Macau, called Macau Jet. “It is absolutely a competitor,” acknowledges Mr Galati. “It is difficult for them to compete against us because they have less aircraft than Jet

Asia and they started just one year ago.” Jet Asia has been operating since 1995. The company’s fleet comprises 11 private aircraft, including six Hawker mid-size jets, according to their website. Jet Asia provides transport mainly for STDM’s chairman Stanley Ho Hung Sun’s family but the company’s purpose is also to bring high-profile travellers to Macau.

Not gamblers Mr Galati says multinational companies make a significant number of charters to fly executives in for board meetings and other appointments in the region. Most of the passengers are either European or North American. Gamblers do not figure much in the customer base. “The jets are not utilised for gaming that much,” he says. “Most of the charters that we do are not related with casinos.” The cost of a charter ranges from US$20,000 (MOP160,000) to US$120,000, depending on the destination. Customers can ask for tailormade services and rates vary accordingly. Outside of destinations in the mainland, the company most often flies to Vietnam, Cambodia, Taiwan, Malaysia, India and Japan. Jet Asia usually works with charter suppliers, which give quotations to prospective charterers. “If you want to travel, you usually go to an agency in order to fly by a certain airline company. We work the same way. We have a company that asks us if we can do the charter or not,” says Mr Galati. Jet Asia then sends the bill to the charter supplier, which charges the client. However, if you have the cheque account to match, prospective high flyers can also contact Jet Asia directly.

Photo: António Falcão

One foot on the ground M

“It’s difficult to make a charter private jet company profitable,” says John Galati

acau had never had an airport, so everything had to be done from scratch,” John Galati recalls. He knows what he is talking about, as he was a team member of cargo and ground handler Menzies Macau from 1995, the year the airport opened, to 2008. When he left Menzies Macau, he was immediately offered a job in the same field at Jet Asia, which is owned by Sociedade de Turismo e Diversões de Macau (STDM), and which was under the direction of Chuck Woods, then chief executive. “But three days before they took the decision not to renew Chuck Woods’ contract, they asked me if I wanted to also assume that responsibility. The way I became the CEO was strictly by accident,” admits Mr Galati. STDM’s original purpose in hiring Mr Galati was to put him in charge of setting up a new company to bid for a second licence for ground handling at the airport, directly competing with Menzies Macau. It has not yet abandoned that ambition. Menzies Macau has been the only ground handler at the airport since its opening but its exclusive contract expired at the end of last year. Although the present arrangement between Menzies Macau and Macau International Airport remains in effect until 2013, the airport has indicated that it could invite bids this year for a second ground-handling licence. STDM “may be interested in bidding” for a handling licence, says Mr Galati. However, he says it has to be evaluated. “It may, or may not be, a good JF business,” he says.

MARCH 2011

Transport

Holding pattern Sky Shuttle waits for nod from governments to extend delta routes BY LUCIANA LEITÃO

he sole operator of helicopter services connecting Hong Kong, Macau and Shenzhen is awaiting the result of talks between the three governments over its proposal to add Dongguan, Jiangmen and Nasha to the routes it services in the Pearl River Delta, the service’s chief executive has said. Sky Shuttle Helicopters Limited, owned by businessman Stanley Ho Hung Sun, has submitted a proposal to the Hong Kong government to add the new routes, but company chief executive Cheyenne Chan said it was difficult to say when the firm would receive a decision. “Air space is controlled by the military on the mainland side and it takes time to open the skies,” she said. The aviation industry is highly regulated and there are many issues to resolve before any approval is given. “It’s not just what the operator can do, it’s between governments. Governments need to conduct all the talks and provide the infrastructure, air-traffic control and other services, such as customs,” Ms Chan said. Civil Aviation Authority of Macau president Simon Chan Weng Hong said that given the “satisfactory growth” of services between Macau and Shenzhen, there was “great potential to further develop the market within Guangdong province”. Flights between Macau and Hong Kong decreased 4 percent year-on-year to 15,302 last year, while those between Macau and the mainland rose 2 percent to 3,452, Macau Customs Service figures show. The head of the aviation regulator expressed the hope that “through the Guangdong and Macau Cooperation Framework Agreement, both governments could study the possibility of opening more helicopter routes to other Guangdong cities”.

MARCH 2011

Sky Shuttle was born in 2008 but has been flying since 1998 when it was established as East Asia Airlines Limited. The first service was between Hong Kong and Macau. The Shenzhen route was added in 2002. “In the beginning, we only had two Bell 222 helicopters with six seats and about six flights per day,” Ms Chan said. “Currently, we have 54 flights per day and five state-of-the-art [AgustaWestland 139] helicopters with 12 seats, manufactured in Italy.” Flights depart every 30 minutes from 9am to 11pm on the Hong Kong-Macau route and there are 12 flights a day between Macau and Shenzhen. The company offers charter and corporate services. Sky Shuttle raised fares by about 12 percent at the beginning of the year, meaning the cost of a trip varies from MOP2,900 (US$363) between Macau and Hong Kong, with a peak surcharge of MOP200. A seat from Macau to Shenzhen costs MOP3,400. Around half of its clients are businessmen looking for a fast and comfortable service for travelling in the delta region. “It only takes 15 minutes from Hong Kong to Macau,” Ms Chan said. “The ferry takes around one hour and passengers have to wait in the queue for immigration.” Leisure clients were mostly from overseas but Sky Shuttle’s client base includes a number of Macau residents, she said.

ast July, one of Sky Shuttle’s helicopters en route to Macau was forced to ditch in Hong Kong’s Victoria Harbour shortly after take-off. There is still no answer why. “The reasons are still under investigation. The preliminary report has been issued but the final one will be issued by the end of this year by Hong Kong SAR,” the company chief executive Cheyenne Chan said. “I don’t want to speculate.” Witnesses reported hearing a loud bang before the aircraft descended into the harbour. There were media reports that the tail had separated from the body of the helicopter. Ms Chan claimed the impact on business was minimal. “We were very happy to see resumed our services just five days after the incident and also passengers coming back within a week,” she said. Macau aviation chief Simon Chan Weng Hong said the accident took place in Hong Kong airspace and the inquiry was the responsibility of the Civil Aviation Department of Hong Kong or HKCAD. However, the Macau regulator has aided the inquiry. “We were informed by HKCAD that they sent some wreckage to a research and development company in the United Kingdom last September for analysis. The HKCAD is still waiting for the wreckage analysis report from this company,” Mr Chan said.

MARCH 2011

Politics

Master plan The annual meeting of China’s National People’s Congress has ramifications for the next five years and beyond BY MARIA JOÃO BELCHIOR IN BEIJING

he eyes of the world will turn to Beijing this month as the leaders of the world’s second-biggest economy lay out their plan for the next five years. The 12th Five-Year Plan, otherwise known as the National Development Plan for 2011 to 2015, and the government work report will be delivered for review at the annual plenary session of the National People’s Congress, the mainland’s legislature. The session will open with a speech by Premier Wen Jiabao. Then, for the first two weeks of the month, its 3,000 members will review the new five-year plan and the budget. Domestic consumption and key areas for investment are seen as the main challenges with the mainland economy continuing to grow quickly (see re-

MARCH 2011

port in these pages). Even so, China is slightly lowering its annual economic growth target for the coming five years, to 7 percent, according to Mr Wen. He said that the government would do away with the 8 percent target that has been a fixture of annual economic plans for the past six years. Other hot issues for the coming five years are likely to be: managing population growth in big cities; environmental protection; a new taxation system for foreign enterprises; and the real cost of large-scale development. Concurrent with the National People’s Congress session is the annual meeting of the Chinese People’s Political Consultative Conference. These are the country’s most important national assemblies.

From what has been made public, this next five-year plan will include measures to improve the way foreign investment is utilised, with a better supervisory and legal environment for investors and further protection of their rights. The government will also take steps to open more of the service sector to foreign investors, including logistics, education, health care, sport and finance. On the domestic front, the government says it is planning to improve the quality of health care and promote the development of care for the elderly – which is timely, as the mainland’s population is ageing. The new five-year plan is also likely to stress the need for Beijing to enhance its soft power. This will include

49 political stability but the inflation rate is not expected to fall in the short term. To curb inflation, credit growth must be curbed. The central bank, the People’s Bank of China, announced the first interest rate increase of the year last month and economists believe it will not be the last.

Second’s silver lining T

he mainland enjoyed the second-fastest growing economy in the world between 2001 and 2010, according to a recent study by The Economist and the International Monetary Fund. Angola had the fastest. The ranking was based on annual gross domestic product growth in each country. The IMF forecasts that in the next five years, seven African countries will be among the top ten fastest-growing economies. But while Ethiopia, Mozambique, Tanzania, Congo, Ghana, Zambia and Nigeria will be runners-up in the next five years, the mainland will dominate the top spot, followed by India. The African countries will be drawn into the top 10 by new-found sources of foreign direct investment. A substantial proportion of that investment will come from Beijing, a textbook illustration of the importance of the mainland’s emergence to the rest of the world. MJB

protecting China’s cultural heritage and paying greater attention to new media.

Revving the engine The mainland’s model for development has two facets. On one hand, there is the economic model as conceptually defined by the five-year plans. On the other, there is the reality of what is happening on the ground, the adaption of the theory into reality. The new five-year plan comes at a time when the government is redefining its present goals and setting new ones, and at a crucial moment for the economy. Of great significance is the politician’s label for the mainland as “an important engine for global recovery” from the global financial crisis. Highly

dependent on exports before the crisis, the country’s processing industries suffered during it. The government reacted by adjusting macroeconomic policy and by introducing the “trillion investment plan”. Boosting domestic demand through consumer subsidies, the plan helped the mainland ride out a crisis that paralysed some economies in the West. This response was a success. But if the financial crisis was unexpected during the period of the 11th Five-year Plan, the new plan will be expected to provide measures to tackle the after-effects. The priority is inflation. In January, the Consumer Price Index was 4.9 percent higher than a year before, meaning inflation was at its highest since 2008. Price rises must be controlled to preserve

Blunt instruments The State Information Centre’s forecasting department referred late last year to allowing the renminbi to appreciate as one way to manage inflation. But that weapon is a double-edged sword and it would have to be wielded carefully. The government has been constricting the volume of new loans, setting the ceiling for new lending this year at RMB7.5 trillion, substantially less than the amount lent in recent years. Controlling where the lending goes is a more precise weapon against inflation. Fearing a real estate bubble, and the real risk of non-performing property loans, the government wants to reduce credit for high-end residential developments. It also wants more investment in affordable housing because so many more workers are expected to migrate to the cities. The economy is still investmentfuelled and there are plans to direct spending in the next five years into vital areas such as urban development and rural modernisation. Open debates online, in which mainlanders can ask their leaders questions, return to the same topics time after time: living costs, housing and the environment are the priorities for ordinary Chinese. The government has responded since 2009 by peppering its official language with the “eco” prefix.

The east is green The environmental cost of breakneck growth and the alternative of green development have been staples of government reports since the mid-2000s. They will continue to be staples of the new five-year plan, with tougher environmental regulations and punishments for lawbreakers on the way. The new five-year plan is certain to stress the importance of investment in renewable sources of energy. For years to come, however, economic growth will probably be powered primarily by burning coal. It flies in the face of the government’s objective to make the MARCH 2011

Politics

country a clean-energy powerhouse. Solar energy is looming as big business and it is projected that inside a few years the mainland will surpass countries such as Germany, an economy that has been investing in alternative energy for decades. The mainland overtook the United States as an investor in renewable energy last year. Over the next decade, spending on energy technology is likely to mean it will remain one of the biggest investors. However important investment may be to the economy, consumption is playing an ever-greater role as the country transforms itself from the factory of the world into the great mall of China, albeit at its own pace. The growing middle class, with its appetite for buying, is giving strength to the domestic market and changing the economic development pattern. The new five-year plan is likely to reflect this, with the government making the expansion of domestic demand, especially household consumption, a longterm strategy to maintain healthy and stable economic development. Even so, the governor of the People’s Bank of China, Zhou Xiaochuan, said last month that it would take at least a decade for exports to be replaced as the engine of the economy. In the meantime, manufacturers will have to continue to improve productivity.

The government hopes to move some industries away from the coast to boost rural development. Favourable conditions for foreign direct investment are expected to lure foreign companies into more remote areas.

Money is power In many world capitals, the new five-year plan will be scrutinised for clues about the future international value of the renminbi. But analysts expect no big deviations from the path it has followed so far. “The emerging economies lack monetary sovereignty,” says a study by the Chinese Academy of Social Sciences, a government think-tank. It is a mantra repeated by the politicians in almost all meetings of world leaders. When Washington asks for the appreciation of the renminbi, Beijing answers that the world cannot be dependent only on the US dollar. For Beijing, there is an obvious risk involved in pushing up its currency: more than 70 percent of its huge foreign reserves are in US dollars. At present, Beijing is promoting the renminbi in various ways, and currency swap agreements have been signed with some countries that import goods from China. Hong Kong has been used as a laboratory for the internationalisation of the renminbi. Last year a pilot programme allowing foreign investors to invest in renminbi-denominated bonds began. Beijing

MARCH 2011

The Iron Rooster flies B

ack in 2004, the Shanghai Maglev was heading towards its regular top speed of about 430 km/h and revealing Beijing’s ambition to become a leader in the field. Six years later and the next five-year plan will see the nation’s city knitted together by high-speed links, creating another first for Beijing. Beijing-Shanghai, WuhanGuangzhou and Beijing-Tianjin are just three of newest connections in the high-speed rail network. Today, it is possible to reach Tianjin from Beijing in about 30 minutes, at an average speed of 234 km/h. On the fastest stretches, the train reaches 330 km/h. The Beijing-Shanghai line will connect the two cities in four hours. It is to be inaugurated in June. The plan to construct more high-speed lines received a considerable share of the money from 2009’s economic stimulus programme. There are now 17,000 km of high-speed lines under construction. By 2015, the government plans to have 25,000 km, paid for with US$300 billion of public funds. The future development of high-speed links was cast into doubt last month when the railways minister, Liu Zhijun, was accused of corruption. The government has reassured the world it will keep its plan for modernising the railway network in the next five-year plan but Mr Liu has been sacked from his post. MJB

Livin’ la vida loca Public servants spend at a presidential rate when they represent the public on official trips, an audit shows

leeping in the imperial suite of a European luxury hotel where a night can cost more than MOP13,000 (US$1,625) or eating a meal costing up to MOP1,300 a head is the kind of extravagant lifestyle one would expect of some of the high rollers coming to gamble millions at the local casinos. In fact, it is the kind of thing that Macau’s public servants get up to while onduty on overseas trips. And it is paid for with public funds, as shown by a report last month by the Commission of Audit on official trips. The report says organs of government “manage their workers’ official trips each in its own way” and “have a weak perception of the need to implement controlling procedures and on saving public resources”. The commission recommends a complete review of the system “in order that the public money would be spent properly”. Commenting on these findings, Chief Executive Fernando Chui Sai On pledged to follow the commission’s advice and to revise the rules on official trips, which are more than 20 years old. In the meantime, the government will issue internal guidelines to control over-spending, said the secretary for Administration and Justice Florinda da Rosa Silva Chan. The Commission of Audit’s report reveals that in 2008, official trips cost the government MOP41.5 million, including lodging, food, transport and daily allowances. The commission concluded that the amounts spent on lodging and meals tended to be “relatively high”. More than 60 percent of the most expensive rooms booked for public servants cost MOP2,000 a night and up. Top dollar was an official of the Sports Development Board, who stayed in an imperial suite priced at MOP13,770 a night during an official trip to Portugal. The average meal price per person ranged from MOP150 to MOP1,300.

Commission of Audit, Ho Veng On, was the chief-of-cabinet of the former chief executive, Edmund Ho Hau Wah. There are two standard practices for trips made by civil servants on the public’s purse. The commission found that for one-day trips, the practice of granting fixed daily allowances was followed about 60 percent of the time. But for trips lasting two or more days, the practice of reimbursing expenses for which receipts could be produced was followed more than 70 percent of the time. The commission concluded that this is because fixed daily allowances have not been revised for over 15 years, “making them completely obsolete”. For instance, the daily allowance for a trip to the mainland is MOP1,100, and meant to cover lodging and meals. In 2009, the average cost of a hotel room alone was about MOP900 a night in Beijing or Shanghai, the commission’s report says. Some public entities, “with no power to do so, have established their own internal rules”, the report says, meaning there could be various daily allowances for exactly the same trip, depending on which part of the bureaucracy the civil servant worked for. The commission also noted that when public servants arrive home they did not always obey the rule that they must submit reports on their trips.

Fiddlers on the hoof The commission examined a sample of 2,876 trips made by the officials of 10 public entities between July 1, 2008 and June 20, 2009. Neither the Chief Executive’s office nor any of the government secretaries’ offices was included. During the period covered by the audit, the man who now heads the MARCH 2011

Politics

Powering down More public tests of LED lighting planned to reduce spiralling energy consumption

acau is set to launch more trials for street lighting using LED lamps. At the same time, the government will look at expanding its use of solar panels to produce electricity, in an effort to conserve resources and money. According to the head of the Office for the Development of the Energy Sector, Arnaldo Santos, the first public lighting trials using LED lamps will run at least until next month. The lamps were installed along a stretch of Estrada da Vitória, on the peninsula and are “allowing for savings of 40 percent in electricity consumption,” Mr Santos told the Lusa news agency. Macau has 17,000 light poles maintained by the government that burn an average of 18 million kW a year, or the equivalent of 0.5 percent of the city’s total electricity usage. The bill is worth MOP20 million (US$2.5 million) a year. If they were swapped for LED light bulbs, the annual saving to the government would be MOP8 million. While that seems to be sound financial sense, Mr Santos said the total investment to replace all public lights with LED lamps was high, about MOP100 million. This is one reason why additional testing is needed before a decision on a more comprehensive roll-out is made.

Stepwise planning

Macau has 17,000 light poles maintained by the government that burn an average of 18 million kW a year, or the equivalent of 0.5 percent of the city’s total electricity usage. The bill is worth MOP20 million a year

MARCH 2011

“All these trials are part of the goal of changing all Macau’s public lighting, but we need to study the best solutions because the investment is big. We need to figure out what the best technology is to ensure improved lighting quality that allows for better public security, financial resource savings and environmental improvement,” said Mr Santos. On the other hand, he adds, changing all the city’s public lighting “is not an immediate task; it takes time and thorough planning”. “We are working on it and this year we are going to create three other trial areas in Taipa,” he said. However, he said saving resources

“All these trials are part of the goal of changing all Macau’s public lighting, but we need to study the best solutions because the investment is big,” says Arnaldo Santos

and being environmentally friendly was a task that included more than just the city’s lighting. Later this year, the government will also launch trials of LED lighting inside public buildings. There are also plans to increase the government’s photovoltaic electricity production by installing solar panels at the Communications Museum and in several public housing estates. “We cannot test only one device at a time and only once, because technology keeps on developing and becoming more accessible,” Mr Santos said. The drive to cut energy consumption is significant, as most of the city’s electricity is imported from the mainland. Over the first nine months of last year, electricity imports increased by 41.2 percent, accounting for almost three quarters of the total available supply, and overall electricity consumption increased by 6.6 percent.

Worrying trends O

ne in five residents separates household rubbish for recycling on a regular basis, and just one in four knows that paper for recycling should be placed in the blue bin of the public recycling stations, according to an environmental awareness survey commissioned by the government. Worryingly, 40.5 percent said they never separated their rubbish and mixed it with non-recyclable waste, according to the Macau Daily News newspaper. The study was conducted in October by the Macau University of Science and Technology which surveyed 1,555 people. The Environmental Protection Bureau said the survey’s results showed there was a need to improve environmental awareness. In 2009, the city produced 160,000 tons of domestic refuse. In the same year, just 237 tons of paper was recycled, down 16 percent yearon-year.

MARCH 2011

Interview

FINDING THE RIGHT TABLE The special relationship between the mainland and the United States, the G2, is not enough to solve the world’s problems, warns Romano Prodi, former European Commission president and twice prime minister of Italy. He recently delivered a speech on the European Union and participated in a debate on Europe-China-Africa relations in Macau. Mr Prodi talked to our senior analyst José I. Duarte and explained why he thinks the city is an important laboratory for the relationship between the mainland and the West MARCH 2011

ou have been involved in several European UnionChina summits. There’s a long history of contacts and working with the mainland. How has the relationship evolved? What are the issues or obstacles to a stronger relationship? Romano Prodi - If you take the EU

framework, relations are very good. There are no tensions, no big problems. If you had to put it in one phrase, you would say “perfect”. But I think the relationship could and should be more intense, both from a qualitative and a quantitative point of view. When I was president of the European Commission, about 10 years ago, we had already tackled the problems of [China’s] recognition as a market economy and the end of the [European] arms embargo [against China]. But these problems are still there. Of course, they do not impede things. There is still friendship and cooperation. But I think friends should solve problems that [have been] on the table for so many years. This is a fact and clearly a consequence of a European mistrust vis-à-vis China [and] of a difficult phase for European politics. We are just setting the rules for such a big, big, big union with 27 members. The decision process is much slower than we hoped and this is a big obstacle to deeper cooperation between Europe and China. The other problem is European public opinion. Such a strong rise of China, multiplying exports and also emigrants to Europe, sometimes gives Europeans a sense of fear. That must be explained, must be guided by political wisdom.

Photos by Carmo Correia

“SUCH A STRONG RISE OF CHINA, MULTIPLYING EXPORTS AND ALSO EMIGRANTS TO EUROPE, SOMETIMES GIVES EUROPEANS A SENSE OF FEAR. THAT MUST BE EXPLAINED, MUST BE GUIDED BY POLITICAL WISDOM”

MARCH 2011

Interview

You have advocated that there are some lessons that China should take from Europe, namely at the level of creating a welfare state.

I do think that, because, in terms of personal income, in terms of expectations for the future, this is just the moment when China will be obliged to define a welfare state. And there’s a choice. Do you want to go in the American direction, or do you want to go in the European direction? A country like China, because of its historical roots, because of its political choices, its characteristics, is in some way [inclined] to the European welfare state, in which the state has a specific role and in which the cost of welfare is less than in the American model, taking into account the results. Take, for example, the health system. To get universal protection, Europeans spend much less than the Americans, who do not have universal protection. And in terms of income distribution fairness and protection of the lowest classes, I think the European system is much closer to Chinese expectations. I know that a process needing so many resources cannot be built in one year or even three. It is a long-range perspective. From this point of view, the European model of life represents, in my opinion, the ideal model for the new Chinese generation. At the popular level, the American model is much shinier than the European one, but sometimes you should better focus on the substance of the problem. There is, in some way, more fairness, more justice in the European model. It is up to the Chinese government to take a decision, not up to us.

“IN THE CHANGING WORLD, WE NEED LABORATORIES, WE NEED CUSHION AREAS. I CONSIDER THIS [CHINA’S SARS] AS A FANTASTIC AND WISE CUSHION AREA” MARCH 2011

An academic turned politician B

orn in 1939 in Scandiano, Italy, Romano Prodi has matched a remarkable career as a scholar with one in Italian and international politics. Mr Prodi was president of the European Commission from 1999 to 2005. During his presidency, the euro was successfully introduced and the European Union was enlarged with 10 new members in central, eastern and southern Europe. He was also prime minister of Italy from 1996 to 1998 and again from 2006 to 2008. He has been, since then, president of the Foundation for Worldwide Cooperation and in July 2008 was named by the secretary-general of the United Nations, Ban Ki-Moon, as chairman of the UN-African Union high-level panel for peacekeeping in Africa. Since February 2009, he has been professor-at-large at Brown University in the United States. Last year he was appointed professor at the China-Europe International Business School in Shanghai. “I’m absolutely happy because school students and the alumni are a substantial part of the new Chinese flourishing generation. So it’s quite an experience and keeps me younger,” Mr Prodi told Macau Business in January. Mr Prodi is no stranger to the mainland, a country he has visited regularly since 1984. “I don’t say that I am familiar with China because nobody is familiar with China,” he says, adding he was there at the birth of the special relationship between the mainland and the West. “Since 1984 I was betting on China – and I am so happy that the bet was not wrong”.

What is the role of Macau and Hong Kong, which have been European outposts for a long time, in this EU-China relationship? Do you think there could still be value added for Europe on these historical connections with China?

I don’t want to go back only to historical rhetoric. I do think that the links were strong. Ricci came here to learn Chinese; think about what Hong Kong represented as a financial and trade link between the East and West. It has been so wise to keep the diversity. Wise for China and for Europe, for both, to have some sort of an open area in which you may make experiments. Think how the Chinese monetary experiments pass through Hong Kong. A sort of lab?

Yes, these are laboratories. I call them a bridge. But you are correct. It is more appropriate to say a laboratory. In the changing world, we need laboratories, we need cushion areas. I consider this as a fantastic and wise cushion area. By preserving them, we preserve room for dialogue, room for experiment.

Global role Coming back to China, but now regarding its relationship with the United States, some even talk about a G2.

My feeling is not like that. First, a G2 is not appropriate, not even a G3. We are in a moment in which everybody is looking at the dialogue between Mr Obama and Mr Hu. If you read the excerpts from the press conference [held during the Chinese president’s recent US visit], you find there is fantastic, positive progress, because 2010 was a bad year for the relationship between the United States and China. This meeting was warm, but no hint to a G2. The big issues that were on the table are still on the table. I don’t want to say: ‘G2, or let me make it G3, and problem solved’ because this is a different world. We are in a multilateral world. Think [about] the role, the real power of Turkey, Brazil, Indonesia, Russia. Let us not think of a world that is different from the real world in which we live. Clearly the Chinese MARCH 2011

Interview

“LET US NOT THINK OF A WORLD THAT IS DIFFERENT FROM THE REAL WORLD IN WHICH WE LIVE. DON’T PUT IN YOUR MIND A WORLD DOMINATED BY CHINA OR BY AN AGREEMENT BETWEEN CHINA AND THE UNITED STATES”

59 and American roles are particularly important. In the future, the role of China will grow. But don’t put in your mind a world dominated by China or by an agreement between China and the United States. The world will be a multilateral world, with many protagonists, major and minor, no one strong enough to dominate the others. The United States dominates the military side but there are demographic and growth sides. In terms of Gross National Product, Europe is bigger than the Unites States and China. So, you have this world. Now the problem is to find the table around which to settle the problems.

“NO COUNTRY, STARTING WITH GERMANY, HAS AN INTEREST IN DESTROYING THE EURO. I CAN ALSO TELL YOU THAT YOU DO NOT ALWAYS HAVE RATIONALITY IN POLITICS”

Should it be the G20?

Well, should be. You put it correctly, “should”. I was full of hope at the first meeting at the peak of the [global financial] crisis. Then, at the following meeting, we didn’t find a common agreement. Clearly we have to go for the G20. But also we have to give more authority to a supranational body like the United Nations. Having some sort of G20 for decisions and then having the UN to act as a referee, not only as a “Red Cross”, but something more, making the role of the wise man in difficult decisions. We must go in this direction. The UN should be reinforced?

What is clear is that the G8 only represents 15 percent of the world’s population. The old world is over. It was clear before the launch of the G20. I have taken part in ten G8 meetings, five for Italy, five for the European Commission, and you clearly had the feeling that you could not take decisions because the world was different. The world in its all was not represented around that table. The G20 is the right table but we have not yet the right cooperation. This is why I think that you must also have the UN and supranational authorities like the International Monetary Fund. That is, the reinforcement of the international organisations...

Yes. Allow me to come back to Europe. You have commented on the current

European crisis, with several countries facing financial problems. You have tried to put a positive slant on it, saying the Greek crisis has been overcome. And you said that, in the end, German Chancellor Angela Merkel would understand that it is in her interest to sustain the euro. What could be the future for Europe in this context?

My thoughts are very clear. No country, starting with Germany, has an interest in destroying the euro. I can also tell you that you do not always have rationality in politics. This is a rule also for China. It’s a general rule. Having said that, I think that we have taken some wise decisions after the Greek crisis, in the right direction, like the financial stability fund. But this is not enough. Europe has created a fantastic miracle with the currency. But in the long run, that must in any case be accompanied by coordination, strict coordination, over financial and budgetary policy. China has been saying it is ready to help, even to buy some debt. How do you fit that into the general framework of relations with Europe? And is the undervaluation of the renminbi still an issue for Europe?

The answer to the first question is that I consider the Chinese were absolutely intelligent [during the European crisis] because it did not cost them much money. It was a message to the Europeans that it was not necessary to be in

disarray in this situation. Even big outside players, like China, found that it was not so risky to take part, in buying bonds. In some cases, it is not even necessary to buy; it is enough to say that you will buy. It has also been an occasion to understand that China does not only buy US dollars but also euros for its own reserves. For me, this is important to make people understand that the US dollar is not anymore a dominant currency in the world. The euro may be in crisis at this moment and cannot substitute the US dollar, cannot be considered to be some sort of paritarian player. But it can still be attractive for Chinese reserves. On the renminbi, I will repeat what I have always said. The more you ask the Chinese to revaluate the renminbi, the less probable it is that they will do it. Not only for a problem of pride but also because nobody wants to be dictated to by the outside world about what to do. Honestly, I repeat that the real interest, task and obligation of China, vis-à-vis the world, is not to provoke imbalances. But how you do that is up to China to decide. You don’t think we are at the breech of a currency war, as the Brazilians have been hinting?

We may risk a currency war but this is a different question. It’s about wisdom in international policy. Clearly everybody understands that we need a reform of the international system if we want to avoid it. But I tell you that it is difficult to have it now, because we are in a moment of change. It is clear that ten years ago China would have accepted a change in the international system by simply adding the euro to the dollar. Today it is not the case, we need a basket [with at least] three big currencies but probably more than that. And to arrive to that you need in-depth technical meetings and you need long, long, long deals. Bretton Woods was done, also, because it was easy at that moment. There was one currency dominating. Only the United States was in peace. They had their homeland safe. Now, [it is] totally different. So, the reform is necessary but it will be long, long. And in the meanwhile I don’t exclude tensions. MARCH 2011

Property | Market Watch

Toothless curbs Much-touted government measures to control speculation have had no impact on the real estate market – in fact most remain on the legislative calendar BY EMANUEL GRAÇA AND ALAN TSO

igures showing a 10 percent rise in the average sale price of homes from the third to final quarters last year show that the government’s measures to curb real estate speculation have had little effect on the market. A likely explanation though is that the authorities have simply failed to en-

MARCH 2011

act the majority of the changes promised six months ago. According to official data, 5,084 residential units worth MOP16 billion (US$2 billion) were sold between October and December, a rise of 39.3 percent over the previous quarter and 94.7 percent over the second quarter. Concur-

rently, the average transaction price of residential units increased 10.1 percent quarter on quarter to MOP33,397 per square metre of usable area. Last year’s strong growth momentum has flowed into this year. Although official data has not been published, prominent real estate agencies have re-

Year

Month

2009

January

2010

Curbs curbed

corded rising sales numbers for the first two months of the year and many industry observers have raised their growth forecasts for the year to between 15 and 20 percent. Real Estate Association of Macau head Chong Sio Kin says more people are flocking to the property market be-

The latest figures and the realtors’ comments clash with the government’s stated goal of restraining galloping property prices. One reason is that the administration has failed to adhere to its own deadline in rolling out the promised policies. One promise to increase land supply for affordable housing has failed to materalise. This had included a land auction, originally planned for late last year, but for which no date has been set. As for the changes to duties, the Legislative Assembly approved the property-tax cut only last month. The new law reduces the tax on unleased flats from 10 percent to 6 percent and the tax on leased flats from 16 percent to 10 percent. It is retroactive, affecting last year’s taxable incomes. Also, legislators only last month started to discuss the bill to increase transaction costs by cancelling the 0.5 percent intermediate transfer duty and subjecting all property transactions to the full stamp duty, which ranges between 1 percent and 3 percent, depending on the value of the property. A bill to regulate real estate agencies is at the same stage. The government finalised the proposal to licence agencies and brokers only last month. According to the government, the bill aims at “effectively ensuring the stability, security and transparency of property

Number of Transactions 172 February 235 March 394 April 580 May 775 June 922 July 1,339 August 976 September 1,366 October 1,185 November 1,360 December 2,003 January 1,297 February 1,084 March 1,503 April 2,202 May 1,627 June 1,543 July 1,204 August 940 September 1,505 October 1,312 November 1,818 December 1,954

Source: DSEC

Residential units sold as per record of stamp duty*

* 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* Year

Month

2009

January February March April May June July August September October November December

2010

January February March April May June July August September October November December

Value (MOP million) 299 372 594 980 1,156 1,627 2,767 1,730 3,161 2,130 2,643 4,057 3,140 1,995 2,806 6,180 4,281 3,319 2,642 1,889 3,687 3,421 7,569 5,010

Source: DSEC

cause of rising inflation, which could further fuel its expansion and drive up prices. “Cash is going to lose value if you just put it in the bank in the face of mounting inflation. In addition, the stock market is not performing very well right now. So more and more people are investing in real estate, which can give them a better return on their money,” he says. Jones Lang LaSalle is also bullish. “Macau’s economic outlook is expected to remain positive in 2011, underpinning the city’s residential demand for both self-occupation and investment purposes,” Macau residential department chief Jeff Wong says. “While holding costs are anticipated to remain low, this provides a favourable environment for residential investment, and the reducing new supply in 2011 and 2012 will strengthen developer’s pricing power.”

* 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.

MARCH 2011

Property | Market Watch

Total number of buyers in residential transactions in 2010:

Average transaction value of residential properties Value (MOP thousand) 5,000

24,889

4,000

Proportion of buyers 3,000

10% 90%

2,000

Non-Residents

Residents

1,000 0

Oct

Nov 2009

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul 2010

Aug

Sep

Oct

Nov

Dec

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

35,000

Total value of residential transactions in 2010:

MOP

30,000

45,939,000,000

25,000

Proportion of buyers

20,000

25% 75%

15,000 10,000

Non-Residents

Residents

5,000 0

Q3 Q4 2007

Q3 2008

transactions” and “will improve real estate agents’ professional skills”.

Draft bored Another bill, to regulate pre-construction sales, is open for public discussion until next month. It prevents developers from applying for sales approval on unfinished properties until all units have been registered, the construction licence

Q3 2009

Q3 2010

issued and foundations completed. Developers will also be obliged to provide buyers a range of information, from unit floor plans to usable area and details on communal areas. The government said unfinished property sales dropped sharply in 2008 but have since taken off. Last year, 142 transactions were recorded. One of the few policies the govern-

Home sales record

acau’s housing sales for last year smashed the all-time record set in 2007, posting a whopping MOP45.9 billion (US$5.7 billion). The fi gure represents a 9.2 percent rise over 2007 and a twofold increase over 2009’s MOP21.52 billion. In terms of sales volume, a total of 17,989 homes were MARCH 2011

sold last year, a 59.1 percent increase. A sizzling-hot market also saw a sharp rise in home values last year. According to the latest government data, the average transaction price of residential properties surged 33.5 percent year on year to MOP31,016 a square metre. Meanwhile, foreign investment in the housing market has also increased sharply. The proportion of foreign funds in local home sales stood at 25 percent, against 17.5 percent in 2009. In the commercial property market, sales figures also climbed. A total of 2,099 retail shops worth MOP5.26 billion were sold last year, a 35.3 percent rise year on year and a rise of 106.7 percent on the figure for 2009.

ment has in place tightens the loan-tovalue ratio for mortgages. The measure, effective from December, states that buyers of properties worth more than MOP3.3 million will be able to get a loan for a maximum of 70 percent of a property’s value. If the property is less expensive, the maximum loan will be 90 percent of its value, but only for Macau residents and only up to a limit of MOP2.31 million. The impact of this measure remains unclear, although new approvals of residential mortgage loans increased in the fourth quarter last year, according to the Monetary Authority. The total value of new residential mortgage loans approved by Macau banks grew 58.6 percent quarter on quarter to MOP10.4 billion – 92.9 percent of which was extended to residents. When compared with the same period in 2009, new approvals of residential mortgage loans increased 58 percent. The government has also improved transparency in the market by issuing more detailed information more swiftly, with regular monthly announcements. Besides, it is prodding developers to be more honest about the size of apartments.

Property | Market Watch

AVERAGE TRANSACTION PRICE PER SQUARE METRE OF RESIDENTIAL UNITS BY DISTRICT AS PER STAMP DUTY RECORDS

Source: DSEC

(MOP) District

2009

2010

17,112

18,928

24,154

25,631

26,845

32,026

30,347

33,397

Macau Peninsula Ilha Verde Tamagnini Barbosa Areia Preta and Iao Hon Areia Preta new reclamation zone (NATAP) Mรณng Hรก and Reservoir Fai Chi Kei Lamau Docks Horta e Costa and Ouvidor Arriaga Barca Patane and Sรฃo Paulo Conselheiro Ferreira de Almeida Ferreira do Amaral (Guia) ZAPE NAPE and Praia Grande Bay reclamation area Downtown Macau Barra / Manduco Praia Grande and Penha

14,436 11,940 8,222 9,528 17,569 8,483 10,575 24,119 13,040 9,050 10,707 14,389 10,889 14,438 28,490 11,559 8,243 13,809

17,794 15,418 10,181 11,155 22,859 13,799 13,475 23,988 16,231 11,473 12,013 13,093 18,584 17,659 39,577 11,631 9,121 16,954

24,158 18,043 13,333 14,845 26,866 18,617 16,565 30,006 21,308 15,805 17,739 16,100 19,661 17,873 51,296 13,945 13,280 17,561

25,415 22,988 20,225 20,123 30,199 21,637 21,180 28,727 23,033 23,457 18,330 19,712 22,541 18,776 52,266 16,814 15,749 24,523

26,674 22,182 19,942 19,812 32,307 20,993 22,744 28,151 25,261 19,396 19,107 21,020 20,308 16,011 59,793 19,931 16,556 21,153

27,603 23,108 25,141 22,857 34,413 25,145 24,895 29,157 25,745 18,875 20,538 20,476 25,713 19,620 48,445 19,383 26,676 24,888

29,517 24,524 25,886 21,887 34,615 23,506 25,437 28,099 28,603 18,849 20,990 21,948 24,953 20,705 58,820 18,223 23,058 32,955

29,664 27,365 27,819 22,519 32,314 26,495 24,072 34,437 29,111 21,853 21,387 23,371 27,565 24,399 51,835 20,742 27,491 37,988

Taipa Ocean Gardens and Taipa Pequena Downtown Taipa University and Pac On Bay Pac On and Taipa Grande City and Jockey Club

24,871 21,107 23,826 17,719 ~ 10,553

22,366 21,838 22,685 17,794 ~ 15,339

23,897 24,851 23,980 18,711 34,361 14,912

26,432 27,733 26,055 21,611 49,628 17,594

27,342 27,893 27,255 20,774 54,776 15,876

28,372 29,608 28,366 21,897 50,445 27,062

29,583 31,888 28,280 26,228 57,185 26,654

39,876 28,837 41,527 22,054 56,702 27,596

Coloane

13,823

20,588

17,188

20,120

25,778

59,509

64,087

64,398

Macau

Notes: 1. The above information covers building units with stamp duty paid in the reference quarter 2. Including residential units that were exempt from the payment of stamp duty ~ No figure provided/confidential data

AVERAGE TRANSACTION PRICE PER SQUARE METRE OF OFFICE UNITS BY MAIN DISTRICT AS PER STAMP DUTY RECORDS (MOP) District

Macau ZAPE NAPE and Praia Grande Bay reclamation area Downtown Macau Praia Grande and Penha

2009

2010

22,228 15,091 23,164 ~ ~

19,556 18,054 21,230 ~ ~

20,049 20,213 22,778 11,043 ~

23,177 19,793 25,233 14,309 16,540

23,740 18,869 28,486 23,186 ~

22,169 16,896 22,252 28,838 ~

23,374 18,839 27,940 16,305 ~

27,078 32,046 27,802 25,801 ~

Notes: Only covers office buildings with ten storeys or higher ~ No figure provided/confidential data MARCH 2011

Property | Market Watch

Notable residential property transactions - 16/01 to 15/02, 2011 District

Building/Street

Unit

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

One Grantai One Grantai One Grantai One Grantai One Grantai One Central One Grantai One Central One Central One Central Residences One Grantai One Grantai One Grantai One Grantai One Grantai One Grantai One Grantai L’Arc L’Arc One Grantai The Residencia Macau The Residencia Macau One Oasis The Residencia Macau One Central The Residencia Macau Nova City The Residencia Macau One Central One Central Residences Supreme Flower City One Central One Central One Central One Oasis One Central Residences One Oasis Nova City Flower City The Residencia Macau The Residencia Macau Villa de Mer La Cite Nova City The Praia Nova City Nova City Hellene Garden The Residencia Macau The Residencia Macau

L/F, unit W Block 4, L/F, unit O L/F, unit X M/F, unit X M/F, unit W M/F, unit A M/F, unit K M/F, unit A H/F, unit B Block 4, L/F, unit A M/F, unit K Block 3, L/F, unit K Block 3, M/F, unit N Block 3, L/F, unit I Block 3, H/F, unit L Block 3, M/F, unit M M/F, unit Y H/F, unit E H/F, unit K Block 3, M/F, unit L Block 3, H/F, unit A Block 3, H/F, unit A M/F, unit E Block 1, M/F, unit B Block 7, M/F, unit A L/F, unit A Block 9, L/F, unit A (with car park) Block 5, L/F, unit A Block 7, M/F, unit A Block 7, H/F, unit G H/F, unit B Block 7, H/F, unit B M/F, unit A H/F, unit G M/F, unit D M/F, unit C M/F, unit F Block 11, H/F, unit C H/F, unit C (with car park) Block 1, H/F, unit C Block 1, H/F, unit C Block 7, M/F, unit B Block 4, H/F, unit D Block 7, M/F, unit B Block 1, L/F, unit C (with car park) Block 15, M/F, unit E H/F, unit A Block 3, L/F, unit F (with car park) Block 3, H/F, unit C Block 3, H/F, unit C

Source: Centaline, Ricacorp & Midland

Floor area (sq. ft) Sale price (HK$) Price per sq.ft. (HK$) 2,931 3,025 3,041 2,947 3,025 2,326 2,281 2,326 2,288 2,326 2,320 2,320 2,283 2,206 2,062 2,020 2,158 2,261 2,261 2,027 1,750 1,750 2,066 1,693 1,269 1,696 2,505 1,690 1,269 1,181 2,060 1,272 1,269 1,181 1,781 1,176 1,848 1,974 2,066 1,570 1,570 1,128 1,705 1,981 1,558 1,630 1,731 2,530 1,559 1,559

19,931,000 19,663,000 18,854,000 18,566,000 17,545,000 15,119,000 15,009,000 14,886,000 14,872,000 14,654,000 14,384,000 14,150,000 13,470,000 13,230,000 12,784,000 12,524,000 11,870,000 11,680,000 10,175,000 9,932,000 9,480,000 9,480,000 9,200,000 8,380,000 8,375,000 8,300,000 8,200,000 8,100,000 8,000,000 7,900,000 7,700,000 7,550,000 7,500,000 7,400,000 7,302,000 7,300,000 7,200,000 7,080,000 7,000,000 6,960,000 6,934,380 6,726,000 6,380,000 6,380,000 6,350,000 6,300,000 6,300,000 6,300,000 6,200,000 6,200,000

6,800 6,500 6,200 6,300 5,800 6,500 6,580 6,400 6,500 6,300 6,200 6,099 5,900 5,997 6,200 6,200 5,500 5,166 4,500 4,900 5,417 5,417 4,453 4,950 6,600 4,894 3,273 4,793 6,304 6,689 3,738 5,936 5,910 6,266 4,100 6,207 3,896 3,587 3,388 4,433 4,417 5,963 3,742 3,221 4,076 3,865 3,640 2,490 3,977 3,977

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

Notable commercial property transactions - 16/01 to 15/02, 2011 Type

Building/Street

Unit

Shop Shop Shop Shop Shop Shop Shop

Edf. Hang Heng Travessa de S. Domingos Rua de Sacadura Cabral Rua Nova do Comércio Avenida do Almirante Lacerda Edf. Hoi Pan Garden Edf. Son Seng

Shop Shop Shop Shop Shop Shop Shop

Source: Centaline

Floor area (sq. ft) Sale price (HK$) Price per sq.ft. (HK$) 1,800 1,484 2,640 550 2,841 480

18,000,000 15,800,000 6,600,000 5,800,000 5,200,000 4,000,000 2,380,000

10,000 4,447 2,197 9,455 1,407 4,958

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

MARCH 2011

Property | Market Watch Notable residential property rentals - 16/01 to 15/02, 2011

Source: Centaline, Ricacorp & Midland

District

Building/Street

Unit

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

L’Arc L’Arc Vista Magnifica Court One Central Residences Vista Magnifica Court The Residencia Macau L’Arc One Central Residences One Central Residences Nova City Kings Ville Supreme Flower City Edf. Kam Yuen The Residencia Macau Nova City Nova City Nova City The Pacifica Garden Nova City The Residencia Macau The Residencia Macau The Pacifica Garden Edf. Nova Taipa Garden La Cite Nova City Nova City The Pacifica Garden Nova City Edf. Kam Yuen Nova City Nova City Nova City Nova City Flower City Nova City The Praia The Praia The Pacifica Garden The Pacifica Garden La Baie du Noble Jardins do Oceano The Praia Golden Bay Garden The Praia Jardim Lameiras Treasure Garden Jardim Lameiras Edf. Golden Peak Jardim Lameiras The Praia Edf. Jardim de Wa Bao

M/F, unit F M/F, unit K M/F, unit D Block 7, M/F, unit A L/F, unit H Block 4, H/F, unit A (with car park) M/F, unit C Block 7, M/F, unit E Block 7, M/F, unit F H/F, unit A Block 1, M/F, unit B (with car park) Block 3, H/F, unit L (with car park) M/F, unit E Block 5, H/F, unit B Block 11, H/F, unit C H/F, unit C Block 13, L/F, unit D M/F, unit A M/F, unit C Block 5, H/F, unit C Block 4, H/F, unit C M/F, unit L Block 27, L/F, unit E (with car park) Block 3, H/F, unit C Block 6, L/F, unit F Block 6, L/F, unit C (with car park) Block 2, L/F, unit K Block 6, L/F, unit C M/F, unit B Block 13, L/F, unit F Block 12, L/F, unit F Block 6, L/F, unit F Block 14, M/F, unit A Block 4, L/F, unit S Block 6, M/F, unit E Block 4, H/F, unit Y Block 3, H/F, unit Q Block 1, L/F, unit E M/F, unit K Block 5, M/F, unit V Peony Court, M/F, unit F (with car park) Block 1, H/F, unit C H/F, unit E Block 2, H/F, unit M Block 2, L/F, unit H Block 1, H/F, unit D Block 2, L/F, unit B Block 1, M/F, unit H Block 2, L/F, unit G Block 4, H/F, unit W (with car park) Block 1, H/F, unit E

Floor area (sq. ft) 2,261 2,261 2,800 2,290 2,500 1,693 1,694 1,269 1,301 2,500 1,801 2,060 1,638 1,696 1,975 1,343 1,556 1,657 1,973 1,207 1,209 1,317 2,167 1,524 1,340 1,314 1,216 1,318 1,300 1,336 1,339 1,339 1,081 1,334 1,318 938 1,199 1,196 1,216 1,255 1,384 1,558 1,486 1,016 1,206 881 1,223 1,620 1,200 979 1,152

Rent price (HK$)

Price per sq.ft. (HK$)

30,000 28,000 28,000 25,000 22,800 20,000 20,000 17,000 17,000 16,000 15,000 15,000 14,000 13,000 13,000 12,000 12,000 11,000 11,000 10,000 10,000 10,000 10,000 9,800 9,688 9,256 9,200 9,166 9,000 9,000 9,000 8,800 8,500 8,500 8,372 8,000 8,000 8,000 8,000 8,000 8,000 8,000 7,800 7,500 7,500 7,200 7,000 7,000 6,800 6,500 6,000

13.27 12.38 10.00 10.92 9.12 11.81 11.81 13.40 13.07 6.40 8.33 7.28 8.55 7.67 6.58 8.94 7.71 6.64 5.58 8.29 8.27 7.59 4.61 6.43 7.23 7.04 7.57 6.95 6.92 6.74 6.72 6.57 7.86 6.37 6.35 8.53 6.67 6.66 6.58 6.37 5.78 5.13 5.25 7.38 6.22 8.17 5.72 4.32 5.67 6.64 5.21

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

Notable commercial property rentals - 16/01 to 15/02, 2011 Type

Property

Unit

Shop

Largo do Senado

Office

Edf. Centro Industrial de Macau

Shop

Avenida Almeida Ribeiro

Shop

Source: Centaline

Floor area (sq. ft)

Rent price (HK$)

Shop

5,780

480,000

L/F

4,200

87,000

20.71

593

80,000

134.91

Price per sq.ft. (HK$) 83.04

Office

Edf. Centro Industrial de Macau

L/F

28,000

10,640

0.38

Office

Edf. Industrial Veng Hou

M/F, unit C

3,500

7,000

2.00

Office

Edf. Industrial Veng Hou

M/F, unit D

3,800

7,000

1.84

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

MARCH 2011

Property

Investment oasis

After strong demand for units in the first phase of One Oasis, more apartments will be put up for sale this month BY EMANUEL GRAÇA

partments in the second phase of One Oasis, a luxury residential complex between Coloane and Cotai, are set to go on sale to the general public around the middle of this month, says the project owner, Empresa de Fomento Industrial e Comercial Concórdia. VIP sales have already been going on for a while. “We are taking on more or less the same model that we have used for the first phase,” Concórdia’s general manager, Wong Ying Fai, told Macau Business. “Initially, there will be VIP sales for some of our close friends or investors who wish to take up apartments in bulk. Probably, around the middle of March, we will be launching units for the public.” The second phase of One Oasis will have four towers and about 800 units, Mr Wong says. When completed, the development will boast close to 4,000 units. Prices of the new apartments will be close to the resale prices of units in

MARCH 2011

the first phase, Mr Wong says. These currently change hands for between HK$4,500 and HK$4,800 per square foot. He is optimistic about demand. “Judging from the very favourable response in phase one, I look forward to very good results.” Concórdia says that by the end of the first day of public sales of apartments in phase one, more than 700 units had been sold. The average price of these and units sold abroad before the launch was HK$4,300 per square foot. Mr Wong expects “some impact” on sales from the government’s measures to curb real estate speculation. “It might increase the initial capital cost for investment,” he says. One of the attractions of the project is that it is just across the street from the panda park in Seac Pai Van. The proximity of the pandas has definitely increased the value of the property, Mr Wong says.

One Oasis will also be close to the public housing complex to be built in Seac Pai Van. But Mr Wong says he is not worried that this will scare away buyers. “It is not visible. Our development is at quite a distance from the public housing. I don’t think that will have a great impact in the value of our property,” he says. The first phase is already under construction. “[The] foundation has been completed and we are now starting the basement construction,” Mr Wong says. The developer’s goal is to finish the first phase, which includes five residential towers containing 870 apartments, by the third quarter of 2012. One Oasis will have apartments, villas, a central clubhouse, a shopping centre, a hotel and green areas. The property is being developed by ITC Properties Group, Linkeast Investments Ltd, Nan Fung Group, ARCH Capital and Success Universe Group.

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

Wild guess chase THE MACAU GOVERNMENT SEEMS INCAPABLE OF PREDICTING ITS ANNUAL REVENUE AND SPENDING WITH ANY DEGREE OF CERTAINTY

s the full figures for Macau’s public accounts from last year become available, a few thoughts seem warranted. The way the budget has been executed over the past few years deserves some attention. Let us start with some common-knowledge facts regarding the public finances. It is obvious that revenues have increased enormously in the recent past. To mention that growth was driven by the performance of the gambling sector and by the direct taxes on gambling is not really news. But some readers might be surprised at the relative weight the direct taxes on gaming have on total revenue. If we take 2005 as our base year – this was the first full year after the end of the gaming monopoly – gaming taxes represented more than three-quarters of total public revenue until 2007 and more than four-fifths since then. The increase is due solely to the expansion of gross gaming revenues because the tax rates have remained stable. From 2005 to 2010, gaming tax revenues have increased almost four-fold, from MOP17 billion (US$2.1 billion) to MOP65 billion. That is, the budget is essentially, gaming tax revenue.

The naïve forecast

More worthy of note it is that the government has systematically underestimated the tax revenues from gaming; and that the gap between budgeted and actual revenue has been increasing. Up to 2007, the gap was not really significant. Deviations of about 5 percent between the forecasts and actual figures are well within what should be expected. A conservative approach to forecasting revenue could be deemed as wise. Since 2008, the gap has increased. Deviations of 20 percent to 25 percent in 2008 and 2009, and of more than 90 percent last year (or 60 percent, taking into account the mid-year budget revision), beg some explanation. Bear in mind that the gaming sector is the Macau economy. Certainly, there is a “natural” volatility in the sector that makes accurate forecasts more difficult to make. But that suggests the need for increased analysis and rigor, particularly given the importance of the sector to the region’s development and the population’s general wellbeing. However, the figures above suggest either a total inability

to create forecasts for the growth of the sector and region with any degree of confidence, or that the government does not consider it an important task. In reality, the gaming revenue forecasts never differ much from what is often called the “naïve forecast”, or the process of creating a prediction for the next period that never diverges significantly from the value registered in the previous one.

Playing scrooge

The budget is certainly not the most exciting topic in the wider discussion about the economic future of Macau. It would be wrong however to underestimate its importance and the signals it provides. The budget is much more than the record of the revenue and expense flows of the government. The public budget also works as the foundation for public policy. It is, in a way, where the evidence for the actual policies of the government must be found. It is where the real priorities, as opposed to the declared ones, are put on display. As such, the budget sets expectations that influence the behaviour of all sectors of society and frame their economic behaviour. If it cannot be trusted, if its credibility is diminished, agents will operate under increased and avoidable uncertainty. Things get even fuzzier when one looks into the capital budget. For the last five years, the government has seriously under-executed its own plans for investment, with deviations between one- and two-thirds less than the forecast figures. That the public investment budget has been systematically underused is something that is even more difficult to understand. It suggests either the government has set unrealistic definitions for its targets or has a significant inability to deliver its plans. Either way, there are some critical items in the government’s budget that appear to be mostly meaningless. It devalues the budget’s usefulness as a policy guide and reference for economic decisions. It so happens that the Legislative Assembly must approve the budget before it can be made law. The curious thing in this scenario is that the government has never felt the need to provide a full explanation of the facts to our legislators and they, in return, have not yet considered it their responsibility to ask. MARCH 2011

mbreport HUMAN RESOURCES 68

BOYS FOR THE JOBS

With unemployment at its lowest rate since the handover, Macau’s labour market is full of challenges for employers and employees alike BY SOFIA JESUS

t was a number that made headlines: Macau’s unemployment rate had dropped to 2.7 percent. By the end of last year, the rate was at its lowest since the handover and has remained stable since. Still, it seems neither employers nor employees are getting all they want out of the labour market. The latest figures indicate that the total labour force is 332,000 people. From November to January, there were 8,900 unemployed – 100 fewer than in the preceding three months. It is a very different picture from 2000, when the unemployment rate was 6.8 percent. Since then, it has been downhill all the way for unemployment, except for 2009. The city, accord-

MARCH 2011

ing to the Monetary Authority, has now achieved full employment. For Macau Polytechnic Institute associate professor Sunny Chan Cheuk Wah, the decrease in unemployment shows that as the economy grows, so do job opportunities. However, the public policy expert is concerned there are still many low-skilled or unskilled jobs that need thousands of workers and absorb a lot of younger workers. Many are employed by the city’s biggest industry. “Because the profit margin of casinos is very high, they can pay a very high salary, even for the lowest-skilllevel employees,” Mr Chan says. But high-paid work may “give a very wrong signal to the younger generation” who could neglect further education, a situa-

tion he says is a “very serious problem” of a “sweet covering a poison”.

Overpaid, under delivering University of Macau professor Davis Fong Ka Chio is head of the human resources policy research group of the Economic Development Council. His group last month found that Macau’s human resources were “quite limited”, and there was a “very urgent need to have more manpower”. The group is now working on solutions. Mr Fong says a lack of workers led to higher pay levels in the last quarter, not only in big companies but also in smaller ones that could not compete financially for labour. “There’s an increasing salary trend

but the quality of the service is decreasing,” he says. Mr Fong argues that raising pay for some skills can harm productivity and raise product costs, further fuelling inflation. The Federation of Trade Unions has a different perspective. Federation vice-president Ella Lei Cheng I says that while the unemployment rate has dropped, thousands of locals still do not have work and the underemployment rate remains high, at 1.7 percent. Ms Lei recognises that pay levels should rise because of the labour shortage but points out that data from the Statistics and Census Service show that “the median income of local workers has remained unchanged in the past 10

consecutive quarters, indicating that local workers’ wages and benefits have not reasonably adjusted due to the impact of the policy of labour imports”. She told Macau Business that although the hospitality industry is profitable, “the workload and labour intensity of employees have risen substantially, but their salaries have not, showing that... employment status and welfare in Macau are not yet satisfactory”.

Prosperity, protection Small and Medium Enterprises Association director Kenneth Lei says he is worried about labour shortages. He argues that it is unfair that Macau’s economic growth benefits only a few sectors, while harming others.

Finding quality employees is difficult and he “can’t see the government doing anything” to reverse the situation, he says. Businesses are reluctant to expand because a shortage of human resources hinders their growth. Further compounding the problem for small businesses is that employers feel they cannot fire poorly performing employees because finding a replacement is difficult. “To operate well, the first thing businesses need is a labour force. No people, no output, no results,” he says. Importing workers has long been a point of contention between employees and employers. In 2008, Macau had 104,000 non-resident workers. After the introduction of government labour MARCH 2011

mbreport HUMAN RESOURCES 70

Preferential treatment The Small and Medium Enterprises Association’s Mr Lei says labour shortages have already forced some companies to shut down. SMEs represent about 90 percent of the companies in Macau, he says. They provide the bulk of the jobs but cannot match the pay and benefits offered by big companies. The government has a clear obligation to create different policies for different sectors, Mr Lei stresses. “If the policy is the same and leaves you no choice, that is not good,” he says. “The government must investigate the situation case by case, to know the root cause why the companies can’t hire local people first.” A realistic plan would begin with listening to the feedback from employers and end with the lifting of restrictions on imported labour, he argues. That process should start now, while the economy is in full flight, because Mr Lei fears a prolonged imbalance in the economy could be dangerous, especially if Beijing changes its outlook on gambling. “The government needs to act while times are good, not when they are bad,” he says. The trade union federation’s Ms Lei hopes the business community can share its economic gains with workers by increasing pay. She wants the government to “promulgate policies for ensuring employees’ promotion opportunities, and encourage workers to participate in training for self-enhancement”. MARCH 2011

The Federation of Trade Unions believes the biggest problem in the labour market is a lack of supervision of labour imports and a flood of illegal workers There is broad agreement that a long-term plan to improve the quality of human resources and retrain labour is required. Academic Mr Chan says the government should move on a plan that brings together the professional associations and builds an accreditation system. It would help employers and employees. “People with higher education get more choices,” he says, adding that better trained staff would attract employers interested in starting a business in Macau. Mr Chan says the government should not close the door to imported labour. Foreign workers can transfer skills to the local market and nurture local talent.

Evolving response In written replies to questions from Macau Business, the government’s Human Resources Office said it would continue to monitor the evolution of the labour market. The office says that before approving the hiring of imported workers the government always gives priority to residents but is willing to allow imported labour to do jobs for which there are insufficient resident workers. It also says it is keen on promoting training. As for the Small and Medium Enterprises Association’s complaints, the office points out that the government has accelerated the procedure for approving the import of labour by SMEs. The Human Resources Office also says it already has a database about the number of workers in Macau with higher education. More data is being collected to turn this into a general database about human resources, which will allow the administration to make better projections and so better plan future policies.

Photo: Luís Almoster | mspagency.org

import restrictions, the number fell to a low-point of about 72,000 workers last May. Since then it has been rising, peaking at 75,800 by the end of December. The Federation of Trade Unions is sceptical about these figures. Ms Lei believes the biggest problem in the labour market is a lack of supervision of labour imports and a flood of illegal workers. “This not only infringes local workers’ employment and rights, but also will lead to a series of social-security-related issues,” Ms Lei says. She suggests the government should clarify the way it calculates imported labour quotas and increase transparency in dealing with applications. Penalties for transgressions should also be made tougher. And the government should ensure imported workers are the fi rst to be dismissed during a recession.

Industry insiders say demand will spike with the opening of Galaxy Macau, which will need close to 8,000 employees to operate at full steam. So far, the government has allowed the operator to import just 2,000 workers

IN NEED OF MANPOWER The biggest game in town is not immune to labour shortages BY SOFIA JESUS

he gaming industry is the biggest single employer in Macau with about 44,000 people on the books last June, excluding the junket operators. The Macau Gaming Industry Employees Association says there is a dire need for more staff. “There is still lack of human resources in the gaming industry. Actually, there are lots of vacancies in all the casinos,” the association’s head, João Bosco Cheang Hong Lok, told Macau Business. “It’s difficult for the casinos to hire enough workers who are really suitable for the gaming industry.”

By the end of June last year there were 628 vacancies in the gaming sector, a 74 percent increase on the year before, according to the Statistics and Census Service. Industry insiders say demand will spike with the opening of Galaxy Macau, which will need close to 8,000 employees to operate at full steam. So far, the government has allowed the operator to import just 2,000 workers. The problem, according to Mr Cheang, is the speed of the development of the gaming industry was never taken into account. “It’s hard to build a healthy and steady structure in such a short period,” he says.

MARCH 2011

mbreport HUMAN RESOURCES 72 The effects of the shortage are felt acutely by those already employed by the casinos, he says. They are required to work overtime, creating irregular working schedules that can preclude them from taking steps to improve themselves, such as additional study. Besides leaving workers with little time to invest in school or training, the shift system may cause other problems, such as disrupting their relationships with families and friends.

Payday with a price Dealers account for 43 percent of the gaming industry’s workforce and it is difficult for them to change jobs or seek careers in other industries since most are not trained outside the industry. “The government and the employers should do more to solve the problem of lack of human resources in Macau gaming industry,” Mr Cheang says. He would like to see more continuing education for casino workers so they can climb the gaming industry ladder. The labour market is unsure about the precise needs of the industry, Mr Cheang says. People need to be told which skills are in demand. He says it would be a good idea to create a mechanism for matching casinos and job candidates. The upside for those in the industry is the above-average pay and benefits. These will be further improved after the government appealed to casino operators to share their good results with their employees. Four operators responded with pay rises. Wynn Macau announced a 6 percent pay increase for the company’s non-management employees from February 1. Sands China said it would give full-time employees a 4.5-percent increase, starting on March 1. Sociedade de Jogos de Macau announced a 5 percent increase for all staff, which took effect on February 1. The company also paid out bonuses. MGM Macau said it would pay non-management employees 5 percent more from March 1. Macau Business contacted all six gaming operators but none would comment further on this matter. MARCH 2011

HELPING HAND

Professional recruitment agencies find their services are in vogue as the labour market tightens BY SOFIA JESUS

ith a small pool of available workers, recruitment agencies say they are finding it hard to match the right people to the right job. A lack of qualified and experienced candidates is a major issue but employers are also working out how to make the most of relationships with recruiters. The industry has experienced remarkable growth in the past few years. As MSS Recruitment Ltd. director Jiji

Tu told Macau Business, two years ago most people in the territory did not know what a recruitment agency did. Now, she says “more and more people are aware”. While forging awareness in the market can still be tough for agencies, it is the lack of suitable candidates that causes most headaches. “The main challenge is the same as faced by many other employers; the candidates’ pool is still limited,” Ms Tu says.

73 There are either just too few workers with the right experience or they are overly cautious in making the move to a new job.

Managing expectations Employers’ expectations are another issue. Ms Tu says some employers “may not understand the local market” and expectations “may need to be adjusted over time”. The company’s market research finds that the majority of candidates come from blue collar sectors such as hospitality, gaming, retail and construction. There are also candidates looking for new jobs in tertiary services such as human resources, finance, IT or marketing. On the other side of the labour relationship, employers mainly come to MSS Recruitment “for the most difficult roles,” she says. In other words, companies are looking for suitable candidates to assume management-level positions and they are not always available. Macau HR director Mark Hammons sees the majority of demand for labour in IT sales and technical roles, retail sales, hospitality and accounting. Most job seekers have a background in administration, human resources, marketing and accounting. A typical age range is between 18 and 50 years, but most candidates handled by Macau HR are in the early stages of their careers, aged between 20 and 30. More than two-thirds are based in Macau, with the remainder from Hong Kong, the mainland, The Philippines or the Middle East.

MSS Recruitment Ltd. director Jiji Tu says some employers “may not understand the local market” and expectations “may need to be adjusted over time”

market, Ms Tu advises companies to draft their own retention strategies. Training and tracking employees’ confidence and satisfaction levels are things managers should pay attention to. In the short term, Mr Hammons believes the government “may consider loosening up some import labour restrictions in some strategic industries”. The Macau HR director also thinks Macau should learn from the experiences of other places where talent is also in short supply, such as Singapore. Greater investment in training is also required, particularly bigger intakes for higher education and specialty programmes for Macau’s leading industries.

Restricted roles Matching candidates to roles is made more difficult by restrictions on labour imports, which, in some cases, have resulted in a freeze on headcount. “Some companies may not be able to find suitable candidates in the local market and they do not have the quota to hire overseas candidates, so they often will hold off on the hiring of new staff,” Mr Hammons says. As a consequence, existing staff have to share the additional workload, and in some cases that leads to overtime, exhaustion and low morale, he says. Foreign labour can be “very valuable” in terms of the skills they can share with Macau residents. It is a vision Macau HR tries to pass on to non-local candidates when they apply for a job. In such a challenging labour MARCH 2011

mbreport HUMAN RESOURCES

5,000 REASONS TO CATCH UP Training institutes welcome a new government subsidy on training but argue that more must be done BY SOFIA JESUS

his year’s policy address may have left some people disappointed with the decrease in the cash handout but Chief Executive Fernando Chui Sai On announced another perk; a MOP5,000 subsidy for residents aged 15 and up to spend on training. Players in the field welcomed the new policy but some argue it is still not enough. SIM Hospitality Training chief executive officer, Joseph Lo, believes the MOP5,000 subsidy is a “good start” that can be further built on. People need to have the opportunity to go for training, he says. “The government needs to do more than just subsidise,” he says. Attending training is not as sim-

MARCH 2011

ple as people may think. As “there are not enough people, everybody is working overtime,” making it hard to go to classes. Created in 2009, SIM Hospitality Training, which has a close partnership with Singapore’s Shatec Institutes, trains at least 1,000 students every year. The centre focuses mainly on training people for the hotel and hospitality industries. It works with some local schools, like the Institute for Tourism Studies, where it regularly holds short workshops directed towards people already working in the industry. But it also partners with casinos, targeting in-house training. Mr Lo says the hospitality industry

is in “an early stage of development” in Macau. One of the reasons the city lags behind is the lack of qualifications. He quotes a study conducted by the government in 2008, which showed more than half of the labour force did not graduate from high school. “You can’t deliver a sophisticated product or satisfy a sophisticated client if the workers are the opposite of that,” he says, adding that this is why training is so important in Macau and necessary for both local and non-local workers. “The quality of our human resources does not match our needs.” “Macau lacks human resources,” says Diamantina Coimbra, the head of the Institute for Tourism Studies’ Professional and Continuing Education School. She says the government is doing a lot in terms of subsidising courses, and the new MOP5,000 subsidy is another positive step. From her experience, there’s a big lack of frontline workers, like reception-

75 around 20,000 students. The institute offers different types of professional training, from languages to culinary courses, including event management and wine tasting. It offers both certificate and diploma programs, all recognised in Macau and several of them also internationally. Some students say they attend these courses to learn more, others to get promoted or to find new opportunities in the service industries. There are also those who admit to being there because their employer told them to go and paid for it.

Changing attitudes

SIM Hospitality Training chief executive officer, Joseph Lo, believes the MOP5,000 subsidy is a “good start” that can be further built on. People need to have the opportunity to go for training, he says ists, waiters, cooks or maids. But there’s also strong demand for directors and other management level staff, an area in which her school will start working soon: in July, it will launch a supervisory course. “There are many companies that want to promote local workers. They feel that, although they may be good workers, managing people is another skill that needs to be learned,” Ms Coimbra says. Last year, the Institute for Tourism Studies gave professional training to

A different type of training provided by the Institute for Tourism Studies is pre-service vocational training, which targets secondary school students. The goal is to explain to them what the service industry is really like and demystify some of the pre-conceived ideas they may have. “[In the past,] there was a wave of some students who even left school to work in the casinos, they believed all would be roses,” Ms Coimbra says. H. W. Cheng, director of the University of Macau’s Centre for Continuing Education, also believes the MOP5,000 could help promote training. His centre has been “established to offer whatever courses the community needs,” without having any kind of restriction as to subject areas. Currently, it offers short courses in design, public administration, and professional English language, among others. In 2009, 3,000 students enrolled, both in short courses and diplomas. Students that attend the courses are usually already working and the majority are aged from 30 to 40 years old. In the future, the centre is hoping to introduce creative studies, convention management and show business courses, to cope with the overhead plan for Macau. Employee’s high turnover rates and language levels are two main problems detected by Mr Cheng in today’s local labour market. He believes Macau needs

“more people who are willing to devote their time to a single enterprise,” while at the same time the territory is “lacking people who are good at Chinese and English”.

Knowledge transfer A well-known training facility in Macau is the Macau Productivity and Technology Transfer Centre (CPTTM), which offers hundreds of different courses and has trained thousands of professionals since 1996. It is a non-profit organisation and results from a partnership between the government and the private sector. The centre offers both public and corporate training courses in four areas: information technology and systems, business language and presentation, apparel technology and industrial support and quality management and enterprise development. Senior manager Helena Lei explains the centre targets people who are already employed, but are looking for a way to upgrade their skills. As she points out, Macau has changed rapidly. The local garment sector, for instance, has evolved into a fashion industry, and, so, the training courses in this field have also changed. The two largest groups of courses are IT and management. However in 2009, creative design saw a significant growth rate. Language courses, especially English, are also popular among students. It’s difficult, though, to find instructors, Ms Lei says. At her centre, most are locals with work experience in the international environment. But the institution still needs to recruit instructors from outside, especially from Hong Kong and the mainland. For Ms Lei, there will always be a demand for human resources in Macau. There are opportunities, but the problem is whether people have the skills to grab them. “Macau people will really need to embrace the concept of life-long learning”, Ms Lei says. Locals should create their own career planning, she stresses.

MARCH 2011

Gaming | Billions Race

Familiar themes New monthly and daily records set for gaming revenues last month

acau set a new monthly casino gross gaming revenue record last month, according to official data released on March 1. With total revenue of MOP19.9 billion (US$2.5 billion), last month’s casino take beat the previous record of MOP18.9 billion set last December by a considerable margin. January’s record also represented a 47.7 percent year-onyear increase. Total casino gross gaming revenue for the first two months of the year was also up 40.4 percent year-on-year, to MOP38.43 billion. Unnamed sources from the gaming industry told Lusa news agency that, although February started very weakly and with poor gross gaming revenues, business has begun picking up and the industry is now booking results that are exceeding previous record results. The results were fuelled by the Chinese New Year holidays, which typically have a strong mass-market focus. On February 8, the sixth day of the festival, Macau casinos set a new daily

Gaming Results: Gross Revenue

gross gaming revenue record, taking MOP1.48 billion, according to Lusa. The previous record of MOP1.33 billion was set last October. Some gaming operators have already announced good results for the Chinese New Year holidays. SJM Holdings chief executive officer, Ambrose So Shu Fai, said the gaming operator “had a double-digit increase” compared with the previous Chinese New Year holiday period. Wynn Macau’s chairman Steve Wynn also said the company was posting a strong start to the year. Statistics compiled by Wells Fargo’s analyst Carlo Santarelli reveal that SJM continues to lead the ranking, with a February market share of 32 percent, followed by Las Vegas Sands with an 18-percent share, and with a 15-per cent share, Melco Crown. Wynn Macau came close, with a market share slightly below 15 percent, followed by MGM Macau, with 11 percent. Galaxy Entertainment Group closed out the list with a 9-percent market share. Note that the figures are rounded to the nearest unit.

In Million MOP (1HKD:1.03MOP)

19,863

20,000

18,869

19,000

17,075

18,000 16,000 14,000

13,445

13,569

Feb 2010

Mar 2010

14,186

16,310 13,642

18,883

18,571

Dec 2010

Jan 2011

17,354 15,773

15,302

Aug 2010

Sep 2010

12,000 10,000 8,000 6,000 4,000 2,000 0

Apr 2010

MARCH 2011

May 2010

Jun 2010

Jul 2010

Oct 2010

Nov 2010

Feb 2011

Gaming Results: Market Share Per Operator 2010

2011

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

SJM

32%

34%

32%

30%

32%

29%

30%

32%

31%

30%

31%

32%

Sands China

20%

21%

19%

22%

19%

20%

19%

15%

17%

18%

Galaxy

11%

10%

12%

13%

12%

10%

11%

Wynn

15%

13%

14%

16%

17%

15%

14%

12%

14%

17%

14%

15%

MPEL

14%

13%

14%

13%

15%

17%

14%

15%

MGM

10%

11%

12%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

Feb 2010

Mar 2010

Apr 2010

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Jan 2011

(Figures are rounded to the nearest unit, therefore they may not add exactly to the rounded total)

MARCH 2011

Feb 2011

Gaming | Stock Watch

RUMOUR RUCTIONS

Gaming stocks endured a bumpy February, mainly because of wrangling within the Ho family, but the fundamentals seem to be strong BY RAY CHAN

n spite of the recent sell-off of counters linked to the Macau gaming sector, investors remained generally positive about the sector last month. Concern about the heavy dependence of Macau on the VIP segment and about Stanley Ho Hung Sunâ&#x20AC;&#x2122;s family dispute depressed casino stocks listed in Hong Kong. But, overall, the outlook remains bright, with the inauguration

MARCH 2011

of Galaxy Macau due in the first half of this year and the full opening of the new railway between Guangzhou and Zhuhai, which should benefit casino operators with a big footprint in the mass market, such as Sands China (1928.HK) and SJM Holdings (0880.HK). Notably, share prices in companies controlled by Mr Hoâ&#x20AC;&#x2122;s family, namely SJM Holdings, Melco International

(0200.HK), and Shun Tak (0242.HK) suffered double-digit falls over the course of last month (see table with this report). The recent share price weakness was attributed to the dispute between Mr Ho and members of his family over his business empire, which includes SJM Holdings and Shun Tak Holdings. Even so, SJM Holdings remained

Ticker

There were rumours in the market that the Stanley Ho family dispute had led to the postponement of MGM Macau’s initial public offering in Hong Kong. But the president of MGM Macau, Grant Bowie, offered assurances that the IPO will go ahead

0880.HK 0200.HK 1928.HK 1128.HK 0027.HK 0242.HK

Company name SJM Holdings Melco Intl Sands China Wynn Macau Galaxy Entertainment Shun Tak Holdings

Share price 11.22 4.97 18.48 20.40 9.96 4.24

MoM (%) -19 -12 -1 -2 -12 -14

YTD (%) -9 12 8 17 13 -13

On February 25, 2011

quarter net revenue was 79 percent higher than the year before at US$912 million, and its earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 109 percent to US$297 million. The company’s adjusted property EBITDA margin widened further to 32.5 percent from 29.5 percent in the third quarter. Its VIP rolling turnover

was US$27.7 billion, rising 28 percent from the third quarter, and its win rate rose to 3.15 percent from 2.88 percent. In a conference call, Wynn Macau chairman Steve Wynn said he expected its new property in Cotai to open in late 2014 or early 2015. Mr Wynn said the property could cost up to US$2.5 billion, although he stressed that the company was still drawing up plans. He

fundamentally strong in operational terms last month. Key stakeholders and the experienced management are likely to help safeguard the company’s operations and its shareholders’ interests in the near future, while the family dispute continues.

MGM market talk There were rumours in the market that the dispute had led to the postponement of MGM Macau’s initial public offering in Hong Kong. But the president of MGM Macau, Grant Bowie, dismissed these rumours and offered assurances that the IPO will go ahead, although he gave no further details. MGM Macau is a joint venture between MGM Resorts International and Pansy Ho Chui King, one of Mr Ho’s daughters, who is involved in the family dispute. The IPO will be done through a vehicle registered in the Cayman Islands, MGM China Holdings Ltd. MGM Macau is seeking to raise up to US$800 million (MOP6.4 billion). Controversies aside, MGM Macau reported an operating profit of US$119 million (MOP952 million) for the fourth quarter of last year, which takes into account depreciation expenses of US$23 million, MGM Resorts International announced. MGM Macau’s fourth-quarter operating profit in 2009 was US$22 million, reflecting depreciation expenses of US$24 million. Several other casino operators posted strong results for the fourth quarter of last year. Wynn Macau’s (1128.HK) fourth MARCH 2011

Gaming | Stock Watch

said the company was waiting for permission from the government to start construction.

Steady on Las Vegas Sands announced its results for the fourth quarter of last year, which included Sands China’s financial and operational performance. The Macau unit’s fourth-quarter net revenue was 13 percent higher than the year before at US$1.1 billion and its adjusted property EBITDA rose 37 percent to US$333 million. Its adjusted property EBITDA margin, at 30.5 percent, was the same as in the third quarter. Its revenue margin and win rate were also stable. Group chairman Sheldon Adelson, speaking on a conference call, said Las Vegas Sands was aiming to open properties on parcels five and six in Cotai by the end of this year. Also last month, Mr Adelson said Las Vegas Sands was planning to create a set of gaming resorts in

Spain, investing up to US$20 billion. The fourth-quarter results of Melco Crown, controlled by Lawrence Ho, exceeded market expectations, largely because of the strong performance of Altira and City of Dreams. The Nasdaqlisted company reported fourth-quarter net profit of US$16.3 million, having made a net loss of US$89.7 million the year before. It was the company’s second straight quarterly profit. Adjusted EBITDA was US$133.8 million, rising from US$2.7 million the year before. Looking ahead, with the opening of Galaxy Macau in sight, investors who took profits are seeking opportunities to buy into the stock again, in view of the operator’s new exposure to the mass market. According to our channel check, the project has entered the fitting-out and internal decoration stage. The new resort will mean a big change for Galaxy Entertainment Group’s revenue model, increasing its exposure to the mass market.

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US gaming operators’ share price performance (US$)

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Bombastic email L

as Vegas Sands chief operating officer Michael Leven was aware that subsidiary Sands China’s chief executive, Steve Jacobs, was negotiating a partnership with Harrah’s Entertainment (now Caesars Entertainment) in Macau, according to an email included in a recent court filing by Mr Jacobs in a case against Las Vegas Sands in which he alleges he was wrongfully fired. Mr Jacobs first filed the suit in October, in a court in Nevada. Las Vegas Sands replied in December, in a court filing saying any dispute between the parties should be resolved in the Macau courts. The Las Vegas Sands filing included Mr Jacobs’s termination letter. According to the August 5 termination letter, Mr Jacobs repeatedly acted in a manner that exceeded his authority and “failed to keep the board of Venetian Macao or Sands China informed on important business decisions” and other actions he took on behalf of the company. Among other examples, the letter cites negotiations about a transaction with Caesars Entertainment, involving parcel three and parcels seven and eight in Cotai. The exact nature of the deal is unclear. In their latest response, Mr Jacobs’s lawyers, besides arguing that the dispute should be resolved in court in Las Vegas, since Sands China is controlled by chairman Sheldon Adelson from there, have included several other documents. One of the documents, a May 11 email allegedly sent by Mr Leven to Mr Jacobs, indicates that Mr Leven was aware of the Caesars issue. “If you want to get it, let [Caesars chief executive] Gary Loveman suggest it in [a] one-on-one mtg [meeting] with sga [Sheldon G. Adelson]... That’s how billionaires think, we are just executors. They are strategic genii in their own minds,” Mr Leven allegedly wrote to Mr Jacobs. Contacted by the Wall Street Journal, Las Vegas Sands spokesman Ron Reese declined to comment on this specific issue. “There’s no illusion about the roles at this company,” Mr Reese was quoted as saying. “Mike’s proven himself as the guy that can get things done and Mr Adelson’s proven himself as the visionary leader of this company.”

Stanley Ho

Macau melodrama The on-again, off-again battle for Stanley Ho’s fortune seems to be back on, as his lawyers lodge papers to regain control of the empire from his family

tanley Ho Hung Sun has made good on a promise to regain control of his industrial empire and gaming assets, finally lodging a case against prominent family members and three companies. A writ filed on February 16 in Hong Kong’s High Court alleges that the transfer of 99.98 percent of Mr Ho’s interest in Lanceford Company to several of his family members was made without his approval.

The writ names Mr Ho’s daughters, Pansy Ho Chiu King and Daisy Ho Chiu Fung, as defendants, along with Lanceford and British Virgin Islands companies Action Winner Holdings Ltd and Ranillo Investments Ltd. The writ was not signed by Mr Ho. This is the latest episode in the prolonged saga of the transfer of Mr Ho’s 32 percent stake in Sociedade de Turismo e Diversões de Macau (STDM), held by Lanceford, to Action Winner Holdings

Daisy Ho leaves MGM board D

aisy Ho Chiu Fung stepped down from the board of MGM Macau at the end of last year. The information was confirmed to The Wall Street Journal by the head of the Gaming Inspection and Coordination Bureau, Manuel Joaquim das Neves. According to the newspaper, the move has lead to speculation among industry players that Ms Ho was looking at distancing herself from MGM Macau in order to get a board seat at Sociedade de Jogos de Macau. Ms Ho is one of the defendants named in the writ filed earlier this month by her father, Stanley Ho Hung Sun, to regain control of his gaming assets (see main story). When contacted by The Wall Street Journal, MGM Macau declined to comment.

and Ranillo Investments. The transfer took place in December and the family has been divided since, with a very public struggle ensuing. Mr Ho was STDM’s biggest shareholder before the transfer. STDM is the parent company of SJM Holdings, which owns gaming operator Sociedade de Jogos de Macau. The parties have “been unable to come to any resolution”, Mr Ho’s lawyer, Gordon Oldham, told reporters when filing the writ. The latest lawsuit followed another, filed on January 26, which was later withdrawn. The previous suit named several other members of Mr Ho family as defendants, as well as those named in the latest one. The new suit asserts that the previous case was dropped after Mr Ho’s relatives gave a verbal agreement they would return the stake to him. The new writ alleges that Mr Ho’s daughters “improperly and/or illegally” transferred the Lanceford shares to Ranillo Investments, a company they control along with their siblings, and to Action Winner Holdings, controlled by Mr Ho’s third wife, Chan Un Chan. It also says the daughters exerted “undue influence” when they transferred a 4.84 percent stake their father owned directly in STDM to Lanceford.

Amicable sentiment Mr Ho is seeking injunctions to restrain the companies that hold the contested stake from selling the shares or voting, and to restrain his daughters from transferring or dealing with his holdings in any other companies, including ferry operator and property developer Shun Tak Holdings. For now, both SJM Holdings and Shun Tak Holdings are saying the new suit will not affect their operations. SJM Holdings chief executive, Ambrose So Shu Fai, said he hoped the dispute would “finish soon” and that the parties involved would reach “an amicable settlement as soon as possible”. Meanwhile, the Macau government has asked Sociedade de Jogos de Macau for information about the changes in its shareholding structure. The company replied that it was still waiting for the outcome of Mr Ho’s family discussions. Gaming concession contracts state that concessionaires must seek government authorisation before making any transfers, direct or indirect, of 5 percent or more of their stock. MARCH 2011

Gaming

Fertile ground The city welcomes its first international casino research firm, Union Gaming Group BY EMANUEL GRAÇA

as Vegas-based Union Gaming Group opened its Macau subsidiary last month, the first global equity and research firm focused on gaming to set up shop here. The group is following a trend of major institutional and private investors bringing funds to the SAR as the gaming industry continues to grow. “We are the first to establish a presence in Macau. We are also the first and the only in Las Vegas,” says Grant Govertsen, one of the group’s founders and head of the company’s Asian subsidiary, Union Gaming Research Macau Ltd. Mr Govertsen told Macau Business the company would issue equity research and provide corporate access to its global client base.

Cautious bulls F

or the whole of this year, Union Gaming Group forecasts that Macau’s casino gross gaming revenue will grow 19 percent, which is at the low end of analysts’ projections. “If the trends we are seeing today continue, that might be a little bit conservative,” Mr Govertsen admits. “We would rather take a little bit more of a conservative approach and then be able to expand as we see the trends unfold.” Even so, he notes that it is hard not to be bullish on the local market. One of the reasons given is that so far, only one percent of mainland Chinese visit Macau, a much lower penetration rate than in most established gaming markets. “When you throw that into a blender, the incredible wealth generation in China, the fact that only a tiny, tiny percentage of them come to Macau and all the infrastructure developments that are taking place in the mainland that will funnel people to Macau, it is hard not to be incredibly excited and incredibly bullish over the long term.” MARCH 2011

Its parent group covers a portfolio of companies focused on the global gaming industry, specialising in equity and credit research, investment banking and gaming-related market and “economic analytics”. “What we are essentially going to do is to try to recreate the success we have had in Las Vegas,” Mr Govertsen says. “A lot of that has to do with being located in the markets that are relevant. “For gaming, Macau has quickly become the capital of the world, let alone of Asia. So, for us, it makes all the sense in the world to have a presence here, given the massive focus of investors on a market like this.” The group’s local unit has a team of four, including two senior analysts. Its aim is to continue to grow, since Macau will be the group’s AsiaPacific base.

Proximity paradigm Mr Govertsen believes a permanent team in Macau will provide better access to information. “By being here, you end up learning about more stuff than you would otherwise and you meet a lot of people who are in the very top management of casino companies,” he says. “You get a much better picture of exactly what is going on and that is important for investors.” Currently, the investment bank analysts covering Macau’s gaming industry are mostly based in Hong Kong. “They will come for a day or two, have a few meetings, go back home and hope they got it right,” notes Mr Govertsen, whose experience includes a stint at Deutsche Bank. He says a lack of accurate information about Macau’s gaming market only adds volatility to the gaming stocks. “The gaming stocks trade on rumours quite a bit. Whether or not they are true, they can move a stock wildly. Being here will help us separate the rumours from the facts,” he says. Mr Govertsen and his colleagues have already started meeting industry players and the feedback has been positive, he says. “There is a limit to what information [casino companies] can give, based on stock exchange rules and regulations but I think they are really excited to see our presence here. Given the focus of investors on Asia and in Macau specifically, they are thrilled to see a credible company like ours in the market.” Things are bit different with getting information out of junkets, he says, but even so, he adds that the group is making a breakthrough. “We are still in the early days. You can’t account for every single penny of VIP play in the market, although I think they [junkets] have generally been very open, especially to what is important, and that is the overall trends in the market.”

More room A

Photos: Carmo Correia

“The gaming stocks trade on rumours quite a bit. Whether or not they are true, they can move a stock wildly. Being here will help us separate the rumours from the facts,” says Grant Govertsen

ccording to Union Gaming Group’s analyses, Macau has yet to see the end of casino expansion. “Ultimately, all the developments we are hearing about on Cotai won’t be enough,” Mr Govertsen says. However, he notes that the government will set a slower pace for development. “You are not going to see five or six properties being developed at the same time like was the case previously, although I think you are going to see fairly continuous development over the next five to 20 years, just given the growth opportunity.” The regulatory framework is also set to remain in place in the near future, with no new entrants, Mr Govertsen predicts. Besides, he believes all six local gaming concessionaires are poised to post good rates of return for investors in the near future. An exception offered is Sociedade de Jogos de Macau, due to the recent wrangling among Stanley Ho Hung Sun and some of his family members for control of the gaming operator. “Until there is more clarity, I think there will be that overhanging those stocks. Ultimately, I think patient investors could be rewarded – Sociedade de Jogos de Macau is doing quite well and there is no reason that they shouldn’t be trading in line with their peers.” Looking ahead, Mr Govertsen is unconcerned about the possibility of more Southeast Asia countries allowing casinos. “Sure, if you get gaming expansion in other jurisdictions, perhaps it can have an impact on the margins, but we have seen what has happened with Singapore… [which] opened up to be a huge market and Macau didn’t miss a beat.” MARCH 2011

Gaming

The smokers’ clause Revisions to the government’s bill to ban smoking in the workplace, still permit smoking on half of the city’s gaming floors acau’s legislature looks set to vote on a revised tobacco control bill that instead of banning smoking in all workplaces, would bow to gaming industry concerns and permit smoking on up to half the floor area of the city’s casinos. Debate has continued in the Legislative Assembly since the bill’s first reading passed in January 2010, with lawmakers mulling over whether there should be some kind of exemption for the gaming industry. Although legislators are far from a consensus a year into the debate, the government last month presented a revised bill in a bid to break the stalemate. It could clear the way for a vote on the second reading as soon as this month, which would allow the bill to be enacted. Unlike the initial version that said

casinos must create non-smoking areas but did not set space limitations, the newest draft allows smoking in up to 50 percent of public areas.

Dramatic impact After seeing the most recent draft of the bill in mid-February, Macau gaming operators sent a fax to the assembly requesting a meeting with the legislators to discuss the issue. Their request was rejected. The operators said the bill could have “a dramatic impact” on their business. They added that they were “deeply concerned” with the “contradictory” statements made by the government after the latest version of the bill was released. The initial text of the second draft said smoking would be banned from casinos after three years. The government

“Does it make sense to gain more money at the cost of your own health?,” asks the Gaming Enterprises Staff Association director-general MARCH 2011

later removed the section, saying it was a “typo”. It clarified that any ban would not apply to all gaming facilities and that casinos would be able to preserve smoking areas in up to half of all public areas. The draft stipulates that areas for non-smokers must be created within a year of the law’s enactment; a deadline the casino operators say gives them insufficient time to make the changes. It was unclear if there was a ratio for the number of gaming tables and slot machines in smoking and non-smoking areas. What is certain is that both areas must be physically separated.

Employee’s health The government said it would issue more detailed rules on how the areas were to be separated and on ventilation standards for smoking areas after the law was passed. According to the most recent draft, although gaming would be partially exempt from the ban, the Health Bureau was poised to conduct a study on the impact of the law on casinos after three years to see if further measures were needed. The bureau said the casino exemption was a matter of realpolitik because of the industry’s overall contribution to the economy but casino workers’ representatives rejected the justification. Macau Gaming Enterprises Staff Association director-general Tam Pou Iong said the government should include casinos in the smoking ban. She expressed particular concerns for the employees working in the areas where smoking was permitted. “Does it make sense to gain more money at the cost of your own health? That concept should not exist and nobody should be willing to accept it,” she said. However, Ms Tam acknowledges that casino workers’ bargaining power was limited in a face-off with employers on this matter. The Macau Gaming Enterprises Staff Association last month petitioned the Legislative Assembly with around 9,000 signatures to head-off the bill.

Upping the ante Once a pretender, now an emerging player, Texas Hold ’em is gaining market share and winning over some lucrative baccarat high rollers BY LUCIANA LEITÃO

evenues from Texas Hold ’em poker are booming, with regulation and education the key to increasing the game’s profile in Macau. There is a long way to go until market leader baccarat is challenged but the founder of the World Mahjong Tour and former online consultant to the World Poker Tour, Pierre Wuu, sees some positive changes in the gaming scene. “I do see some high-limit baccarat players taking up the game and thus spending less time playing baccarat,” says Mr Wuu, who spoke on emerging trends at the iGaming Conference held recently at the Grand Hyatt Macau. VIP baccarat and mass-market baccarat together account for more than 90 percent of the gross gaming revenue of Macau’s casinos, ensuring “baccarat will still be king in the near term,” Mr Wuu says. Even so, there are now more poker rooms in Macau, and major tours such as the Asian Poker Tour and the Asia Pacific Poker Tour, are using them to promote the game and introduce it to

players from the mainland. From that foothold, Macau may have an important role in the growth of poker in Asia. “It did a great job getting the game regulated quickly for casino play,” he says. It is hard to get a clear picture of how strongly poker is growing in Macau. The data made public by the Gaming Inspection and Coordination Bureau refers only to casino gross gaming revenue from each game, failing to give details of the volume and size of bets.

Raking it in Macau’s Texas Hold ’em regulations say gaming operators can charge a commission, called a “rake”, of three to five percent of the pot. Since the maximum rake is capped – it tops out at five times the value of the big blind – the figures for casino gross gaming revenue from poker fail to give a precise idea of how much is being bet. Even so, casino gross gaming revenue does hint at the pace of poker’s growth. Casino gross revenue from poker jumped to MOP216 million

(US$27 million) last year from MOP54 million in 2008, when the game was first introduced in Macau. Nevertheless, this is only a small fraction of the gaming industry. Poker does not even make it into the top five casino games as measured by gross gaming revenue. Macau’s success comes in part from the increasing popularity of poker in Asia. In places such as Hong Kong and Taiwan, where poker cash games are illegal, unlicensed poker rooms have mushroomed. Mainland China has also been a part of the growth in Asia, although casino gaming is illegal across the border. The game is also quite popular in the Philippines, where regulated poker tables are offered. Mr Wuu believes poker has become appealing to Asians because it is a new challenge for players. “The game involves a sense of skill and for the most part involves a lower-amount bet and lost,” he says. “Essentially a player can play all night and instead of losing US$5,000 in one baccarat hand, they may only lose US$5,000 after playing 12 straight hours.” Mr Wuu says that although there is a need for more education, poker is set to grow in Asia. “With new countries regulating the game either online or offline, you will see an influx of new poker players,” he says. “This task is not an easy one though,” he warns. “Regulation is a top priority.” MARCH 2011

Gaming

Great expectations After four formative years, Aspect Gaming is preparing to reach out from its Macau base for a bigger share of the booming Asian slot market BY EMANUEL GRAÇA

rom Asia, for Asians. That is how Aspect Gaming, a new player in the slot-machine supplier market is promoting itself. “Aspect Gaming is a relatively new player in the market,” the company’s chief executive, Justin Nguyen told Macau Business. “We have only been around for four years and much of our formative years were getting our technology ready and building a very robust and solid platform cabinet, a solid set of games and getting our operations right.” The company has its headquarters in Macau, where the cabinets are assembled, and where marketing, sales support and market research is done. Its Shanghai office is where the primary development team is based, although there are some developers based in Macau. According to Mr Nguyen, only recently did Aspect Gaming attempt a commercial launch of its products. The company has slots deployed in several casinos in Macau and is also present in the Philippines and in Indochina. So far, everything is going well, he says.

Headline attraction To lead the company’s development, Aspect Gaming last month hired Andrew Macaulay as managing director. The company will use Mr Macaulay’s

experience in Macau and the wider Asian market to promote the company’s products. Mr Macaulay has held senior positions as executive vice-president Asia for Shuffle Master, general manager of business development for Aristocrat Leisure and managing director of GTECH Australasia. “It is a very exciting new position,” Mr Macaulay told Macau Business.

“We are dealing now with players that are maturing very, very fast. They are a little more sophisticated than players we have seen historically on slot machines, people that were not computerliterate, that didn’t use cell phones and were afraid of technology,” says Tony Payne

“We see an opportunity to put slot machines into Macau and the broader Asia market.” Mr Macaulay says the focus on Asian players makes the local slot supplier a better bet than an international company. “The international players are very much focused on their own markets, whether be it the United States, Australia or Europe,” he says. “As much as everybody now recognises Macau as the largest gaming market in the world, it is still secondary to them because their corporate head office isn’t here and the development teams are not here.” According to Mr Macaulay, proximity with players in Asia is important, as it seems a unique gaming style is emerging. More than a regional player profile, “what we are seeing is that Macau is different from Singapore, Singapore is different from Malaysia, Malaysia is different from the Philippines. And they are all collectively different from America or Australia”. Tony Payne, Aspect Gaming’s executive vice-president for product development, says the theme is an important feature, as it is key in getting players to sit down at the machine. Then, there is also the degree of complexity of the game itself.

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MARCH 2011

87 “There are games that become too simple and players feel there is not enough interest there,” Mr Payne says. “We are dealing now with players that are maturing very, very fast. They are a little more sophisticated than players we have seen historically on slot machines, people that were not computerliterate, that didn’t use cell phones and were afraid of technology.” “People expect us to move along with the rest of consumer electronics – as fidelity gets better, as screen resolutions get better, we need to incorporate all of those things,” says Mr Nguyen. The use of 3D and server-based technology are just some of the trends he sees the industry engaging.

Room to move

Justin Nguyen

Tony Payne

Photos: Carmo Correia

Andrew Macaulay

Aspect Gaming officials stress that, although Macau is still driven by table games, the scenario is starting to change. “Historically, there was a little bit of fear of slot machines. They were called ‘hungry tigers’ in Cantonese,” Mr Macaulay says. “That is all very much in the past. Electronic gaming is becoming accepted here.” Nevertheless, slots accounted for less than 5 percent of total casino gross gaming revenue last year. That is something that doesn’t worry Mr Macaulay. “Looking at the statistics, you can see there has been dramatic growth in the gross volume of electronic gaming revenue.” While in 2005, slots raked in MOP1.25 billion (US$156 million), last year revenues reached MOP8.6 billion, almost 600 percent more, outstripping the growth rate in the industry overall during the same period. According to Mr Nguyen, there is more growth ahead in the slot machine market, as the middle class in the mainland continues to expand. “The real history behind China driving Macau’s growth is its rising middle class. As we get that rising middle class, there will be a high proportion of them that will play slots.” In the short run, adds Mr Macaulay, the cap on gaming tables will also push casinos to make better use of electronic games to increase results. “You sit in a casino now and they are at their full capacity and can’t put more tables in. They need to find space for slot machines since it is the only revenue-generating thing that they can add to their floors.” MARCH 2011

Gaming

New twist, old favourite

All fair game

American gaming operators not discriminated in Macau, says US consul he US consul-general for Hong Kong and Macau, Stephen Young said last month that the local government is not discriminating against American gaming companies operating in the city. Mr Young classified the government’s decision to not grant parcels 7 and 8 on Cotai to Sands China, as “not discriminatory”. “This policy is not discriminatory but is intended to regulate the growth of the economy and the industry in general,” he said. “There’s not some sort of special conditions that prejudice foreign investment. If you talk with foreign operators, they feel they are fairly treated.” Commenting on the labour short-

age in Macau that is impacting on Sands China’s construction projects for parcels 5 and 6, Mr Young said: “The question is: are there local people capable of doing the job or do you have to bring them from elsewhere?” “As long as the labour policy if focused on that and is not artificially favouring people who are not skilled to do the job, that’s good,” he said. Mr Young recalled that the government has said several times that, if local labour is not available, local companies will be allowed to import labour. Mr Young’s comments were made during a visit to the Legislative Assembly, where he met with the Assembly president, Lau Cheok Va.

VIP promoter invited to Galaxy Macau

VIP room gaming promoter Asia Entertainment & Resources Ltd. announced that it has received an invitation to open a VIP room with up to 12 tables at Galaxy Macau on Cotai. Management will “seriously” consider the invitation, the company said. The room would become operational upon the opening of the resort anticipated in the second quarter of 2011, according to Asia Entertainment & Resources Ltd. So far, Galaxy Macau has no official opening date – Galaxy Entertainment Group has only said the property will open in “early 2011”. Asia Entertainment & Resources Ltd already operates VIP rooms in MGM Macau, StarWorld and Venetian Macao.

Gaming expansion to slow down: govt

The secretary for Economy and Finance, Francis Tam Pak Yuen, said the growth of Macau’s gaming industry is set to slow down in the future. According to him, the government is poised to control the level of expansion of the sector. Mr Tam said that, “in the future we shall only see the industry increasing by a few percentage points” every year. Mr Tam also said youngsters should “think twice” before joining the industry, as it will be unlikely the gaming sector to continue to provide a large number of jobs as it used to in the past.

MARCH 2011

Shuffle Master has just introduced a new game at MGM Macau from the Vegas Star electronic table product line. Grand Baccarat is available as part of a multi-terminal set-up, that can be installed in a variety of configurations. The new product enhances the traditional table game with progressive jackpots. Unlike the old Vegas Star products, this one features unique video card dealers that speak English, Mandarin or Cantonese. Queenie Li, a model from Hong Kong, is the video card dealer. Shuffle Master has also launched the game in Laos.

Melco Crown sues Canadian gambler

Melco Crown has filed a lawsuit in Canada to recover a gaming debt. According to media reports, the company claims that a Vancouver player has not paid a gambling debt of HK$3.5 million. The cheques the player wrote to pay the debt bounced, according to the court documents. The documents, prepared by Vancouver law firm Blake, Cassels & Graydon LLP, say the player has been “unjustly enriched” and should repay his debt in full, with interest.

David Banks hired by Aristocrat

The board of Aristocrat Leisure Limited recently nominated David Banks as a nonexecutive director. Mr Banks is well known in Macau, were he was the chief operating officer of Galaxy Entertainment Group until March 2009. Aristocrat’s chairman Ian Blackburne said Mr Banks’ “deep industry knowledge and insights, in particular in the Australian and Macau markets, will be a valuable addition to the board and the company as a whole.” David Punter, Aristocrat’s general manager Asia Pacific said: “Having dealt with David in his previous life in Macau I am extremely pleased that Aristocrat has a man of his calibre as a director and look forward to working closely with him and drawing from his extensive knowledge of the gaming industry”.

89 DAVID GREEN GAMING CONSULTANT, NEWPAGE CONSULTING

Stuck in reverse: New Jersey has a rethink as play goes cold NEW JERSEY MAKES DRAMATIC CHANGES TO CASINO REGULATION, AFTER DECLINE IN GAMING REVENUE. BUT IS IT TOO LATE? n February 1, 2011, New Jersey Governor Chris Christie signed into law Bill S-12, which makes the most dramatic changes to gaming regulation in Atlantic City since casino gambling was approved in 1978. New Jersey had better reason than most established jurisdictions to rethink its regulatory approach. Since gaming revenue peaked in the state in 2006, at US$5.2 billion (MOP41.6 billion), it has been in steady, and significant decline. In 2010, revenue was a modest US$3.57 billion, down 10 percent on 2009, and the lowest recorded figure since 1994. Expectations of many analysts are that this decline will continue in 2011, as neighbouring states of Delaware and Pennsylvania will have full year returns from table operations, in addition to their highly successful slot-machine businesses. Pennsylvania in particular has sucked much of the life out of Atlantic City since it opened slot-only casinos in 2006, with revenue growth in 2010 of 16 percent, to US$2.27 billion. Pennsylvania is likely to overtake Atlantic City in revenue by 2013, at the latest. In July 2010, a report by the governor’s Advisory Commission on New Jersey Gaming, Sports and Entertainment found that gaming faced critical challenges, jeopardizing its strategic role in the state’s economy. A key challenge was entirely of its own making: its regulatory model. Often cited as a paragon of regulatory virtue when it was first implemented in 1978, it has proved something of a millstone in recent years, none more so than in March 2010, when MGM Resorts International announced that it would withdraw from New Jersey, in response to the 2009 adverse findings of the Division of Gaming Enforcement (later accepted by the Casino Control Commission) concerning the suitability of the company’s association in Macau with Pansy Ho Chiu King.

Anachronisms

The so-called foreign gaming operations provisions on the New Jersey gaming law have become something of an anachronism, and implicitly recognized as such by the state legislature, which has inserted the following provision into the preamble to that law: “The ability of the legalized casino gaming industry in New Jersey to compete in an ever-expanding national gaming market requires a regulatory system that is sufficiently flexible to encourage persons and entities holding casino gaming licenses outside of New Jersey to participate in casino gaming in Atlantic City…” If imitation is the sincerest form of flattery, Nevada should be bursting with pride that New Jersey has decided to enter the second decade of the 21st century by incorporating some of its regulatory principles. First, the inefficiencies of the two-tiered regulatory system have largely been addressed by limiting the power of the Casino Control Commission to licensing and related reviews, and appeals against certain decisions of the Division of Gaming Enforcement (DGE). The DGE has now taken on many of the functions of the commission, with resultant savings to the public purse, and efficiencies in service delivery. This was well overdue; the combined cost of regulating

New Jersey’s 11 casinos was at least US$30 million higher than Nevada taxpayers paid for oversight of around 300 casinos, generating revenues almost three times higher than in New Jersey, in 2010.

Upholding integrity

Secondly, it has at last been recognized that licensed casinos have at least as strong an interest as industry regulators in ensuring they do not deal with, or employ persons of questionable integrity. Hence the argument for licensing non-gaming vendors and ordinary casino employees has lost weight. A system of registration has been introduced for employees. Vendor oversight can be expected to be vigilant by purchasers whose casino licenses may be at risk should they contract with undesirables, or be party to wrongdoing. Most major casino companies are now stock exchangelisted in one or more jurisdictions. They pay taxes to host governments, employ staff in accordance with local labour laws, operate under often onerous financing arrangements with regulated entities, such as banks, and are required to comply with myriad laws covering health and safety, environment protection, building standards, money laundering, foreign corrupt practices, and so on. In other words, they have become adept at exercising a substantial degree of internal oversight through strong governance and professional management, the pay-off for which is many times greater than the yield from opportunistic malpractices such as those pursued by gangsters in the 20th century. It is commendable that New Jersey has now implicitly recognized this; the Casino Control Commission may exempt persons from licensing where they can demonstrate, amongst other things that they are: “… regulated by a public agency that determines whether a person subject to its jurisdiction possesses good character, honesty and integrity … or a publicly traded corporation … [subject to some limitations]” It remains to be seen whether New Jersey will continue to second-guess casino regulators in other jurisdictions who have made findings of suitability; old habits die hard. On the positive side, perhaps surprisingly, the new law seeks to position New Jersey at the forefront of Internet gaming, should it be permitted by state and federal law. It requires the Casino Control Commission to: “… take all actions … for the expeditious implementation of Internet wagering when such wagering is permitted by state and federal law.” New Jersey has hard yards ahead of it. Its projected 2010 budget deficit of US$10.7 billion is, relative to budgeted expenditure, the highest in the United States. Taxes have been increased, according to the governor, 115 times in eight years. The state personal income tax top rate of 9 percent is spectacularly uncompetitive when compared with the 3 percent rate charged in neighbouring Pennsylvania. Building an attractive model to rival that which the state presented in the 1970s will be impossible; New Jersey is stuck in reverse, and its new gaming regulatory approach may be too little, too late to arrest the slide. MARCH 2011

MELCO CROWN, HO SCOOP AWARDS

Accepting the award for outstanding contribution to gaming, Melco Crown chief Lawrence Ho represented his father, Stanley Ho Hung Sun

asino magnate Stanley Ho Hung Sun was a big winner at the International Gaming Awards 2011, handed out last month in London. Mr Ho received an award for his outstanding contribution to the gaming industry. The award is the highest honour given by the International Gaming Awards and is restricted to individuals who make an outstanding contribution to the gambling industry. Mr Ho’s son, Melco Crown Entertainment chief executive officer Lawrence Ho, accepted the award on his father’s behalf. Melco Crown’s leading property in Macau, City of Dreams, won the annual award for casino interior design. The award was presented by the publisher of Macau Business, Paulo A. Azevedo. Melco Crown also won the award for the best casino VIP room and was named the casino operator of the year for Australia and Asia for the third consecutive year. “We are honoured to receive this very prestigious emblem of achievement three years in a row and to be recognised as a visionary in the world’s most dynamic gaming market,” Mr Ho said. “These awards reflect Melco Crown Entertainment’s understanding and commitment to the Macau gaming landscape and they highlight our role in the transformation of Macau into an international gaming and leisure destination for the most discerning guests.” Another Macau property, StarWorld, won the award for best casino restaurant for its Jade Garden dining room that serves Shanghainese and provincial-style dishes. Macau Business was nominated for best casino journal or magazine either online or in print. MARCH 2011

Award for Traditional Gaming Equipment Supplier: TCSJohnHuxley

Award for Socially Responsible Operator: Holland Casino

Award for Casino VIP Room: City of Dreams

Award for iGaming Software Supplier: Playtech

Online Poker Operator of the Year: PKR

Online Bingo Operator of the Year: Foxy Bingo

Gaming

Online Casino Operator of the Year: PartyGaming

Award for Casino Interior Design: City of Dreams

Award for Eco-Friendly Company: Cammegh

Casino Operator of the Year - Europe: Casinos Austria International

Award for Slot Manufacturer: Bally Technologies

Online Sportsbook Operator of the Year: Betfair

Casino Operator of the Year - Australia/Asia: Melco Crown Entertainment

Award for Casino Journal or Magazine Offline/Online: Casino and Gaming International

Casino Operator of the Year Americas: Caesars Entertainment

Best Customer Experience: Celebrity Cruises

Award for Technology Provider/ Supplier: Continent 8 Technologies

Award for Casino Restaurant: Jade Garden, StarWorld MARCH 2011

Gaming

Aiming at the jackpot again Taiwan resumes casino planning and hires Macau firm as consultant BY ANDREW GELLATLY*

ime ran out for consideration of new legislation that would pave the way for integrated resorts on Taiwan’s outlying island earlier last month, but the government is still pushing ahead with its plans to introduce casinos. Taiwan’s ruling KMT government missed their chance to approve two bills to outline development of new casino resorts in the most recent legislative session which ended before Chinese New Year, but with questionnaires from would-be casino operators due for submission mid-last month, observers believe Taiwan remains serious in its efforts to introduce integrated casino resorts on its offshore Islands. Taiwan’s Council for Economic Planning and Development ruled out the idea of mainland casinos in Taiwan some time ago, but the promises of ca-

MARCH 2011

sinos on offshore islands formed part of the KMT’s 2009 election platform. However momentum for the development of a casino resort came to a halt in 2009 after a casino project in the tropical island of Penghu was vetoed by a local resident’s referendum when only 44 percent of voters backed the measure. Subsequently Taiwan’s government put into motion two legislative projects, one a casino management law under the supervision of the Ministry of Transportation and Communications, and a tourism macro-planning project that would incorporate gaming, to be conducted by the Taiwan Tourist Board.

Hearings and more hearings Professor Liu Day-Yang of the National University of Taiwan (NTU) who recently conducted a mid-term review on the draft casino management law pro-

posal for the Ministry of Transportation and Communications told Gambling Compliance: “The casino gambling legislation research project will go through three public hearings at three outer islands, including Kinsmen, Penghu and Mazou. “After that, more public hearings from experts and scholars will be held to have further comments on the proposal. And I believe that news headlines will focus on this issue soon as well. “The final report will wait for at least another few months before it is sent to parliament.” After a preliminary questionnaire was circulated for the casino management bill last year, the Taiwan Tourism Bureau engaged a consultant company, Macau-based Ocean Tech Group, to complete the tourism macro-planning project by collecting international devel-

93 Referring to elements of the draft legislation that specify a strictly demarcated and controlled gaming zone be set up within the integrated resort, the form also asked very specific questions about the optimum proportion of each resort that should be allocated to gaming. Other questions included an evaluation of the transportation links for each offshore island, and an assessment of whether the cross-strait political situation or immigration restrictions of Taiwan could potentially derail the investment.

After a preliminary questionnaire was circulated for the casino management bill last year, the Taiwan Tourism Bureau engaged a consultant company, Macaubased Ocean Tech Group, to complete the tourism macro-planning project by collecting international developer views on the feasibility of an integrated resort oper views on the feasibility of an integrated resort. That questionnaire had been circulating for the past few weeks and was due for submission mid-last month. In the questionnaire would-be operators were asked to assess the potential of six offshore islands, Hsiau Liouchiou, Kinmen, lLanyu, Lyudao, Matsu and Penghu, all within one hour’s flying time from Taipei. The five page questionnaire, seen by Gambling Compliance, asked some 40 potential operators general questions about the optimum scale and hotel room numbers needed to create a successful integrated resort, and asked them to rate the six islands and their suitability for meetings, incentives, conventions and exhibitions, theme park construction and “tropical island villa-style resort development.”

While potential developers were asked to suggest how long they would require each gaming licence to last in order to justify investment, the Ocean Tech Group noted that “feedback from the questionnaire will not have any affect on possible bids for any licenses or permits.” Feedback from the questionnaire will be returned to the Tourism Bureau for consideration, although its impact on the parallel casino law project is not yet certain.

A new contender Despite its long history of bruising military engagement with the nearby mainland forces, the island of Kinmen is now thought to be under serious consideration by foreign investors. This is partly because the Taiwanese government is planning to allow Foreign Individual

Travel for Chinese visitors to Kinmen in April 2011, although some observers doubt the willingness of the mainland government to cooperate with this plan. Also on Kinmen, a petition for a referendum has been submitted to the government, the initial part of the approval process, a process that is anticipated to take around to six months. Penghu, which houses a large US Air Force base, is expected to put forward another casino proposal to the electoral commission by mid-2011, but due to a ban on restaging any casino referendum within three years of defeat, the island might have to wait until 2012 before another vote can be held. Local observers suggested last year that Penghu’s failure to approve casinos could hand the initiative on establishing casinos to the islands of Kinmen and Matsu also located in the straights of Taiwan.

Getting interested But Carl Burger, director of AMZ Holdings Plc which a has amassed a land bank of resort-approved land on Penghu said: “Interest from many of the gaming operators seeking to develop in Taiwan has increased of late, clearly eyeing the benefits of Taiwan’s large gaming-centric population and the ongoing relaxation of the Chinese visa controls.” “We are very encouraged with the latest legislative initiatives that Taiwan is making to complete the supporting gaming legislation shortly. This will be the catalyst for Penghu to formally renew its referendum efforts.” While recent press coverage in Taiwan has suggested that the Ministry of Transportation and Communications will move to request concepts and proposals from operators in 2011, in anticipation of opening integrated resorts by the end of 2013, the political reality is far less clear. With regard to the timing for the legislative vote, Professor Liu notes: “It is impossible to guess right now because other factors may disturb it and it is very much not clear at this moment.” Still one potential political speed bump is unlikely to provide any problems for the casino law project. The next presidential election is scheduled for March 2012 and the KMT’s Ma Ying Jiu is strongly tipped to retain power. * Exclusive Gambling Compliance/ Macau Business MARCH 2011

Gaming

Macau on the Mekong Chinese-run casinos in Laos give mainland gamblers an atmosphere that’s just like home, just over the border. They could threaten Macau, except for one key ingredient BY MUHAMMAD COHEN

egal casinos in the mainland are the single biggest threat to Macau’s position as the world’s premiere gaming destination. That is unlikely to happen in the foreseeable future but the next closest thing is taking shape right now in Laos. Mainland owned and operated casinos in two special economic zones (SEZs) in northern Laos target mainland

gamblers. New roads connect the casinos to the mainland and a high-speed railway is in the works. Each casino is controlled by a different consortium and both claim to be the first step in ambitious plans to create destination resorts alongside industrial and agricultural projects in an investor-friendly, tax-free environment, supported by both governments. “The basic slogan of investing in SEZs is ‘you invest, we welcome; you make fortune, we make development’,” according to Golden Triangle Special Economic Zone chairman Zhao Wei. His Hong Kong-registered Kings Romans Group, known as Dokngiewkham in Chinese, opened the Kings Romans

casino in December in Ton Pheung, next to the Thai border. It is connected to the mainland and Yunnan province capital Kunming by a new road. It is accessible from Thailand by ferry across the Mekong River. A bridge spanning the river is due for completion in 2013, extending the expressway to Bangkok.

Half a billion “Macau on the Mekong”, the Kings Romans has 150 tables and 170 electronic gaming machines on a 15,000 square metre gaming floor, according to Kings Romans executive E. Abbas. The group says it has spent US$500 million (MOP4 billion) in the SEZ so far. Nightclubs,

CHINA

Hanoi Ton Pheung

BURMA

Boten

LAOS

THAILAND

Bangkok MARCH 2011

VIETNAM

95 karaoke lounges, saunas and shops surround a four-star hotel. Two more are planned, for a total of about 1,200 rooms. On the border with Yunnan province, the Boten Golden City casino in the Royal Jinlun Hotel opened late in 2007 with 150 gaming tables and 300 machines, plus a sports book with live telecasts. The hotel has about 300 rooms, with more on the way. The SEZ admits mainland tourists without a visa. The Lao village previously on the site was moved about 20 km to facilitate the new development. It emphasises and exacerbates the zone’s isolation from Laos. “Revenue derived from Laos is not significant,” according to a statement from RGB International, which operates gaming machines in Ton Pheung. “However, we would like to explore it more in the years to come.” On a good month, gaming revenue from each casino reaches US$10 million. They pay minimal tax, offer strong incentive deals to junket operators and the SEZ status grants them virtual autonomy to write their own rules. Both casinos do a healthy business in Royal Jinlun Hotel

Lives on the line T

he television documentaries retelling the December 2009 Boten hostage drama were filled with tales of mainland gamblers lured over the border, cheated at the Boten Golden City casino, loaned money at high rates and subjected to “hell on earth”. As the drama unfolded, hundreds of gamblers were believed to have been held against their will. Hubei province was forced to intervene, sending a police rescue team to the Laos border. Beijing says the police did not cross the border into the Laos special economic zone but negotiated the release of 10 captives from the casino’s Yunnan owners. Video purportedly shot by a hostage, showed beatings and other mistreatments within the casino. Three hostages were reportedly killed. The mainland’s Foreign Ministry warned gamblers to stay away and demanded Laos shut the casinos, which have concessions for up to 90 years. There are genuine security concerns in the special economic zones but some observers suspect Beijing’s warning reflected antagonism between the investors and authorities. MC

telebetting, for example. Policing is by Chinese guards employed by the zone’s mainland investors.

Second home Most strikingly, inside the casinos, it could be the mainland. Everyone speaks Mandarin, the food is Chinese. Everything for sale, from cigarettes to sex, comes from the mainland and is

paid for in renminbi. It sounds like a nightmare realised for Macau. But the casinos at Boten and Ton Pheung, like their predecessors on the frontiers with Cambodia and Burma, face substantial challenges, some of which management can overcome and one big one they cannot. The Chinese Foreign Ministry has warned against gambling at Boten following reports of kidnappings (See report below). “Anything on that border has a sort of question mark against it. These places have their own private police forces and militias,” says a regional gaming executive familiar with the industry in Laos. “Security, especially for high rollers, is a major issue. There are none of the protections you’d have in Macau.” Kings Romans Group runs another casino on the border in Mong La, part of Burma’s Shan state, an area said to be overrun by drug lords and reputed to be a centre for money laundering. The company denies those activities take place but questions remain, especially since its investors’ identities have not been made public. Laws in Laos and its SEZs do not promote transparency. “It’s unlikely that the current regulations in Laos will facilitate the involvement of the major US gaming companies and, as such, it’s difficult to see similar quantum of investment; without these factors I can’t see another Macau being created,” HSBC senior gaming analyst Sean Monaghan says.

Trading places Macau may fall short of the standards some global sophisticates expect, but it is worlds ahead of Boten and Ton MARCH 2011

Gaming

Pheung. Laos border SEZs have a single casino each, limited accommodation and rows of shops in garage-like structures selling goods you could find in the mainland. Amenities are on the drawing board but may never progress. Moreover, the area’s previous attractiveness as an ecotourism destination is being undermined by rubber plantations and other SEZ projects. Mainland travellers describe the SEZs as “China ten years ago” and an “eyesore”. Management can potentially address these situations but it can’t do much about geography. Mr Monaghan places “location next to Guangdong province” at the top of his list of factors for Macau’s success. Laos is next to Yunnan province, which has just half the population and 2 percent of the GDP of Guangdong, the mainland’s wealthiest province, 1,400 kilometres away. Worse still, Ton Pheung and Boten are not just far from Guangdong, they

Kings Romans casino

are also barely convenient to Yunnan and the rest of the mainland. “If you’re south of Kunming, then you’ll go there,” the industry source

Southside story B

esides Boten and Ton Pheung at its northern tip, Laos has two casinos in its southern half. About 60 km outside Vientiane, Dansavanh Nam Ngum Resort is admired for its lakeside location and picturesque golf course. The casino, opened in 2008, has about 60 tables and 150 gaming machines. Dansavanh is a home-grown resort chain and runs a shuttle service to Nam Ngum from its hotel in Vientiane. Savan Vegas, a partnership between Macau-based Sanum Investments, Lao backers and the government, is billed as the country’s first five-star hotel and entertainment complex. About 450 km southeast of Vientiane and with road and rail links to Thailand, the casino has 90 tables and 450 machines. Savan’s casino manager Eric Coskun says an expansion is scheduled for later this year. The hotel has 500 rooms, with another 400 to open late next year. The casino relies on Thai gamblers. Junket groups have been largely supplanted by burgeoning mass market and direct VIP play. Lao nationals are prohibited from gambling at all four casinos, but they can play at six slot clubs on the borders with Thailand and Vietnam. Sanum operates four slot clubs and plans at least three more. MC

It’s your daily business

MARCH 2011

says, noting that the area is sparsely populated farm country. Boten is 12 hours by road from Kunming, while Ton Pheung is another three-and-a-half hours southwest on the Thai border. Yet Ton Pheung focuses on Chinese customers, with Thai gamblers reportedly urged to play out their stakes and leave. “Even if you could convince junkets [from beyond Kunming] to come here, there’s no way to get them here,” the source adds. The only airport in the region is 45 minutes from Ton Pheung and three hours from Boten, offering only a handful of domestic flights each week. International connections are via Laos’ capital Vientiane to the south, which has its own casinos, albeit oriented toward Thai gamblers (see the report below). “If you’re getting on a plane, you’ll have to go to Vientiane, but then you might as well go to Guangzhou and across to Macau,” the source said.

5 O’CLOCK TEA A TOUR AROUND THE AFTERNOON TEA SPOTS IN TOWN DESSERT COMES FIRST JANICE WONG, OWNER OF 2AM:DESSERTBAR, TELLS WHY DESSERTS ARE THE MAIN DISH

THE SECRETS OF TAN WE TAKE A LOOK AT GOLDEN FLOWER, A RESTAURANT WITH FLAVOURS FROM HISTORY

BREAKDOWN BY THE NUMBERS

THE HOW MUCH AND HOW MANY OF FINE DINING IN THE REGION

The number of Michelin-starred restaurants in Macau. Robuchon a Galera at Hotel Lisboa is the only property in town with three stars, the top distinction The number of wine cabinets modelled after the most-celebrated estates in Bordeaux that the Grand Château Series comprises. From clients in Europe, Mexico, the United States and Asia, only Hotel Lisboa, in Macau, bought an entire set The minimum number of times per week that Japanese restaurant Tenmasa, at Altira, flies in ingredients from Japan The length, in metres, of Yi Gen Mian, the signature noodle dish at the Noodle & Congee Corner, at Grand Lisboa casino hotel, featuring a single, continuous noodle The forbidden number in a popular drinking game in China (including Hong Kong and Macau). Everybody sits at a table and says numbers in succession, having to avoid seven and its multiples

his month is about fine dining, wines and spirits. And who doesn’t like this topic? We continue our search for the best options in town and find some pretty interesting things. All for your own good of course – and for ours too! For starters, we interview the owner of the famous 2am:dessertbar in Singapore, Janice Wong, and unveil some of the secrets behind this innovative concept. Also in this edition, we feature the restaurant Golden Flower, one of the jewels of Wynn Macau. With its fine decoration and its stylish features, it takes you back in time, cooking the best dishes from the cuisine once invented by Qing Dynasty official Tan Zongjun. We continue our journey through this fantastic world and look into the best places for an afternoon tea in Macau. If you simply want to relax during the afternoon, sipping a cup of tea and enjoying a set of delicious biscuits and pastries, we give you our suggestions. And because the world of fine dining only exists when paired with wine, we bring you a selection from Grand Hyatt’s best white and red wines, just for your delight. Talking about drinks, when it comes to this subject, the ultimate pairing with wine is sex. So read on if you want to discover how it can benefit your sex life. Getting interested?

“Unusual” Chinese food

Chinese appreciate the so-called “stinky tofu”, which is a form of fermented tofu that has a strong odour. Unlike cheese, stinky tofu fermentation does not have a fixed formula for its starter bacteria. Dog meat is considered a speciality for Chinese, although it’s not that common to find it on the menu. Certain animal organs are believed to have medicinal or enhancing properties, such as deer’s antlers boiled as tea, snake pickled in China’s popular baijiu alcohol, or seahorses which are said to improve a man’s virility.

Chinese consider shark’s fin, bird’s nest, jellyfish and pigeon soup delicacies. Live snakes are readily available at markets in Singapore, Hong Kong and Taiwan, where they are killed in front of customers, who buy them for their meat. In China, people eat pig or duck’s blood in soup or they cook it with tofu.

“Unusual” European food

The Europeans do not eat stinky tofu, but they do eat Roquefort, which is a sheep’s milk blue cheese, white, tangy, crumbly, with distinctive veins of green mould. It has a characteristic odour and flavour with a notable taste of butyric acid. Europeans do not eat dog, but some are fond of horsemeat. Western medicine does not use animal organs for healing purposes, but Europeans still consider certain animal organs a delicacy. This is the case for scrotum, brain, chitterlings (pig’s small intestine), trotters (feet), heart, head (of pigs, calves, sheep and lamb), kidney, liver or “lights” (lung). European may not eat shark’s fin, birds’ nest, jellyfish or pigeon soup, but they do eat caviar, goose liver pate and frog’s legs. Snakes are not on the European menu, but snails (escargot) are very much appreciated in France and in other parts of Europe. In Europe, pig’s blood is eaten in different ways, depending on the country: as a sausage, for instance, in a soup or even to make pancakes.

SEVEN DEADLY SINS OF FINE DINING IN CHINA Gluttony – Even if you really like the food being served and you want to eat as much as you can, try slowing down your pace. Eating fast in China is considered rude, so you should take your time while the food is still warm.

Greed – You are looking at that delicious chicken with

that greedy look, but you still cannot have it. Wait a little bit longer until your host asks you to start eating. It is very rude to attack the food without the host’s approval.

Lust – We know that you’re really drawn to rice and that

you really desire it so much that you could almost absorb it directly from the bowl. But restrain your desire. The rules say that you are supposed to eat rice graciously, putting the bowl close to your mouth and pushing the rice with the chopsticks.

Sloth – It is really very rude to dip food in the sauce that is being used by everybody in the table. So make an effort and use the spoon to take out a little bit of sauce and pour

itVI into your individual bowl. It may require some extra work, but it will be worth it.

Envy – Don’t covet the dish in front of the person opposite you. Rather enjoy the dish in front of yourself. Eat a little bit of everything, but don’t make a mess.

Wrath – Never stick the chopsticks upright in a bowl with

rice. More than rude, it is considered offensive. By doing so you’re invoking a negative image. According to Chinese tradition, you’re supposed to stick two incense sticks vertically in a bowl of rice when you’re offering something to your ancestors. So, either you’re angry with someone you’re eating with and you’re wishing he or she were dead, or you’re just being incredibly rude.

Pride – The most important guests are supposed to be

served first, then the younger ones should serve the elders and the employees should serve their superiors, and so on. So there’s no place for pride here – rules are rules. 99

FEATURE

THE SPIRIT OF

TAN CUISINE

et in an opulent and exclusive dining room at Wynn Macau, Golden Flower restaurant celebrates the life and culinary talent of Cantonese Qing dynasty official Tan Zongjun, who blended the authentic flavours of China’s Tan, Lu (Shandong), and Sichuan cuisines into something new. Tan was a Qing Dynasty official from Canton who took up residence in Beijing, where he discovered Lu cuisine. But he went a step further, blending the best from China’s north and south to create Tan cuisine. Tan Zongjun inspired several generations of chefs to uphold the traditions of Tan cuisine,

BIG SPENDER

A sweet present I

f you have a thing for sweets, forget about pie, pudding and fruits and think of exquisite desserts. Tasty and expensive, Chocolate Variation is one of the ten most pricey desserts in the world and it’s available nearby, in Bangkok, at the Mezzaluna, in the Lebua Hotel. You cannot miss it. For those around in Asia, wishing to explore the crème de la crème where desserts are concerned, this is one of the best. The US$640

100

including Golden Flower’s very own Chinese executive chef Liu Guo Zhu, who worked for more than a decade in the same kitchen as Tan Zongjun a chef, in the original Tan household. “Tan cuisine is a school of cooking that can be enjoyed by both northern Chinese and southern Chinese because the flavours are very balanced and the cuisine protects the original flavours of our ingredients. But it is also a cuisine that is very exclusive and hard to truly understand because of the labour-intensive cooking methods involved. Also, few chefs have worked in a kitchen with a chef from the original Tan household,” says Chef Liu. The signature dishes include braised Jinshan shark’s fin in supreme chicken broth, braised Yoshihama abalone in brown sauce, sweet and sour cabbage with chilli vinaigrette, as well as stock boiled mandarin fish fillet with ginger. Not only does it intend to bring a part of China’s history to Macau, but Golden Flower also tries to make history through its exquisite design. The restaurant recreates the very nature of Tan cuisine, which was evident in Tan’s courtyard home in Beijing. It also bears some extravagant features, such as a tea lounge and a reception room inspired by a suite from the home of British tycoon Frederick Leyland (1832-1892) known as the “Peacock Room”. To combine with the exquisite Tan delicacies, Golden Flower has a special tea purveyor and in-house tea sommelier who helps guests to make the perfect selection. And to finish the meal gracefully, the restaurant features an in-house calligrapher who composes original poems and calligraphy for the guests. Overall, it is a unique experience.

(MOP5,120) Chocolate Variation includes edible golden leaves, champagne sorbet made from champagne Roederer Cristal Brut 2000 and crème brûlée. And, as if this wasn’t enough, it finishes off with Perigord truffles, strawberry chocolate mousse and a slice of chocolate cake. Don’t even think of the price. Think of the fantastic experience you’ll be getting by tasting such a treat. And you’ll probably want to repeat it.

INTERVIEW

It’s a whole new concept, where desserts become the main dish and have to be paired with the right wine. JANICE WONG, owner and chef of 2am:dessertbar in Singapore, saw an opportunity to establish a trend and grabbed it. Passing through Macau for a collaboration with chef Guillaume Galliot at City of Dreams’ Horizons restaurant, she told us all about it

By Luciana Leitão

hen did you decide to become a chef? Janice Wong - I was actually studying Economics when I decided to do a switch in my career, in Melbourne. I went straight to Paris and started in Le Cordon Bleu patisserie, had the basics there and worked in Singapore for six months at the French restaurant Les Amis. I decided this was really what I wanted to do, no turning back. I went to New York to get more culinary skills, more inspiration and then opened 2am:dessertbar in Singapore. Why did you specialize in desserts? As a woman, in a very male dominated industry, you have to find a niche; you have to find a way that allows you to be extremely creative yet putting you somewhere different. If I went to a restaurant among a thousand restaurants, where was I going to stand out? Don’t get me wrong, I love food as well, but I just felt that there was no one doing fine dining desserts and a full restaurant at that. Of course there was a lot of risk: doing a fine bar that just serves desserts and wine pairings, is it sustainable? There were all these huge question marks from the media, myself and everyone else but we just had to make it work. It’s three years old, I’m happy it’s going well and it’s a new concept for people to understand.

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INTERVIEW

Were people immediately attracted by the concept? Well, because of the Asian culture (Hong Kong, Taiwan, Singapore) I would say it’s about the same when a new place opens up. You have the crowd coming in, but after three months are you going to have the same crowd? We learned it the hard way with a lot of work. The creative part has to keep coming, every month we have to keep changing the menu. If you keep the menu the same maybe for a year, people will come back, but they are going to get bored. So the dessert bar philosophy is also to introduce new techniques, new flavours to the customers. We import a lot of things as well - we introduced yuzu, so many herbs and different kind of flavours in the dishes. But the connection with the customers is so important that we don’t just introduce new things to them, we’re also making them understand our philosophy. Would you say your desserts are more Asian, European or fusion style? I would say progressive, modern European actually. Asian style desserts aren’t very sweet and they don’t have much texture. However, it’s surprising the number of hot desserts you get in Asia. You don’t get that in Europe. For me, I just adjust from where I grew up - Hong Kong and Japan. But where I trained was in Europe, so the techniques are very progressive. The main thing is it doesn’t matter if it is French or whatever,

Asian style desserts aren’t very sweet and they don’t have much texture. However, it’s surprising the number of hot desserts you get in Asia

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for me it’s just a flavour, the techniques, the look and, of course, the palate. So I would say that there are influences of each culture – I don’t want to say fusion. The important thing is the flavour and how you work around one main ingredient. Where do you get your inspiration? A lot of it is my memory, childhood memories, the Japanese flavours from the past. I think every chef is actually inspired by his childhood. How do you stimulate your creativity? I run away from Singapore. To be honest with you, the island is so small, so reaching nature is not easy. So I isolate myself for two weeks or two months. I went to Spain for two months to work around in every place, to talk to chefs, to be inspired by nature and that way the creativity just keeps coming. There, I could create ten dishes in an hour and here it’s something that takes a month. When you change the menu, do you have certain dishes that you keep? Yes, we have this dish called “Chocolate Water”; we submitted it to the Madrid Fusion Competition and it got picked to represent Asia. It was developed because we were inspired by the women at the bar, they were always asking us at midnight for a chocolate dessert that was light. I decided to create this technique that replicates a big block of mousse but you’re only eating this much of chocolate; when you have a bite it is just like air. They look at it and think it’s too much chocolate, but they eat it and they are satisfied. So far everyone has liked it. Is it difficult being the chef and the owner of 2am:dessertbar? For sure. When you own a place and you run it, you’re not able to create all the things you want to, because the business has to make sense, it has to sustain itself and, sometimes, you have to put things on the menu that you don’t like. Even though you don’t like it, but if the crowd favours it you’d better listen to them. Those are all the little secrets for success [I have learned] after three years running a business with such a concept. We decided that the first year we were going to make 80 percent of our items classical and 20 percent would be kind of modern and “avant-garde”. Now it’s the other way around – 80 percent are avant-garde and 20 percent are classical. Is it easier that way? It is tough, because as a chef, your food represents who you are. So when I first started out, all the food represented me, but it had to make sense. [Now], I need to keep creating and I need the money to keep coming in. As a business, it has

The patisseur Janice Wong is recognized as a rising star in Asia’s pastry scene. She is the owner and chef of 2am:dessertbar at Holland Village, in Singapore. Her journey in F&B has been very exciting, having started in Le Cordon Bleu, Paris, and perfecting her skills in high-end restaurants such as Aquavit, WD-50, Room4dessert and Per Se in New York, Alinea and L2O in Chicago, always working with some of the world’s greatest chefs. Her crowning achievement was as a consulting pastry chef to Spain’s three-star Michelin restaurant Arzak. She was selected as the sole Asian representative competing against seven other pastry chefs from around the world at the 2010 Madrid Fusion Prestigious C3 competition, and is one the pioneers in molecular gastronomy in Singapore.

[to have clients] coming – if they like chocolate, caramel or cake, you still have to put that [on the menu]. Do you like Chinese desserts? You have a lot of sago, red beans and mango pudding. I would say that sometimes it’s too heavy for the end of the meal. We do have some very good light flavours, which sometimes are not being used, such as lychees. What kind of clients do you have at 2am:dessertbar ? Mostly people from Singapore and 30 percent are expats. We have a lot of tourists. A big percentage of the population in Singapore is Chinese. Do you think the more European style desserts you prepare suit their tastes? In Singapore yes, because they love chocolate. As long as I don’t put it like a unique flavour. I love liquorish - I actually put it on the menu once and no one ordered it. But if I put [a bit of] liquorish in the sweets but it’s not on the menu, it may not be so popular [as a flavour], but it is still there. I did a dessert with liquorish, but I know that Singaporeans don’t like it, so I just put a little touch here and there just to introduce that flavour to them. It’s

very important for me to dare, because if I’m always playing it safe then I’m not going to stand out. What kind of wines can be paired with desserts? Usually Moscatos, but we have been working with different kinds of wines, because we want to introduce other wines. Does fruity red wine always pair with chocolate? No, it depends on the chocolate you use. There are no boundaries in wine pairing, no fixed rules or laws. It is a suggestion. We can have a dessert and pair it with a wine and after two weeks we’re changing the wine. We also listen to our customers. You’ve been travelling a lot. Which people or country inspired you the most in your cooking? It would be Chef Alex Stupak, who runs the WD-50, in New York – a major pastry chef, very talented and he has a very good palate. In Spain I was more inspired by the cuisine side. Pastry is not that common in Spain.

103

REVIEWS

Afternoon tea

It’s ideal for a casual business meeting or even a family gathering. We select some of the best afternoon teas in town for you to choose from

The businessman spot Windows at Four Seasons Hotel Macao

Windows, at Four Seasons Hotel Macao, has an afternoon tea menu that picks up on western flavours. The tea set is divided into three layers. “The first is the basic, the second one is for the sweets and the bottom layer is for the savoury ones,” explains Executive Sous Chef, Michael Shum. The basic elements are usually the scones, while the sweets include pecan nut chocolate tart, fruits macaroon and mango mont blanc. As for the savoury items, they include delicious soft rolls with pata negra and very smooth gazpacho jelly. To pair such delicacies, there are several varieties of tea, such as Lychee Green tea or Flowery Earl Grey. On weekdays there are less people at Windows - mostly travellers - but during weekends the restaurant is filled with mostly families who come to taste the afternoon tea specialties. Serving from: 2:30 pm to 5:30 pm, Monday to Sunday Price: MOP210

Tea for all tastes

Lobby Lounge at Mandarin Oriental This is a very relaxing environment, perfect for a casual business meeting. These are the main guests who come to the Lobby Lounge for afternoon tea on weekdays. What better way to discuss business than sipping on a nice cup of tea and eating a delicious pastry? On the weekends, the customers are mostly local families. There are two types of high tea sets – the traditional western style tea and the signature tea, which is a mix of the eastern and the western flavours. Even though the menus are periodically reviewed to stimulate the palate of customers, Executive Pastry Chef Tony Miller recommends certain pastries, such as the smooth chocolate hazelnut bar or the banana bread. The most popular items among customers are the sweet brandy cherry cake as well as the cheesecake. As for teas to pair it with, there is a selection of leaf teas or blended coffee. Serving from: 2:00 pm to 5:30 pm, from Monday to Sunday Price: MOP168

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A casual option Pâtisserie at MGM

Photos: Courtesy of Wynn Macau

There is a casual environment at the MGM Pâtisserie, more suited to families and leisure than business meetings. At MGM Pâtisserie, the afternoon tea includes a set of pastries and sandwiches, as well as a drink that can be selected from any of the recommended teas, coffee or juices. According to Ria Aguirre, team leader for Food & Beverage, the most popular item in the combination is the chocolate fudge. The tea set has three trays with different items. The first tray is for the cookies, while the second one is for the savoury items and the last one is for sweets. If you go to taste the afternoon tea at MGM Pâtisserie, then you will find egg and salad sandwiches, vegetable curry puffs as well as delicious scones, chocolate and kirsch mousse in the glass, chocolate fudge, baked cheese cake with pistachio cream and apricot, among others. Every three months, the menu changes in order to keep guests interested, but certain items have to always be included, such as the traditional scones. Weekends are usually more popular, with around 180 guests per day entering the Pâtisserie, while during weekdays the environment is a little more relaxed. Serving from: 2:30 pm to 6:00 pm, Monday to Sunday Price: MOP148

The favourite cheesecake Café Esplanada at Wynn Macau

It’s one of the most popular places in town for afternoon tea – or, as some people like to call it, high tea. Located close to Wynn Macau’s main entrance, Café Esplanada offers a wide range of desserts to be accompanied by different types of teas and/or drinks. But, different from other restaurants, it does not have any afternoon tea menu. According to the Executive Pastry Chef, Luc Capus, people who choose Café Esplanada for an afternoon tea “just step in and look at desserts in the counter” choosing whichever is to their liking. But Café Esplanada does recommend certain pastries as well as matching beverages to pair with them. Leading the way is the tasty and creamy berry cheesecake (paired with Taichi tea), which is also the most popular among guests. “Everybody loves cheesecake,” Chef Luc says.

Another recommended pastry for afternoon tea is the red bean, green tea and chestnut cake (paired with green tea) – which, given its mixture of ingredients, is more suitable to Asian tastes. Among other recommended pastries is the very intense dark chocolate mud cake (paired with an espresso), which is also among the most popular desserts, as well as the limoncello baba with citrus segments (paired with Mango Fantasy). As far as drinks are concerned, Café Esplanada staff try not to influence guests too much, since, according to their experience, clients already know which drink to choose. Afternoon teatime is usually for guests from the casino as well as families, and some tourists. “Everyday, from 3:00 pm to 6:00 pm, it’s always full,” the manager, Kim Leung, says. Serving from: 6:30 am to 00:30 am, Monday to Sunday Price: A la carte

105

WINES

We recommend Grand Hyatt Macau’s Food & Beverage team have chosen the best whites and reds from the hotel’s wine cellar and here are their choices

Marquesa de Cadaval Ribatejo, Portugal

This Portuguese red wine is a very good suggestion for local foods like Curry Crab and African Chicken. This wine goes well with semi spicy foods.

The Lucky Country Shiraz, South Australia

It’s a red wine good for a family style of dining. The specific taste suits most the hot dishes at the grill.

107

Feudi di San Gregorio 2007 Falanghina

Domaine du Pegau “Cuvée Réservée”

Young ladies will love this mediumbodied white wine, from Southern Italy with a lingering aftertaste of citrus and minerals. This goes very well with seafood, pasta, sushi and sashimi. You can finish the whole platter alone because it just keeps increasing your appetite.

Comprised of mostly old vine Grenache (80 percent), this white wine has a unique grape variety and it is very good for accompanying all types of shellfish.

Campania, Italy

Châteauneuf-du-Pape, France

Chairmanâ&#x20AC;&#x2122;s Reserve

Ronco Del Gelso Pinot Grigio

This is Asiaâ&#x20AC;&#x2122;s most wonderful wine. Directly from the Yellow Plateau of Taigu, Shanxi, these are really wonderful Cabernet wines. Now the whole world knows that China is really growing.

Different types of food are an easy-match and this is a refreshing white wine.

Grace Vineyard, Shanxi, China

Friuli, Italy

108

HOST WITH Want to become a master of entertaining THE MOST at home? Take a peak at our suggestions

Hotman Iron Trivet

by Peleg Design

Itâ&#x20AC;&#x2122;s the perfect piece to put under your pots and pans. Itâ&#x20AC;&#x2122;s practical and stylish. Just the way you like it. Where: Dora Tam Design Gift & Jewellery, Macau

Silicone vessels by Alessi

A set of vessels in stoneware with lid in silicone. Designed by David Chipperfield, these elegant utensils will be a great benefit for any elegant home. Where: Lane Crawford, IFC Mall, Pacific Place Home Store, Canton Road, Times Square, all in Hong Kong

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Fioretto

by Alessi Designed by Gabriele Chiave, this knife sharpener in stainless steel with diamond resin coating and a handle in thermoplastic resin is a luxurious item for an elegant home. Where: Lane Crawford, IFC Mall, Pacific Place Home Store, Canton Road, Times Square, all in Hong Kong

Hellraiser by Alessi

Itâ&#x20AC;&#x2122;s a fruit holder in 18/10 stainless steel, designed by Karim Rashid, which may cause hell but will certainly be an original item to have as a centrepiece. Where: Lane Crawford, IFC Mall, Pacific Place Home Store, Canton Road, Times Square, all in Hong Kong

Tea Time Blue by Vista Alegre

From the Portuguese brand Vista Alegre comes a new and trendy tea set, available in blue, white and black colours. It includes a teapot, two teacups and one sugar pot. It will definitely bring a new flavour to your tea. Where: Vista Alegre, Macau

Red Fruit Bowl by Bugatti

Why should you have a plain fruit bowl when you can have a Bugatti? This fruit holder is made from 18/10 stainless steel and will give your living room an extra sense of design. Where: New Yaohan Department Store, Macau; Shiamas Limited - Duddel Street, Hong Kong

110

HOST WITH THE MOST

Porcelain dishes by Alessi

Eggcup with spoon by Alessi

In 18/10 stainless steel, this eggcup with spoon designed by Helen Kontouris is a simple yet elegant piece.

Designed by Marcel Wanders, this new table set in white porcelain with relief decoration is a stylish option. Where: Lane Crawford, IFC Mall, Pacific Place Home Store, Canton Road, Times Square, all in Hong Kong

Where: Lane Crawford, IFC Mall, Pacific Place Home Store, Canton Road, Times Square, all in Hong Kong

Vela Blender by Bugatti

’Vela’ is Italian for ‘sail’, so away with this exquisite blender, with its variable speed settings and a pulse function to crush and blend. Where: New Yaohan Department Store, Macau; Shiamas Limited - Duddel Street, Hong Kong

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WINE AND SEX

Crime Scene Silicon Trivet from Peleg Design

It doesn’t really mark the scene of a crime, but it will certainly draw your guest’s attention. This Crime Scene Silicon Trivet is a creative option for carrying your pots and pans. Where: Dora Tam Design Gift & Jewellery, Macau

Chain Wine Bottle Holder from Peleg Design

A simple chain can do wonders. Just with a creative chain embrace, here’s how your bottle can be held. Where: Dora Tam Design Gift & Jewellery, Macau

The best match

When we talk about wine, we always discuss pairing it with food. Well, let us tell you one secret: there is no better complement to a glass (or a bottle) of wine than sex. Given the versatile nature of sex, it’s very easy to pair it with wine. Just remember one golden rule: respect the right temperature of the wine. If you choose, for instance, a warm Chardonnay, the mood will probably never appear. And please, keep track of the portions. If you have too much, it will not have the desired effect, and could instead become a messy affair. If you have too little, it is as if you didn’t have any at all. The right portions make your heart beat a little bit faster, your skin feel warmer and the desire for a good understanding under the bed sheets will become natural. Red or white? Wine or champagne? Well, you should know better according to your personal taste, but Italian experts have recently concluded that women’s sexual desire increases with a glass of red wine. It is still not clear exactly how red wine can have such an effect, but one theory suggests that the anti-oxidants in wine have a positive effect on the blood vessels, increasing the blood flow to certain areas of the body. Well, it is just a theory, yet to be proven. Care to test it out? Nevertheless, be careful with your wine choice, because it may determine the end of your night. But who are we to say anything? There are no universal rules in this department. Go on and discover your own best match! 112

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The Esplanade, Wynn Macau

Shoppes at Four Seasons

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Escapes

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113 JOSEPH E. STIGLITZ UNIVERSITY PROFESSOR AT COLUMBIA UNIVERSITY AND A NOBEL LAUREATE IN ECONOMICS

The Tunisian catalyst TUNISIA IS OFF TO AN AMAZINGLY GOOD START he whole world celebrates Tunisia’s democratic revolution, which has set off a cascade of events elsewhere in the region – particularly in Egypt – with untold consequences. The eyes of the world are now set on this small country of 10 million, to learn the lessons of its recent experience and to see if the young people who overthrew a corrupt autocrat can create a stable, functioning democracy. First, the lessons. For starters, it is not enough for governments to deliver reasonable growth. After all, gross domestic product grew at around 5 percent annually in Tunisia over the last 20 years, and the country was often cited as boasting one of the better-performing economies, particularly within the region. Nor is it enough to follow the dictates of international financial markets – that may get good bond ratings and please international investors, but it does not mean that jobs are being created or that standards of living are being increased for most citizens. Indeed, the fallibility of the bond markets and rating agencies was evident in the run up to the 2008 crisis. That they now looked with disfavour at Tunisia’s move from authoritarianism to democracy does not redound to their credit – and should never be forgotten. Even providing good education may not suffice. All over the world, countries are struggling to create enough jobs for new entrants into the labour force. High unemployment and pervasive corruption, however, create a combustible combination. Economic studies show that what is really important to a country’s performance is a sense of equity and fair play.

Economic justice

If, in a world of scarce jobs, those with political connections get them, and if, in a world of limited wealth, government officials accumulate masses of money, the system will generate outrage at such inequities – and at the perpetrators of these “crimes.” Outrage at bankers in the West is a milder version of the same basic demand for economic justice that we saw first in Tunisia, and then across the region. Virtuous though democracy is – and as Tunisia has shown, it is far better than the alternative – we should remember the failures of those who claim its mantle, and that there is more to true democracy than periodic elections, even when they are conducted fairly. Democracy in the United States, for example, has been accompanied by increasing inequality, so much so that the upper 1 percent now receives around one-quarter of national income – with wealth being even more inequitably distributed. Indeed, most Americans today are worse off than they were a decade ago, with almost all the gains from economic growth going to the very top of the income and wealth distribution. And corruption American-style can result in trillion-dollar gifts to pharmaceutical companies, the purchase of elections with massive campaign contributions, and tax cuts for millionaires as

medical care for the poor is cut. Moreover, in many countries, democracy has been accompanied by civil strife, factionalism, and dysfunctional governments. In this regard, Tunisia starts on a positive note: a sense of national cohesion created by the successful overthrow of a widely hated dictator. Tunisia must strive to maintain that sense of cohesion, which requires a commitment to transparency, tolerance, and inclusiveness – both politically and economically.

The rule of law

A sense of fair play requires voice, which can be achieved only through public dialogue. Everyone stresses the rule of law, but it matters a great deal what kind of rule of law is established. For laws can be used to ensure equality of opportunity and tolerance, or they can be used to maintain inequalities and the power of elites. Tunisia may not be able to prevent special interests from capturing its government, but, if public financing of electoral campaigns and restrictions on lobbying and revolving doors between the public and private sectors remain absent, such capture will be not only possible, but certain. Commitments to transparent privatization auctions and competitive bidding for procurement reduce the scope for rent-seeking behaviour. There are many balancing acts to be mastered: a government that is too powerful might violate citizens’ rights, but a government that is too weak would be unable to undertake the collective action needed to create a prosperous and inclusive society – or to prevent powerful private actors from preying on the weak and defenceless. Latin America has shown that there are problems with term limits for political officeholders, but not having term limits is even worse. So constitutions need to be flexible. Enshrining economic-policy fads, as the European Union has done with its central bank’s single-minded focus on inflation, is a mistake. But certain rights, both political (freedom of religion, speech, and press) and economic, need to be absolutely guaranteed. A good place for Tunisia’s debate to begin is deciding how far beyond the rights enshrined in the Universal Declaration of Human Rights the country should go in writing its new constitution. Tunisia is off to an amazingly good start. Its people have acted with purpose and thoughtfulness in setting up an interim government, as Tunisians of talent and achievement have, on a moment’s notice, volunteered to serve their country at this critical juncture. It will be the Tunisians themselves who will create the new system, one that may serve as a beacon for what a twentyfirst-century democracy might be like. For its part, the international community, which so often has propped up authoritarian regimes in the name of stability (or on the principle that “the enemy of my enemy is my friend”) has a clear responsibility to provide whatever assistance Tunisia needs in the coming months and years. MARCH 2011

Photo: LuĂs Almoster | mspagency.org

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Tourism

Strained relations

An ugly brawl and stand-off between mainland tourists and tour guides raises prickly questions about hospitality standards and greedy tourists

fter years of complaints that unscrupulous tour guides have exploited them, the tables have turned on tourists to Macau. Tour guides are accusing visitors of bulling, demanding apologies and cash compensation. The new twist in an ugly tale came last month when three mainland tourists attacked their guide at the Macau Ferry Terminal. A group of 26 tourists from Liaoning province complained about their guide, accusing him of being late and of not identifying himself with a hand-held information board. An argument followed and when a guide from another agency tried to mediate, he was attacked by the trio.

MARCH 2011

The guide was taken to hospital with minor injuries. Police spoke to the three attackers and they were released without being charged. The Macau Government Tourist Office said the guide was on time and that the group had arrived earlier than scheduled. Not content to let the matter rest, a group of tour guides later gathered en-masse outside the Jai Alai casino, where the trio were apparently watching an erotic show. One observer said up to 100 guides surrounded the casino. They turned on the tourâ&#x20AC;&#x2122;s coach, demanding an apology. The wife of the injured guide wanted MOP200,000 (US$25,000) in cash compensation.

115 Police and a deputy director from the Macau Government Tourist Office spent five hours mediating between the groups. As no agreement was reached, police drove the tourists back to their hotel and the group returned home the following day.

Copycat concerns The incident followed a more familiar confrontation between a tour guide and a mainland couple in Hong Kong during the Lunar New Year break. The pair accused the guide of forcing them to buy items from a jewellery shop. Eventually the travel agency that handled the couple’s group gave them HK$120,000 – a sum not officially confirmed – as compensation. Angelina Wu Wai Fong, president of the Macau Tourist Guide Association, says the Hong Kong case has encouraged mainland tourists to confront their guides, seeking an easy payday. “The tourists think they can receive compensation if they can make us angry and hit back,” Ms Wu says. The behaviour of the guides, forming an angry mob and taking the law into their own hands, was also criticised but Ms Wu has defended their actions. She said the only way to protect guides from harassment was to send a strong signal to tourists that extortionate behaviour would not be tolerated. Ms Wu was also particularly critical of the judiciary, calling for summary judgements on minor crimes to prevent mainland tourists from skipping through on summons. Meanwhile, the Hong Kong Tourism Board is advising travel agencies in the former British colony not to pay compensation to visitors when there is a confrontation, to reduce copycat cases. “Definitely, we should not mislead tourists into thinking that if they join tours to Hong Kong and deliberately get into an argument with a tour guide or operator, they will get paid, because that is not the case,” chairman James Tien Pei Chun told reporters.

Beijing follows up

“The tourists think they can receive compensation if they can make us angry and hit back,” says Angelina Wu Wai Fong, president of the Macau Tourist Guide Association

The incidents in Macau and Hong Kong prompted the mainland’s National Tourism Administration to strengthen its supervision of trips to both SARs. The administration has called on tourism agencies to provide advice to outbound tourists to avoid similar cases. An administration announcement said contracts between travellers and tour agencies should clearly state the rights and duties of both parties and that guides should become better at defusing situations before they escalate into conflict. According to the Macau Government Tourist Office, tourists have filed 88 complaints over the past three years. Most complaints related to guides failing to follow the announced route, including meals, hotels, shopping and other activities. Last month’s incident in Macau was the highest profile case since 2007, when a group of 120 Hubei tourists were threatened with being left at Hac-Sá beach by their tour guides because they were not spending enough money. “Zero-priced tours” and “negative-priced tours”, where tourists pay only a part of their trip cost while tour operators take a commission from the amount tourists spend at designated shops, have been common in Macau in the past. Authorities insist the practice has mostly ceased. MARCH 2011

116

Tourism

Macau Government Tourist Office officials and guests distribute lai see to tourists on the Year of the Rabbit’s first day

Double happiness Year of the Rabbit begins brightly for the city’s tourism industry he Lunar New Year holiday has left a smile on the faces of the city’s tourism operators, with increases in both the numbers of tourists entering the city and in hotel guests. Lawmakers however pointed to overtaxed infrastructure and retailers reported running out of infant milk formula, a popular “souvenir” for mainlanders. About 805,000 tour-

ists came to Macau over the holiday from February 2 to February 8, preliminary data from the Macau Government Tourist Office shows. The figure represents an 8.4 percent rise year on year. Matching government forecasts, mainland visitors accounted for the lion’s share – some 477,000 visitors – of the Golden Week influx, a year-on-year increase of 13.9

More people spending the same L

ast year, visitor arrivals on package tours totalled 5.7 million, a 23.6 percent increase year on year, according to official data released last month. Hotel guest numbers for all of last year also rose 15.5 percent year-on-year to 7.76 million. The average occupancy rate of hotels and guest houses surged 8.4 percentage points to 79.8 percent. Nevertheless, visitor per-capita spending, excluding gaming expenses, amounted to MOP1,812 in the fourth quarter last year, a figure close to that of the same time period last year, the Statistics and Census Service reports. Mainland visitor per-capita spending topped out at MOP2,902, down 18.5 percent year on year. MARCH 2011

percent. The number of tourists from Hong Kong also swelled 6.5 percent. The continuous growth in tourist numbers is worrying some legislators. Last month, several lawmakers called the government’s attention to the lack of infrastructure to cope with demand during peak seasons. The growth in visitors from the mainland led to a sellout of several foreign brands of milk powder, however the Health Bureau downplayed the issue, assuring that supplies had always been adequate to meet demand. Since more than 27,000 tonnes of melamine-tainted milk products were found in and from the mainland in 2008, many mainlanders use their trips to Macau to buy imported infant and baby formulas, among other foods. A survey released recently by Insight China magazine and Tsinghua University’s Media Survey Lab, says almost 70 percent of Chinese have serious doubts about food safety in the mainland.

Be my guest According to the tourist office, growth in seasonal tourist numbers was matched by a 1.1 percent year-onyear increase in the average daily number of rented ho-

tel rooms, to 16,949. Much sharper was the increase in the average room rates at hotels from three to five stars. It was up by 14.4 percent, to MOP1,879 (US$234). Despite the office’s warning that it would penalise hotels charging higher rates during the holiday, at least two complaints were filed, the bureau said. One case, however, was dismissed because the petitioner failed to provide sufficient evidence, while in the other, investigators found that the price range charged was within the hotel’s set room rates. Each hotel is required to inform the office in advance when revising room rates. During the holidays, authorities also sealed three premises suspected of illegally providing accommodation. The swelling ranks of tourists welcoming the New Year came as the year started on a high note for tourism operators and hoteliers, with 2.1 million arrivals in January. The government’s tourism director João Manuel Costa Antunes expects the total number of visitors to Macau this year, from all points of embarkation, to reach 27.5 million, a 10 percent increase year on year. He added however that his forecast may be too conservative.

MICE

117

Meeting expectations This year will be a turning point for the conference and exhibition business in Macau, says the vice-chairman of the Macau Convention and Exhibition Association. He says the industry is maturing but expects there are challenges ahead BY ALEXANDRA LAGES

t is nothing but good news for the meetings, incentives, conventions and exhibitions (MICE) industry this year, says Alan Ho, vice-chairman of the Macau Convention and Exhibition Association. The government stimulus programme for the industry is about to be improved, while political leaders in both Macau and Beijing have shown strong support for this emerging industry. Three years after the opening of Macau’s biggest MICE facility, Mr Ho is sure that this year, the industry will enter a new stage in its development. “Since the opening of the Venetian Macao Convention and Exhibition Centre in October 2007, when Macau first started to develop this industry, until 2010, we were in the beginning stages. From 2011 to 2015, it will be the fast-growing development stage,” he told Macau Business. Official data shows the number of MICE events held in the city last year was 1,399 – that is 15 percent more than in 2009. The number of people taking part reached 806,000, a 41 percent rise.

Together, Macau’s MICE venues have an estimated 140,000 square metres of space, Mr Ho says. This is expected to increase with the upcoming opening of Galaxy Macau, in Cotai.

Breeding like MICE The number of MICE-related companies is also increasing, industry insiders say. The most recent available data shows that Macau had 20 companies principally engaged in organising conferences and exhibitions in 2009, together employing 85 people. Today it is different. “There are more than 200 companies involved in this industry, employing more than 1,000 people,” says Mr Ho. His estimate includes not only event organisers but also contractors and travel agencies. The government is closely involved in nurturing the MICE industry, as it hopes it will aid economic diversity. Its support includes not only subsidies but also the promotion of Macau abroad as MICE destination. It is following the lead set by Beijing. “Some people think

Official data shows the number of MICE events held in the city last year was 1,399 – that is 15 percent more than in 2009. The number of people taking part reached 806,000, a 41 percent rise

MARCH 2011

118

MICE

of Macau as a gaming centre, but the central government’s plans for Macau are to create a tourism and leisure international city,” says Mr Ho. Last month the secretary for Economy and Finance, Francis Tam Pak Yuen, led an official delegation to Germany to promote Macau as a convention and exhibition destination and to introduce the government’s Strategic MICE Market Stimulation Programme to the Germans, who include some of the world’s biggest fair organisers. And the Macau Government Tourism Office was represented at the 19th Asia-Pacific Incentives and Meetings Expo (AIME), in Australia. Also manning its stand were representatives of the Mandarin Oriental Macau, The Venetian Macao, Grand Hyatt Macau and Sofitel Macau at Ponte 16.

Last year, 38 percent of MICE events in Macau were about commerce, trade and management, 14 percent about information and other technology and 9 percent about banking and finance. Just 7 percent were about travel and tourism

A far cry “AIME is vital for taking enquiries and bookings for future events in Macau,” says Helen Wong, representative of the Macau Government Tourist Office in Australia and New Zealand. “Much important business took place throughout the event. It’s an exciting meeting point for those wanting to know more about Macau and its credentials to host quality events beyond 2011.” Alan Ho believes that in five years the MICE industry will play a bigger role in Macau’s economy. “We regard MICE as an important industry. Revenues are not big, but it can promote many other sectors. For example, it can boost the travel industry and also create employment,” he says. “It will help Macau to achieve economic diversification.” In 2009, the industry’s annual revenue grew by 45.7 percent to MOP76.79 million (US$9.6 million). The industry added a gross value of MOP14.96 million, 44 percent more than in 2008, while gross fixed capital formation decreased by 24 percent to MOP273,000. The industry’s revenue is still a far cry from the gross gaming revenue raked in by the casinos. That figure stood at MOP119 billion in 2009. MARCH 2011

To speed things up, the government established a committee for the development of the MICE sector last year. It falls under the Economic Services Bureau and aims to assist the administration in outlining development strategies, measures and policies to promote the industry. The Macau Convention and Exhibition Association has a seat on the committee.

Stimulating committee Proposing ways to attract foreign organisers to hold events in the city is one of the committee’s tasks. “The population of Macau is small, as well as the local market demand. So we need to attract buyers from outside Macau, from the whole world. We can give them free accommodation and transportation tickets,” says Mr Ho. “The committee wants to set up a fair and open policy to support the industry. It includes a fund to support both local and international industry players.” He says a new Strategic MICE Market Stimulation Programme will be put forward in July. The present programme offers support to local and overseas organisers alike. This includes financial subsidies, accommodation rebates, speaker

119

Have visa, will travel T

sponsorship, and food and beverage allowances. “The most important thing to do this year is to continue to improve the stimulation plan and the financial support for both organisers and attendees. The government will also set up a one-stop service centre,” says Mr Ho. Also in the pipeline is the creation of a new exhibition centre, even though a lack of MICE venues is not a concern, he says. “We asked the government to establish a medium-size exhibition centre with an area between 20,000 to 100,000 square metres on the Macau peninsula, operated by the government,” he says. If approved, the project will take several years to be completed, Mr Ho believes, since it is part of a long-term strategy for the industry.

Like Las Vegas Besides gaming-related MICE events, his association wants to bring to town conferences and exhibitions about tourism and associated industries, like the food and beverage industry. “We also target niche markets, like adult expos. Macau is a free market and we can organise any kind of exhibition, while in the mainland there are some limitations,” says Mr Ho. Official data shows that last year 38 percent of MICE events in Macau were about commerce, trade and management, 14 percent about information and other technology and 9 percent about banking and finance. Just 7 percent were about travel and tourism. Mr Ho is confident that Macau will gradually become more like Las Vegas and evolve into a popular destination for MICE events, as well as gaming. He is proud that the Union of International Fairs, a global exhibition association, rated Macau the second-best emerging MICE destination in Asia in January. “We have to go step by step. Right now, people regard Macau as a good place to organise conventions,” he says. “It needs time. Macau will successfully become an Asia MICE destination.”

he central government is poised to ease visa restrictions for mainland businessmen travelling to Macau for MICE events, says the vice-chairman of the Macau Convention and Exhibition Association, Alan Ho. The mainland’s present visa policy is one of the obstacles hindering the development of the local MICE industry. “We want to invite more officials and senior managers from state-owned companies to participate in MICE events in Macau but we often find this difficult,” he says. “However, we have been in conversations with the central government and they said they would ease restrictions soon. That’s good news.” “Next month [March], we should have some news on that. Last time we had conversations, the minister of commerce told us that this year the central government would release some news for us. We need flexible visas for people from the mainland to participate in conventions and exhibitions.” Visa restrictions tend to vary from province to province in the mainland. In Guangdong, where most Individual Visitor Scheme visitors come from, residents can get a visa only once every two months. The authorities could issue a special visa, such as a MICE visa or business visa, which would be a multiple-entry visa, Mr Ho says. Now that Macau and Guangdong have agreed on a framework for further cooperation, Mr Ho is hoping to see more business on both sides of the border for the exhibitions and conventions industry. “We want to cooperate within the region.” The emphasis on cooperation should also be viewed against the strong competition for MICE business within the neighbouring region. Hong Kong, Singapore and Shenzhen are veteran competitors. “Compared to them, we are just beginners,” Mr Ho says.

Help wanted Macau’s MICE business is still hampered by bottlenecks in transport and access to technology. “Exhibitions need technology and transportation, and the Macau market is limited,” Alan Ho says. For instance, only a few airlines fly to Macau, and there are no direct intercontinental connections. The lack of manpower is another problem, even though flexible labour import policies for the MICE industry allow the issuing of temporary work permits to outsiders that work here for the duration of an exhibition. Official figures show that in the first nine months of last year most of the MICE events held in Macau were meetings of some kind. Just 4 percent were expos or exhibitions. “Macau MICE is just entering into a developing stage and we need professionals, mainly convention and exhibition organisers. Now we bring workers in from outside, but we need local skilled workers,” says Mr Ho. “In three days, Hong Kong can set up a whole exhibition, while Macau needs five days. As time goes by, we will have enough human resources. We need time to train people.” MARCH 2011

120 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT

New hardware, old software IT IS TIME TRAINING IS IMPROVED TO PROVIDE A STANDARD OF SERVICE THAT MATCHES THE QUALITY OF MACAU’S TOURIST FACILITIES he director of the Macau Government Tourist Office, João Manuel Costa Antunes, said last year that Macau needed to offer quality to tourists. A few weeks ago, he said the city would strive to establish itself as a quality tourism destination, enhancing tourism products and improving service, in line with the strategy of turning Macau into a global centre for tourism and leisure. Last year’s figures show an increase in the number of tourist arrivals and it is most likely that this growth will continue. The future looks stunning, with the new Galaxy Macau resort opening this year, the Sheraton and Shangri-La following, and a theme park (possibly), and other important developments on their way too. But the dream of transforming Macau into the gambling paradise of East Asia and a global tourist destination can become reality only if other important issues are tackled. Quality of service should be first.

Jobs galore

The problem is that there is too much hardware and not enough software. Today’s Macau is like a brand new laptop with the latest chips but running old software. There is a lack of quality service and a big gap between visitors’ expectations and what they get. To sustain growth, a high standard of service is needed. Herein lies the big challenge that Macau and its entire tourism industry faces. It is a challenge that the city has yet to square up to and it is time to act. Hotels must realise that their future growth depends on developing their employees’ skills and manners, and not only in MARCH 2011

building beautiful facilities or adding more gaming tables to their casinos. Macau urgently needs qualified people to fill present and future positions if the imported labour policy does not change. Thousands of workers will be needed to operate the 20,000plus new hotel rooms, the new restaurants and other attractions that are on the way. Where are the qualified people to fill these positions? Where is the training plan?

Get started

I have been visiting the city’s hotels, casinos, restaurants and other attractions for the past three months. I met several human resources managers and head trainers. Some are trying to do something about training. Others do not seem to care. This field research has raised a question: what if? What if we properly appreciated the size of the problem that lies ahead? What if human resource managers stopped blaming people for their poor skills and did something about it? What if we worked together to solve this puzzle? What if we realised what a huge opportunity we have? We could make a big difference. Macau has great potential. It is a beautiful city and a great tourist destination. It has marvellous hotel complexes, many attractions and thousands of industrious people ready to learn to improve their abilities. These are the foundations for a higher standard of quality service. We must begin building on them today. Since this is a gambling city, I bet that any hotel that dares to address the issue immediately and seriously will be ahead of the game in the short term.

121

March

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

1st – 3rd

iGaming Asia Congress

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

7th Guangzhou International Game & Amusement Exhibition

Venue: China Import & Export Fair Pazhou Complex Organiser: Guangzhou Grandeur Exhibition Service Co., Ltd Address: 2nd Floor, No.318 Chebei Road, Guangzhou, 510660, China Tel: (86) 20 22106418 Fax: (86) 20 82579220 Website: www.chinaamusement.com E-mail: sales@grandeurhk.com Date: Event:

May

YNow - International Youth Leadership Summit

Date: 4th – 7th Event: GTI Asia Taipei Expo Venue: Taipei World Trade Center, Taiwan Organiser: Haw Ji Co., Ltd. Address: 2F, No. 17, PaoChing St., SongShan Dist., Taipei City 10585, Taiwan Tel: (886) 2 27607407~10 Fax: (886) 2 2742-0522 Website: http://www.gtiexpo.com.tw/taipeien/ E-mail: gametime@taiwanslot.com.tw

31st – 2nd April

Date: 17th – 19 th Event: GIGSE Venue: San Francisco, California Organiser: Clarion Gamingzz 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

30 th – 1st April

Venue: TIS Campus Organiser: The International School of Macao Address: MUST Block K, Avenida Wai Long, Taipa, Macau Tel: (853) 2853 3700 Fax: (853) 2853 3702 Website: www.tis.edu.mo E-mail: tis@tis.edu.mo Date: Event:

Date: 15th Event: Delta Inter Chamber Event (DICE) Venue: TBC Organiser: Macau Business | DB | WiP Address: 9/F Flat H, Block C, Nam Fong Ind. Bld., 679 Av Dr Francisco Vieira Machado, Macau Tel: (853) 2833 1258 Fax: (853) 2833 1487 Website: www.deltainterchamber.com E-mail: dice@macaubusiness.com

Macao International Environmental Co-operation Forum & Exhibition (MIECF)

Venue: The Venetian Macao Organiser: IPIM | DSPA Tel: (853) 8798-9675 Fax: (853) 2872-7123 Website: www.macaomiecf.com E-mail: miecf@koelnmesse.com.hk April

Date: 10 th - 12th Event: APAC Investments Summit 2011 Venue: The Venetian Macao Organiser: marcusevanskl Address: CP21, Suite 2101, Central Plaza, 34 Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Tel: (603) 2723 6600 Fax: (603) 2723 6700 Website: www.apacinvestmentssummit.com E-mail: webenquiries@marcusevanscy.com

Date: Event:

31st – 2nd June

Hospitality Architecture + Design Expo (HA+D Expo)

Venue: Marina Bay Sands, Singapore Organiser: Questex Asia Ltd Address: 1211 Prosperity Millennia Plaza, 663 King’s Road, North Point, Hong Kong Tel: (852) 2296 9099 Fax: (852) 2562 6040 Website: hadexpo.questexevents.net E-mail: eileen.chang@trefoilmedia.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 MARCH 2011

122

Management

Challenging business Macau plays host to teams battling it out at the international finals of the world’s biggest management strategy contest BY LUIS PEREIRA

tudents and junior managers from around the world will arrive in Macau next month to take part in this year’s Global Management Challenge international finals, billed as the biggest strategy and management competition in the world. With semi-finals on April 13 and the final the next day, the competition consists of a management simulation in which teams of up to five run a listed company competing to achieve the highest share price on a simulated stock exchange. More than 420,000 people have participated since its inception in 1980. This will be the fourth time heat organiser Macau Management Association has hosted the finals. Since 1996, when the city first joined the competition, more than 10,000 participants have enrolled. The initiative is organised internationally by Simuladores e Modelos de Gestão or SDG, a training group that

MARCH 2011

runs similar simulation programmes for universities, businesses and NGOs. SDG vice-president Pedro Alves Costa, who is also the chief executive of the challenge, says previous international finals in Macau had been a great success and that this year’s event was of “special significance” as it marked the 15th anniversary of Macau joining the challenge. Mr Costa predicts the traditionally strong Asian teams will face “fierce competition” from teams representing the emerging economies of Eastern Europe. Last year’s reigning champions Ukraine took the title from the Russian Federation team. Macau Business is the media partner of the competition.

Mainland ambitions Macau will be represented once again by a team of mainland students of finance and marketing at the Macau University of Science and Technology: Xiong Jun-

jun, Wei Rong, Sun Minghui, Wei Cheng and Yuang Shen. Last year, they were second runnersup in the local heats, an experience that was “extremely helpful” for this edition, they say. Their secret to success, Xiong disclosed, was “team work, having a model and following it”. All five are firm believers in the Chinese tradition of opening their own companies but are careful to steer away from the traditional management system of the family business. “China has become more international since joining the World Trade Organisation,” one member says, to which the other team members agree. A growing number of multinationals are operating on the mainland and they “hope to get a job at one of them”. The Macau champions were among the 2,178 participants that took part in the preliminary round, competing against 182 teams drawn from tertiary

123 institutions, government departments and finance and hospitality companies. The Hong Kong leg of the competition saw the emergence of another mainland team, comprising three mainland finance students and one local business economics student. There were 364 student teams from several tertiary education institutions taking part. Team captain Jackson Zheng Peiyuan from Shenzhen is no stranger to the challenge. He led the team from Sun Yat-sen University in Guangdong to the 2008 international finals in Lisbon. However, the team was beaten in the semi-finals. “We are more experienced now and we will try to do better this time,” Zheng told Macau Business. The only Hong Kong resident on the team, Perry Chan Chun Yip, is also the only member with his eyes set on the mainland in the short term. “The Hong Kong market is very saturated but China is growing and needs all the talent it can get,” he says. On the other hand, his teammates hope the Global Management Challenge experience will propel them into Hong Kong’s corporate world. “One day we’ll go back to the mainland but we would like to work abroad first,” Zheng says. They agree that the mainland economy is growing fast but that the operating environment lacks best-practice standards. The aim is to gain experience overseas and bring that knowledge back to the mainland.

Macau champions

International quest Management association council chairman Tommy Lau Veng Seng believes the competition has “created an international platform for Macau people to meet others with different cultures, values and management skills”. He feels the experience gained from participation is “a valuable asset especially at a time when Macau is becoming an international city, with numerous business opportunities coming from different parts of the world”. Promoting and running the challenge is part of the association’s mission to “introduce the most updated management knowledge and best management practices to the community,” he says. The competition gives thousands of youngsters, still studying or already in the junior ranks of management, a riskfree opportunity to experience being a

Hong Kong champions

Organisers predict the traditionally strong Asian teams will face “fierce competition” from teams representing the emerging economies of Eastern Europe

top manager. Alluding to a perceived disparity between theory and practice, association vice-president Eddie Wong believes the challenge “narrows the gap, helping the participants develop team spirit and flexibility”. He adds that the global competition addresses “the need for the practical implementation of theoretical knowledge, offering a useful tool for the comprehension of the operations of an enterprise”. The 2012 Global Management Challenge international finals are scheduled to take place in Ukraine, concurrently with the Uefa European Football Championship. Teams from 34 countries and regions will take part. The Czech Republic and Brazil are pegged as possible future hosts of the challenge. MARCH 2011

124

Retail

Picture this

Camera and optics maker Leica has opened its first Macau store, continuing the brand’s Asian expansion BY LUCIANA LEITÃO

erman camera and optics manufacturer Leica Camera AG had the official opening of its first store in Macau last month, at City of Dreams. It follows the opening of a raft of new stores in other important East Asian cities, namely Tokyo, Hong Kong, Singapore, Beijing and Taipei. The company plans to grow strongly throughout Asia, where it has seen quarterly sales increases exceeding 100 percent yearon-year. Leica, the first company to successfully market a 35-mm compact camera, is best known for its high-quality optical instruments. Its product line includes compact cameras, of both the rangefinder and single lens reflex varieties, as well as lenses, projectors, enlargers and binoculars. Selling the full range of Leica products, the Macau store is aimed mostly at photo enthusiasts from the mainland, Hong Kong and Macau. “This store is a destination where we will enhance the experience value of the customer but we will also showcase our products to new people that have never seen Leica before,” says the company’s managing director for the Asia-Pacific region, Sunil Kaul. “Based on the demand of this city, we will go into the next stages. For the time being, we plan one store only.” Neither the number of cameras sold nor the number of customers in the store is important, Mr Kaul says. “We make a few for a few. We are a very unique brand and our customers are very exclusive. They buy in prestigious and premium locations.” There were just 13 Leica stores and 11 Leica boutiques in the world last September. Opening a store in Macau is a strategic move. “It’s a very important location because it’s the Vegas of the East. Many people from different parts of Asia are coming here to enjoy this destination,”

MARCH 2011

Mr Kaul says. He emphasises the importance of mainland tourists in Macau, “which is a very large component of this growth”.

A brand with history Comparing Macau’s store with other Leica outlets, Mr Kaul says that there is just one substantial difference. “In other stores, depending on the size and the location geographically, we have a gallery component,” he said. “But because of the space constraints [in Macau], we will have the gallery exhibitions in another area, not in the store. We will rent other locations where we can exhibit our gallery component.” Leica has its base in Solms, Germany, with an outpost in Portugal. It has about 1,110 employees worldwide. The company’s fourth-quarter sales reached €75.5 million (MOP829 million) last year, up 57 percent on the year before. It was Leica’s best quarterly result since it went public in 1996. Leica’s roots go back to 1849, when optician and mathematician Carl Kellner founded Ernst Leitz Optische Werke, an institution for the development of lenses and microscopes, in Wetzlar. It was there, in the early 20th century, that Oskar Barnack developed the Ur-Leica, arguably the first truly successful smallformat camera in the world. Due to World War I, the first Leica – a contraction of “Leitz camera” – did not enter mass production until 1924. It was introduced to the public a year later. By 1932, about 90,000 Leica cameras were in use. By 1961, there were 1 million. In 1998, the company launched its fi rst digital camera, the Leica Digilux. The brand grew to become associated with high optical quality and street photography, especially in the mid-tolate 20th century. Famous photographers like Henri Cartier-Bresson were among the brand’s fans, helping to increase awareness of the brand.

“Based on the demand of this city, we will go into the next stages. For the time being, we plan one store only,” says Sunil Kaul

125 JIM O’NEILL CHAIRMAN OF GOLDMAN SACHS ASSET MANAGEMENT

Down with “emerging markets” ANY ECONOMY OUTSIDE THE SO-CALLED DEVELOPED WORLD THAT ACCOUNTS FOR AT LEAST 1 PERCENT OF CURRENT GLOBAL GDP SHOULD BE DEFINED AS A “GROWTH ECONOMY” t has been nine years since I coined the acronym “BRIC,” which has become synonymous with the rise of Brazil, Russia, India, and China. It has been more than seven years since my colleagues at Goldman Sachs and I first published an outlook to 2050 in which we suggested that the four BRIC economies could emerge bigger than the G-7 economies, and, together with the United States, would constitute the world’s five largest. It also has been more than five years since the expression “Next Eleven,” or “N-11,” first appeared. That term bracketed the next eleven largest countries by population, and sought to determine their BRIC-like potential. These 15 countries drive most of the positive momentum behind the world economy nowadays. China has overtaken Japan as the world’s second largest economy, with output roughly equal to that of the other three BRIC countries combined. Their aggregate gross domestic product (GDP) stands at around US$11 trillion (MOP88 trillion), or about 80 percent of the United States level. Domestic demand in the BRIC countries is even more impressive. The collective dollar value of BRIC consumers is estimated conservatively at just over US$4 trillion, possibly US$4.5 trillion. The United States consumer market is worth more than double that – around US$10.5 trillion – but BRIC consumer power is currently growing at an annual rate in dollar terms of around 15 percent, which means an annual rate of roughly US$600 billion. If this pace is maintained, BRIC consumers will be adding another US$1 trillion to the global economy by the middle of this decade. By the end of the decade, they will be worth more than United States consumers. Indeed, at some point during this decade, the BRIC economies combined will become as big as the United States economy, with China’s GDP alone reaching about two-thirds that of the United States. The four countries will be responsible for at least one-half of real GDP growth in the world, and possibly as much as 70 percent.

“Growth economies”

Beyond the BRICs, among the likely top ten contributors to global GDP growth this decade are South Korea, Mexico, and Turkey. From the so-called developed world, only the United States is guaranteed a place on this list – and the top 20 could include Iran, Nigeria, the Philippines, and Vietnam. So how should we now think about the term “emerging markets”? A few weeks ago, I decided with my colleagues to pursue the term “growth economies,” which Goldman Sachs adopted in 2010 to describe how we treat many of the world’s most dynamic markets. At its simplest, a growth economy should be regarded as one that is likely to experience rising productivity, which, together with favourable demographics, points to economic growth that outpaces the global average.

But an economy also needs sufficient size and depth in order to allow investors not only to invest, but also to exit when appropriate. So we opted for the following: any economy outside the so-called developed world that accounts for at least 1 percent of current global GDP should be defined as a growth economy. At this size, currently around US$600 billion, an economy should be large enough to allow investors and businesses to operate as they do in advanced countries, yet also be likely to grow faster. All other economies should continue to be defined as emerging markets. According to this definition, eight countries currently qualify: the BRIC countries, along with South Korea, Indonesia, Mexico, and Turkey, while others – including Saudi Arabia, Iran, Nigeria, and the Philippines – could join the list in the next 20 years.

Improving the benchmark

It is also time that investors started to benchmark their portfolios more appropriately. In the past few decades, it has become conventional for equity investors to base their decisions on neutral benchmarks determined by the market capitalization of companies and indices. But this gives much more weight to the United States economy and its companies relative to so-called emerging markets. An alternative approach is to use a GDP-weighted benchmark. For bold and aggressive investors, a benchmark that incorporates future predicted GDP gives a lot more weight to emerging markets, especially to the growth economies. The index that Goldman Sachs calculates every year for around 180 countries, called a Growth Environment Score (GES), is used to monitor productivity and the likelihood of sustainable growth. The index goes from zero to 10, with 13 sub-indices for overall growth and productivity. Currently, for example, Korea’s GES is 7.5, compared to 6.9 for the United States. Economies that remain small and have low GES scores are appropriately treated as emerging markets with lots of risk. While they may grow significantly and escape from their current situation, they are vulnerable to adverse developments in coredeveloped countries – especially the United States – and in these countries’ financial markets. Countries with low GES scores need to undertake policies that allow them to rise. For example, we forecast that within the next 20 years Nigeria, home to around 20 percent of Africa’s population, could account for 1 percent of global GDP. But its current GES score of 3.9 is significantly below the BRIC and N-11 average. On the other hand, Nigeria’s economy has almost doubled in size over the last 13 years. If it maintains this progress, before 2030 it will no longer be an “emerging economy.” That would be an exciting development for Nigeria – and for Africa. Even more exciting is the likelihood that Nigeria will not be alone at its graduation into a growth economy. MARCH 2011

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USED CORRECTLY, FACEBOOK CAN BE A VALUABLE SALES TOOL AND IS IDEAL FOR PROMOTION – SOMETHING THAT IS NOT LOST ON BIG BUSINESS BY ALEXANDRA LAGES

MARCH 2011

127 ven if you are not into social media networks, you have surely heard of Facebook. At the end of last year it had more than 600 million active users, many of whom use it for more than social purposes. It is a place to conduct business and marketing experts regard it as a powerful tool. Clothing, shoes, travel and entertainment are among the goods and services being sold by Macau companies on Facebook. The results are amazing, Macau Business was told, but experts believe big enterprises such as mobile companies are making better use of Facebook than small and medium enterprises (SMEs). Clothing retailer Mush Room launched their Facebook page in 2009 and so far they have collected about 500 regular customers. Facebook is “pretty important for the business” says Sonny, one of the shop owners. It is the firms’ only social media marketing tool but it is enough to achieve the owners’ goals. “It’s free and user-friendly. There are lots of people in Macau that love to use Facebook, so we can employ it to add more and more people, and let them know about our label,” she says. Facebook has been anointed one of the top 10 marketing trends for the year by American publication “The Entrepreneur” and there is a growing trade in teaching businesses to take advantage of the platform.

Free feedback Research done late last year by the Macau Internet Research Association and ERS e-Research Lab found that 60 percent of Internet users in Macau use social networking sites. Of those, 95 percent have signed up with Facebook, with 68 percent logging on one to several times every day. Tony Sam Kin Meng, a marketing expert and assistant professor of business information systems at the University of Macau, says Facebook’s most valuable use for companies is free access to public feedback. “Facebook is a communication channel, just like chat rooms, where users can elaborate their opinions and talk about products with their friends,” he says. It is a device that can help businesses take their products global. “As there are millions of Facebook users, it’s a good idea to take products out of the company

and make them global,” Mr Sam says. Internet researcher Angus Cheong Weng Hin believes Facebook can increase customer loyalty. He says that if one person makes a positive comment about a product, it can affect other people’s opinions. After all, Facebook is all about relationships. That was what lured event promoter 3 Sided Square to Facebook. One of the company’s chiefs, Alfredo Vaz, opened a Facebook account in June 2009 and soon realised the tool’s power for promoting events. “A few days later a friend came to Macau to spend the weekend. We decided to throw a party and another friend of mine posted it on Facebook. What first started as a five- or six-people gathering became nearly a 200-people party,” he says. Mr Vaz is now the creator and comanager of 10 Facebook groups and pages. “That’s why some people call me Mr Facebook Macau,” he says.

Promoter’s friend Every day he spends an average of five to six hours managing pages promoting sports events, themed parties and concerts, among others, in Portuguese and in English. His online empire includes a presence on other social media networks and altogether he has an audience of more than 4,000 people. Among Macau’s Facebook young users, 70.5 percent use it at least once and sometimes several times a day, according to a Macau Internet Research Association and ERS e-Research Lab study (see box). “Facebook is the promoter’s best friend, so it is the key of 3 Sided Square’s strategy. It has become the most effective way to spread messages, announcements, invitations, promotions,” Mr Vaz says. It is also fashionable, according to the event promoter. He says Facebook “adds value to a product and increases the demand”. Mr Cheong believes Facebook is still “not so popular” among businessmen. “Only some big companies are using it as a marketing tool, like mobile companies. Maybe the marketing and sales people don’t really think of the power and potential of Facebook,” he says. He urges SMEs to take advantage of MARCH 2011

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Technology

the many benefits of Facebook, as well as e-commerce websites. “It is a very cheap way to promote products, and SMEs could use it more.”

Dragon tales Ferry operator Macao Dragon decided to sign up with Facebook to send advertising messages to customers it targets. “Depending on the ad we want to run, we are able to specify who it exactly goes out to. With Facebook advertising, we can track the progress and gather important information about the users that are clicking on our ads. This information allows us to make changes to our ads and get a better result,” says Macao Dragon deputy general manager Connie Lai. “Facebook is an extremely important tool to our company. Macao Dragon, being a new name, needed to get its brand out quickly to people we were interested in.” So far the ferry operator has had “tremendous results” from its Facebook strategy. “We have a growing number of fans who frequently visit our Facebook page for updates. We have found that many of our fans use our Facebook wall to voice their thoughts and opinions,” she says. Facebook marketing is not profitable by itself. Businesses have to make it effective. That means daily work. There are many Facebook tools designed to improve business use of this social network. There are more than 550,000 active applications on the plat-

“With Facebook, we can gather important information about the users that are clicking on our ads,” says Macao Dragon’s Connie Lai form, according to Facebook itself, with many designed specifically to improve business methods or better integrate Facebook into a company’s operations. Many business apps are free. Often apps offer a basic service at no charge, although usually with limited support. As well as general-purpose business applications, there are apps for specific industries or occupations such as real estate, education, entertainment, web design and marketing. Still, profits will not appear magically. “Businesses need to realise how to use Facebook effectively,” Mr Cheong says. Mr Vaz thinks businesses should focus on one important detail in their communications. “In my opinion, there is a fine line between taking real advantage of Facebook’s potential and failure,” he says. “You have to work hard on Facebook, reading pages, seeing what’s new, consulting sources of information, posting messages, posting photos, posting photo captions, keeping in touch with the largest possible number of users. It is huge, hard but very enjoyable work.”

FRESH FACED F

or products aimed at young consumers in Macau, Facebook is the place to be. According to research published in December, 86.3 percent of local residents aged between 13 and 29 use Facebook. Researcher Angus Cheong Weng Hin says this percentage indicates that Facebook has already become “indispensable” to most young people. The study was conducted by the Macau Internet Research Association and ERS e-Research Lab, which interviewed 604 people. The most common activities on Facebook by young people are following friends’ status (50.7 percent), playing games (36 percent) and viewing photos (30.5 percent). More than 20 percent of the respondents also said they made use of the platform to chat with friends or post messages or comments on others’ profiles. The findings show that almost 60 percent of the users between 13 and 29 are keen to follow friends’ status every day and agree that Facebook has enhanced their relationships with friends in real life. Most of the young users of Facebook are also willing to disclose personal information on the network, such as their English names (64.4 percent) or their email addresses (81.1 percent). Recent reports have suggested Facebook’s growth in the United States and Europe is slowing but accelerating elsewhere, including Asia. AL MARCH 2011

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THINK TWICE BEFORE POSTING P

osting unauthorised photos or someone’s personal information on Facebook is a legal grey area and may break the law, Macau’s Office for Personal Data Protection has warned. The office’s coordinator, Sonia Chan Hoi Fan, said uploading a photo of a friend to the Internet before seeking their permission could be regarded as breaking the Personal Data Protection Act of 2005. Ms Chan said it was important that people be more careful with the information they share on the Internet. The office’s deputy coordinator Yang Chongwei recommends people pay attention to the data they share while networking online at sites such as Facebook. He said people should remember that third parties can use that information for different purposes. Data from Facebook has been used by employers to screen job candidates overseas but is less common in Macau. “It is not common in Macau but we know that in other regions there are companies that access personal information from the candidate without their consent,” said Mr Yang. MARCH 2011

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A USER’S MANUAL Type the words “Facebook marketing” into an internet search engine and you will find thousands of results, each sharing tips on doing business by using this social media network. Here are some tips from Antony Mayfield, senior vice-president and head of social media at iCrossing, a leading global digital marketing firm

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1. Facebook will compete with search engines For the moment, Google remains the place where consumers go to find things but Facebook’s ability to capture eyeballs means that it should now be a primary focus for any online marketer.

2. Facebook can be a dangerous place for brands Brand Facebook pages seem like a no-brainer. They are a cheap and effective way of connecting with fans. But before you build a page, you need to think about whether you have the resources and strategy to manage it properly. Can your public relations agency offer you expertise in community management? Have you established a set of best practices to guide your Facebook page managers? Do you have a Facebook plan in case of a crisis?

3. Build it or they will not come There is an assumption among many marketers that Facebook is a free medium that will deliver hundreds of thousands of new customers. This is not the case. It has a massive audience but that audience is not necessarily on the site searching for brands. There are few brands out there with the clout to generate an audience spontaneously, so you need to think about how you are going to build your fan numbers proactively. The obvious options are Facebook ads, which can be cheap and effective, and promoting your Facebook page on your dotcom site. On top of this, you can leverage your employees to include the brand’s Facebook address in their e-mail signatures and get them to tell their friends. Facebook has the potential to reach a massive audience but it is a marketplace where there is competition for attention, so you need to fight for your fans. Of course, once you have got your fans, you have to make sure you use them well. A massive fan base left disengaged can quickly lose interest. However, with the right community management strategies, your Facebook fan base can be a powerful tool.

4. The changing face of Facebook One of the constants of Facebook is change. Social marketers are used to waking up to find that something has changed, without warning, in the way that Facebook works. Whether it’s the new “Like” button, the social graph protocol or the Facebook groups, the fact is that change and adaptation are at the heart of Facebook marketing.

5. Facebook, the retailer While the world has been debating Facebook’s privacy procedures, the site has been quietly preparing an assault on a new battleground: e-commerce. Commerce is not new to Facebook. The 200 million-plus people who play games on the network every month are already paying for virtual goods. However, Facebook is targeting a much broader audience. An e-commerce Facebook app, Payvment, is already in use by 30,000 small retailers. It is in its early days but no retailer should ignore these trends. With the average user spending something like seven hours a month on the site, and with many already “liking” commercial brands, there is a real chance that retailing may soon shift away from dotcoms and over to Facebook’s social graph.

6. A Facebook page is not a social media strategy A Facebook page is not a social media strategy. It may be an important part of one, but being connected socially means engaging with customers, fans and critics wherever they are. People talk all over the web, and being connected is about being part of those conversations. Your social strategy should be about putting a little bit of “social” into every move your business makes. AL

FUNDING VIRTUAL TERRORISM P

laying massively multiplayer online games on platforms such as Facebook is quite common in Macau. Any proposed introduction of financial transactions using virtual currencies could be exploited by terrorists and for money laundering, experts warn. B.C. Tan, the head of organised crime research at business intelligence consultancy World-Check, says Macau’s proximity to the mainland might see it used as an offshore base to transit finances raised in “gold farming”, the practice of accumulating virtual currencies that are sold in real-world transactions. He said Hong Kong had already been used for illegal trade in virtual currencies. “In a case of a China-Korea money laundering operation involving virtual currencies, Hong Kong was used as a middle-point in the transactions,” says Mr Tan. He recently discussed the issue at iGaming Asia Congress & Expo. There are several reports of people in the mainland that have become full-time gold farmers, usually selling their in-game currency to players from developed countries that lack the time to earn it themselves. According to Mr Tan, given the lack of barriers or regulatory oversight, gold farming “can easily be used by criminals to place, layer and integrate illicit finances with reduced risk through anonymity”. While banned by Beijing in 2009 and forbidden by the operators of massively multiplayer online games, gold farming “continues to be a lucrative and growing trade,” he said. Operators have to do more to check players’ data and enforce bans. By Luciana Leitão MARCH 2011

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Roll out the welcome app Taking aim at the tourist market, computer software developers are working on iPhone apps for hotels, restaurants, local media and universities BY LUCIANA LEITÃO

quick Google for iPhone or iPad applications or “apps” for Macau and several pages pop up. A search for the application’s developers however reveals there are just a few from the territory. One of the first companies to create its own iPhone application was Altira Macau hotel-casino in March last year. The aim was to provide information on the hotel, the restaurants and other facilities. There are other tourism-focused applications for the iPhone, such as Find Macau and Macau Map, and more are being created by local companies, including Sinokru, Ignite Media Group and some freelancers. But, as an industry, mobile content production is still in its early stages in the city.

Discover the highlights Find Macau was released at the end of last year for free downloading in Traditional Chinese by information technology company Sinokru. “We provide a platform for Macau people or visitors to find their favourite shops or restaurants,” says the project manager, Neildo Choi. “The Find Macau Android version is ready but we pushed out the iPhone version first.” In just its first month, the application has already been downloaded about 20,000 times. Mr Choi believes most downloads were in Macau. In the product’s first stage, the company has taken popular content for the application, such as information on landmarks, restaurants and shops. Mr Choi says the next step will be to show another side of Macau. “We’re preparing content about arts, design, graphics, photography, all produced by Macau people,” he says. You can also discover the territory MARCH 2011

using Macau Map, another iPhone app developed by Sinokru and released in 2009. It has maps of Macau, Taipa and Coloane as well as bus schedules. Sinokru launched six years ago with the product, in partnership with the University of Macau, which owns the copyright, and the Macau Government Tourism Office that acts as the distributor. The first version was developed for hand-held computers but Mr Choi says developing content for the iPhone has become a priority for the company. By December last year, the Macau Map iPhone app had been downloaded 50,000 times. “By Hong Kong people mostly, as well as people from Taiwan and Singapore,” Mr Choi says, adding that the information is displayed in Chinese, English and Portuguese. Sinokru has two new applications under development. “One is about the University of Macau’s new library and the other is related to a youth magazine,” he says. The company’s business model is not to profit from the number of downloads

but instead to become known as a quality service provider and work with third parties.

Content, right now Macau-based Ignite Media Group is currently working on five apps that will be launched throughout the year. All are for customers in Macau. “We cannot tell you for who, that’s confidential information, but we’re doing it across hotels and resorts,” says the company’s managing director, Simon Henry. “We’re doing it for a couple of online companies as well. And we are doing it for both iPhone and iPad.” One application will provide hotel information, while another will offer information about a leading nightclub. “Three of them are going to be free, two of them are going to be paid,” says Mr Henry. The applications under development target tourists. Mr Henry says visitors “want to be able to download instant information, such as the latest rates, latest promotions, what’s on, what’s happening,

133 maps, any specials, any events. They want that ‘really right now’ information as well as contact information.” In one app for a resort, users will be able to see room types, with accompanying photographs. There are details on restaurants, shopping, and entertainment options, as well as promotions, travel information, how to get there and maps, he says. Ignite is a pure play software provider. “We meet with the customer, who often pitches an idea, we’ll then work with the idea to create something that matches their business requirements,” Mr Henry says. Customers typically have two

things in mind when creating an application, more “hits” or visibility. “They either want more visits to their website or they want their magazine to be read more times or a better awareness of their products,” he says.

Room to grow Mr Henry says he knows of only a few local companies or freelance developers working on developing new iPhone apps. “One of the issues with the iPhone is the data roaming charges. As soon as you travel from Hong Kong to Macau your data roaming becomes very expensive,” he says. It’s the main reason why demand is

Homegrown and popular Altira Developed by: Altira An app that brings all the information regarding restaurants and other facilities in the hotel to your iPhone. Macau Map Developed by: Sinokru A neat, handheld digital map of Macau.

UO Macau Traveling Guide Developed by: UO e-Information Limited This application supplies a map of Macau, historical and hotel information, a directory of popular phone numbers, a glossary of terms in Chinese, a summary of some great food and a travel guide. UO Macau Weather Developed by: UO e-Information Limited UO Macau Weather provides iPhone users with the current weather. Find Macau Developed by: Sinokru A sharing platform that provides information on restaurants, hotels, entertainment and leisure, shopping and events. Macau Movie Developed by: Steven Lei Macau Movie provides a complete listing of movie screening times.

not as great as it could be, he believes. Another reason might be the city’s small population. “Macau’s population is only 500,000. The iPhone penetration is between 15 to 20 percent,” he says. “The number of users who will actually use an iPhone application in Macau is probably quite small compared to the mainland, America or Australia. We’ve got quite a small marketplace.” There are also shortages of skilled technical workers. According to Mr Henry, there are few people with the skill set to build the software. “A lot of the skills in Macau are geared towards hardware, servers and infrastructure, and not particularly spread towards online applications development or iPhone development or iPad development,” he mentions. Nevertheless, the industry will eventually grow, Mr Henry argues, but not in the short-term. “Everybody in Macau pretty much already knows where everything is and if you want to find what’s happening or what’s going on, you read the press. There’s a lot of print material around which tells you what’s happening,” he observes.

Price premium Factor in the amount of money required to create an app and that goes a long way towards explaining the lack of companies working in the field. “A cheap iPhone application, very basic, no database, no interaction, costs between HK$60,000 to HK$80,000. For a complex application, which includes interaction, social media, automatic updated content, you are looking at between HK$150,000 and HK$300,000,” Mr Henry says. “For instance, something for the new iPhone4, is up to HK$800,000 because so few people are developing applications and technology is growing so fast.” With the expense of developing new apps and the limited size of the market in Macau, Ignite’s interest is mainly in developing for the international market. “There is a big market internationally for these things and places like Macau, the mainland and Hong Kong can do this a lot cheaper than they can, for instance, in the United States or the United Kingdom,” he says. “By building applications for Macau first, we’ll get the international recognition for having done these things and then you can go overseas and get more business.” MARCH 2011

134 OTAVIANO CANUTO WORLD BANK’S VICE-PRESIDENT FOR POVERTY REDUCTION AND ECONOMIC MANAGEMENT

Risky growth engines THE MOST IMPORTANT TASK FOR DEVELOPING COUNTRIES IS TO FACILITATE AND STRENGTHEN THE CREATION OF NEW ASSETS hile the rich world puts its post-crisis house in order, developing countries as a whole are becoming the new engine of global growth. Increasingly, they are a force pulling the advanced economies forward. But switching locomotives is never free of risk. As my colleague Marcelo Giugale and I argue in our recent book “The Day After Tomorrow”, there are at least four tracks along which this switchover is taking place. First, public- and private-sector balance sheets in most emerging economies are relatively clean. While deleveraging is ongoing in advanced economies, many developing countries will be able to explore untapped investment opportunities – infrastructure bottlenecks being a glaring example. Second, there is a large inventory of technologies that the developing world is yet to acquire, adopt, and adapt. Thanks to breakthroughs in information and communication, transferring those technologies is becoming cheaper and safer. Furthermore, decreased transportation costs and the break-up of vertical production chains in many sectors are facilitating poorer countries’ integration into the global economy. Third, a flipside of the emergence of new middle classes in many emerging markets is that domestic absorption (consumption and investment) in developing countries as a whole may rise relative to their own production potential. Provided that South-South trade linkages are reinforced, one might see a new round of successful export-led growth in smaller countries. Finally, resource-intensive developing countries may benefit from strong projected relative demand for commodities in the medium term. As long as appropriate governance and revenueadministration mechanisms are put in place – particularly to avoid rent-seeking behaviour – natural resource availability may turn out to be a blessing rather than a curse for these countries.

Major threat

Most developing countries were already moving along these four tracks before the global financial crisis, owing largely to improvements in their economic policies during the previous decade. Given that these policies enabled these countries to respond well to shocks coming from the crisis epicentre, there are strong incentives to keep them in place. There is, however, a major threat to a smooth transition to new sources of global growth: the possibility of overshooting in the inevitable asset-price adjustment accompanying the shift in relative growth prospects and perceptions of risks. Indeed, because the creation of new assets in developing countries will be slower than the increase in demand for them, the price of existing assets in those markets – equities, bonds, real estate, human capital – are likely to overshoot their longterm equilibrium value. Recent history is full of examples of the negative side effects that can arise.

Dangerous euphoria

Each and every one of the recent booms and busts – in Latin America, Asia, and Russia in the 1990s, and in Eastern Europe, Southern Europe, and Ireland more recently – shared some combination of unsustainably low financial costs, asset bubbles, over-indebtedness, wage growth unwarranted by productivity gains, and domestic absorption in excess of MARCH 2011

Each and every one of the recent booms and busts shared some combination of unsustainably low financial costs, asset bubbles, over-indebtedness, wage growth unwarranted by productivity gains, and domestic absorption in excess of production production. In every case, these imbalances were fuelled by easily identifiable periods of euphoria and sudden asset prices increases. True, external factors, such as foreign liquidity, were conducive – or at least permissive – to such periods of euphoria. Twin current account and fiscal deficits (and/or currency and debt maturity mismatches) were the rule. But our point is that powerful forces that drive up asset prices may be unleashed even without massive liquidity inflows. The scramble for available assets and a dangerous euphoria may occur through purely domestic mechanisms. So what should developing countries do, aside from maintaining sound macroeconomic policies, curbing excessive domestic financial leverage, and attempting to isolate themselves from volatile capital inflows? The most important task is to facilitate and strengthen the creation of new assets, and there is much that developing countries can do in this regard. They can take advantage of the current bonanza in available capital to build contestability, transparency, and institutional quality around markets in which greenfield investments can be implemented. They can ensure that the rules they have in place are consistent and favourable to funding investment projects with long maturities. And they can invest in their own capacity for project selection and design. These and other internal reforms would serve to moderate the furious rise in the price of developing country assets. For that reason, they also constitute the best way to ensure that the next locomotives of global growth – and all the economies that are pulled by them – remain on the rails.

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Arts & Culture

DANISH MAGIC Erik A. Frandsen

is one of Denmark’s hottest exports. Tap Seac Gallery is hosting his first solo exhibition in Macau

Mosaic “Shoemaker, China Town, New York”

he pictorial universe of contemporary artist Erik A. Frandsen is descending on Macau. His exhibition “Written in Water – Works by Erik A. Frandsen” is a showcase of 20 pieces, including stainless steel engravings, mosaics and installations at Tap Seac Gallery. Despite the fact that he has long enjoyed international recognition, this is Frandsen’s first individual exhibition in Macau. His resumé features a recommendation from the Danish Crown Prince himself, who has commissioned works from the artist. Frandsen’s creative method favours combinations of different media and materials, creating innovative visual effects. Throughout his career, he has continued to explore the application of new materials and novel working methodologies. Butter is one of the

Installation work “Neon Light”

137 countless materials he has previously explored.

A 3D vision As can happen with many contemporary artists, Frandsen’s artwork denies easy categorisation. He often presents himself as a painter who does not restrict himself to painting on canvas, going beyond classic boundaries. Instead, his works unfold either as installations, threedimensional objects or as a reworking of painterly problems. The stainless steel engravings featured in the Tap Seac Gallery exhibition are typical of Frandsen’s work. They highlight the unique properties and characteristics of the material, but go further. Icy cold colours and tranquil flowers combine with the reflections of the viewing audience to create a variety of illusory moving images. Alongside images of his family in intimate, everyday situations, flowers are one of Frandsen’s most frequently used motifs. A characteristic of his art is the recycling of favourite patterns and their application across various mediums with an altogether different expression as the end result. In the series of mosaics in Venetian smalti or glaze at the exhibition, Frandsen explores themes from everyday life. His careful observations and the exploration of distinct lines create a unique perspective, which is central to his expression. “The Written in Water” exhibition includes a number of installations where Frandsen plays with the different layers within each piece and with the way they interact. In “Neon Light”, Frandsen uses a neon tube with a polished inner globe,

Stainless steel engraving “Frozen Moment 6”

that reflects light to the outside, repeating the pattern.

Ambiguous imagery Born in 1957, art has been part of Frandsen’s life since he was a little boy. “I remember when I was about 10, I saw these hippies on television and I immediately knew that this was the space I wanted to be in, this artistic space,” he told Time Out Beijing in 2009, when he made his solo debut in the mainland. By 14, he was painting. Frandsen is a self-made artist. He dropped out of university, where he studied Economics, before cruising around Europe learning how to make art. During that period, he studied ceramics, sculpture, graphics and even

bookbinding in locations as diverse as Greece, Italy, Germany and France. He moved back to Denmark in his mid-20s to found Værkstedet Værst, an artistic collective, with a number of artists, including Christian Lemmerz. He was also part of the “det vilde maleri” movement or Wild Art of the early 1980s. His choice of

aesthetically beautiful materials such as mosaics in Venetian smalti, largescale paintings and shiny steel makes Frandsen’s art ambiguous, as it is both inviting and rejecting. With its humorous, unconventional and astonishing contents, Frandsen’s imagery is both disturbing and an aesthetically pleasurable experience.

“WRITTEN IN WATER WORKS BY ERIK A. FRANDSEN” Date: February 26 to May 8 Venue: Tap Seac Gallery Address: Avenida do Conselheiro Ferreira de Almeida, 95 Tickets: Free entry Inquiry: 2836 6866 Opening hours: Daily, 10am to 7pm Website: www.icm.gov.mo

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Arts & Culture

Classic comedy Audiences can look forward to three evenings with a family favourite this month,

“The Taming of the Shrew”

nspired by Shakespeare’s comedy of the same name, the Stuttgart Ballet will bring “The Taming of the Shrew” to the Macau Cultural Centre’s Grand Auditorium this month. At the heart of the three performances from March 17 to 19 is the promise of entertainment for the entire family. The two-act play tells the vivid comedy through dance and drama, featuring humour and virtuoso moments. It is a story referred to as one of the first feminist texts that hits deep chords with the audience and retains the power to stir emotive debates. The lead character is Katherina, an MARCH 2011

intelligent, outspoken woman, who is regarded as a shrew because she resents the preferential attention paid to her vain, yet sexy sister. Petruchio marries Katherina for money and sets out to gain her submission. The answer of who tames whom is left for the audience to decide.

Famed direction Macau audiences will witness a version of the story as told by The Stuttgart Ballet and originally choreographed by John Cranko. An acclaimed choreographer when he arrived in Stuttgart in the early 1960s, Cranko helped the ballet

evolve into one of the world’s finest. He was blessed with an exceptional troupe of young dancers and created a great repertoire of original works that were brought to the world’s cultural capitals. During the Stuttgart Ballet’s first tour to the United States in 1969, American critics labelled the troupe a “ballet miracle”. He took the three memorable tales in “Romeo and Juliet”, “Onegin” and “The Taming of the Shrew” and single-handedly renewed the full-length narrative ballet. The adaptations are to this day regarded as classics roles for performers around the world.

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Cranko died suddenly in 1973, aged 45. His biographers argue that it was untimely and prior to his creative peak but his legacy lives on in works of the quality of “The Taming of the Shrew”.

Artistic legacy Alongside world premieres and the expansion of the repertoire, Cranko’s oeuvre represents a focal point in the programming of the Stuttgart Ballet. In the company’s performances in the Stuttgart Opera House, and also on the company’s international tours, “The Taming of the Shrew” is among the company’s most performed pieces. Current artistic director of the Stuttgart Ballet, Reid Anderson, has been at the helm for 16 years. He has enjoyed a long and successful career as a dancer, teacher, trainer, producer and now, ballet director. Born in Canada, with his training at companies in Britain and Canada, Anderson has followed a repertoire policy that places equal weight on preserving and cultivating the Cranko legacy and the high art of classical ballet, and on discovering and nurturing new talent and promoting the works of established contemporary choreographers. Under his directorship, Anderson has taken the company on extensive tours, including New York, Beijing, Hong Kong, throughout Asia and crisscrossing Europe. The Stuttgart Ballet in south-west Germany enjoys a rich inheritance. Great European talents earned the company the reputation as one of the most acclaimed centres for dance in

Europe in the 18th, 19th and early 20th centuries. After the Second World War, guest performances by foreign ballet companies from New York, Paris, London and Russia contributed to rekindling public interest in classical dance. In 1957, Nicolas Beriozoff, a former dancer with the Ballet Russe de Monte Carlo, was appointed to lead the ballet ensemble of the Württemberg State Theatre in Stuttgart. Beriozoff enlarged the company and redefined its repertoire with new stagings of narrative classics such as “The Sleeping Beauty”, “Swan Lake” and “The Nutcracker”.

Bella Italia Anderson has helmed more than 60 world premieres mainly by young choreographers. He was awarded the German Dance Prize 2006 for his contributions. Magazine Dance Europe voted him Director of the Year, the same year. In 2009, he received the Medal of Merit of Baden-Württemberg. In the interpretation of “The Taming of the Shrew” to be put on in Macau, Katherina’s character undergoes a profound change during the course of the ballet as she lets her defences down

and realises that Petruchio loves her for herself. Set in Padua, Italy, an ensemble of characters delights audiences and provides a foil to the two main characters. There is Katherina’s pretty but vain sister Bianca, trailed around slavishly by her three suitors: Gremio, the snobbish Hortesnio and the young student Lucentio. In addition, Katherina’s and Bianca’s long suffering father and the village priest add to the wonderful humour of the ballet. Set to cheerful and boisterous music by Domenico Scarlatti, orchestrated by Kurt Hein Stolze, and with costumes and set by Elisabeth Dalton, “The Taming of the Shrew” evokes the sunlit streets and gardens of Italy. The Macau Cultural Centre premiere of the ballet will be accompanied by the Macao Orchestra. In parallel to the performance, an Art Appreciation Talk will be hosted in Cantonese by Chow Fan Fu and Stella Lau, from the Hong Kong Academy of Performing Arts. Tickets for “The Taming of the Shrew” are available now, with discounts for seniors, youths and friends of the Cultural Centre. Contact the centre’s box office on (853) 2870 0699 or Kong Seng outlets for ticketing inquiries.

“THE TAMING OF THE SHREW” WITH LIVE ACCOMPANIMENT BY THE MACAO ORCHESTRA Date: March 17 – 19, 7.30pm Venue: Grand Auditorium, Macau Cultural Centre Price: MOP80 – MOP280, with discounts available Credit Card Ticketing Hotline: (853) 2840 0555 MARCH 2011

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Entertainment

CELEBRATIONS WELCOME THE YEAR OF THE RABBIT Celebrations took over the city last month, as the Year of the Rabbit kicked off. There were a series of government and corporate events to mark the Spring Festival that added to the cheerful atmosphere. One of the highlights was the parade of a 238-metre-long golden dragon at busy tourist spots. Sociedade de Jogos de Macau organised its longstanding traditional Lunar New Year’s Eve celebration dinner, drawing together the socialite set, including Chief Executive Fernando Chui Sai On. For the second year in a row, company chairman Stanley Ho Hung Sun was absent due to his fragile health.

1 - A 238-metre long golden dragon parades past the Leal Senado 2 - The chief executive took to the streets, touring firecracker and flower stalls 3 - Sands China’s senior executive team wished guests and visitors good fortune in the coming year 4 - The Mandarin Oriental Macau hosted its own lion dance procession to welcome good luck 5 - The head of the Civil and Municipal Affairs Bureau, Raymond Tam, sets off a set of firecrackers 6 - Maintaining the tradition, SJM held its Lunar New Year’s Eve celebration dinner 7 - Officiating at MGM Macau’s Chinese New Year ceremonies was the company’s president Grant Bowie

MARCH 2011

141 PETER SINGER PROFESSOR OF BIOETHICS, PRINCETON UNIVERSITY

Tiger mothers or elephant mothers? TIGERS LEAD SOLITARY LIVES, EXCEPT FOR MOTHERS WITH THEIR CUBS. WE, BY CONTRAST, ARE SOCIAL ANIMALS. SO ARE ELEPHANTS any years ago, my wife and I were driving somewhere with our three young daughters in the back, when one of them suddenly asked: “Would you rather that we were clever or that we were happy?” I was reminded of that moment last month when I read Amy Chua’s Wall Street Journal article, “Why Chinese Mothers Are Superior,” which sparked more than 4,000 comments on wsj. com and over 100,000 comments on Facebook. The article was a promotional piece for Ms Chua’s book, “Battle Hymn of the Tiger Mother”, which has become an instant bestseller. Ms Chua’s thesis is that, when compared to Americans, Chinese children tend to be successful because they have “tiger mothers,” whereas Western mothers are pussycats, or worse. Ms Chua’s daughters, Sophia and Louise, were never allowed to watch television, play computer games, sleep over at a friend’s home, or be in a school play. They had to spend hours every day practicing the piano or violin. They were expected to be the top student in every subject except gym and drama. Chinese mothers, according to Ms Chua, believe that children, once they get past the toddler stage, need to be told, in no uncertain terms, when they have not met the high standards their parents expect of them. (Ms Chua says that she knows Korean, Indian, Jamaican, Irish, and Ghanaian mothers who are “Chinese” in their approach, as well as some ethnicChinese mothers who are not.) Their egos should be strong enough to take it. But Ms Chua, a professor at Yale Law School (as is her husband), lives in a culture in which a child’s self-esteem is considered so fragile that children’s sports teams give “Most Valuable Player” awards to every member. So it is not surprising that many Americans react with horror to her style of parenting.

Not everyone can finish first

One problem in assessing the tigermothering approach is that we can’t separate its impact from that of the genes that the parents pass on to their children. If you want your children to be at the top of their class, it helps if you and your partner have the brains to become professors at elite universities. No matter how hard a tiger mom pushes, not every student can finish first (unless, of course, we make everyone “top of the class”). Tiger parenting aims at getting children to make the most of what abilities they have, and so seems to lean towards the “clever” side of the “clever or happy” choice. That’s also the view of Betty Ming Liu, who blogged in response to Ms Chua’s article: “Parents like Amy Chua are the reason why AsianAmericans like me are in therapy.” Stanley Sue, a professor of psychology at the University of California, Davis, has studied suicide, which is particularly

common among Asian-American women (in other ethnic groups, more males commit suicide than females). He believes that family pressure is a significant factor. Ms Chua would reply that reaching a high level of achievement brings great satisfaction, and that the only way to do it is through hard work. Perhaps, but can’t children be encouraged to do things because they are intrinsically worthwhile, rather than because of fear of parental disapproval? I agree with Ms Chua to this extent: a reluctance to tell a child what to do can go too far. One of my daughters, who now has children of her own, tells me amazing stories about her friends’ parenting styles. One of them let her daughter drop out of three different kindergartens, because she didn’t want to go to them. Another couple believes in “self-directed learning” to such an extent that one evening they went to bed at 11 pm, leaving their five-year-old watching her ninth straight hour of Barbie videos.

The need for social skills

Tiger mothering might seem to be a useful counterbalance to such permissiveness, but both extremes leave something out. Ms Chua’s focus is unrelentingly on solitary activities in the home, with no encouragement of group activities, or of concern for others, either in school or in the wider community. Thus, she appears to view school plays as a waste of time that could be better spent studying or practicing music. But to take part in a school play is to contribute to a community good. If talented children stay away, the quality of the production will suffer, to the detriment of the others who take part (and of the audience that will watch it). And all children whose parents bar them from such activities miss the opportunity to develop social skills that are just as important and rewarding – and just as demanding to master – as those that monopolize Ms Chua’s attention. We should aim for our children to be good people, and to live ethical lives that manifest concern for others as well as for themselves. This approach to child-rearing is not unrelated to happiness: there is abundant evidence that those who are generous and kind are more content with their lives than those who are not. But it is also an important goal in its own right. Tigers lead solitary lives, except for mothers with their cubs. We, by contrast, are social animals. So are elephants, and elephant mothers do not focus only on the well-being of their own offspring. Together, they protect and take care of all the young in their herd, running a kind of daycare center. If we all think only of our own interests, we are headed for collective disaster – just look at what we are doing to our planet’s climate. When it comes to raising our children, we need fewer tigers and more elephants. MARCH 2011

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

What if?

f you haven’t seen the movie “Letters to Juliet” please be warned that you might find it to be just another romantic comedy somehow similar to most of its genre. For us however, it is an enchanting movie about love, and therefore, we believe it is worth wasting a couple of hours on it. And here is why. Actress Amanda Seyfried plays the role of a young American fact finder who travels to the Italian city of Verona, home of the doomed Juliet Capulet of “Romeo and Juliet”, where she joins a group of volunteers who respond to “letters to Juliet” looking for advice about love. Answering one of these letters, Amanda elaborates as follows: “‘What’ and ‘if’ are two words as non-threatening as words come. But put them together side-by-side and they have the power to haunt you for the rest of your life: ‘What if?’” “What if” is nothing more than an indication of the human mind’s annoying predisposition to worrying! Have you noticed that your mind is constantly flooding you with questions such as: “What if I lose my job?”; “What if I lose my eyesight, my hearing or my ability to speak?”; “What if no one hires me because of my tendency to overreact?”; “What if no one marries me?”; “What if my family or friends stop loving me?”; “What if I die young without having enjoyed life?”; “What if I do not have the capacity to support my children?”. And, the cliché, “What if the world ends tomorrow?” What if, what if, what if...

Keep it simple Are you close to a nervous breakdown? With this simple exercise of imagining what is behind people’s tendency to worry so much, we already feel overwhelmed! Don’t you? Does such an illustration make you feel more human? It is not only you who thinks about this “stuff”. The key question is: do you let those two non-threatening little words bother you? Such words indeed have the power to haunt you for life, but the good news is that they only haunt you if you let them! So, if you feel you want to get rid of some of your worries, here are a couple of tips inspired by Dale Carnegie’s book “How to Stop Worrying and Start Living”: 1. Don’t allow the small things to ruin your happiness; 2. Don’t waste your time revisiting your past over and over again; 3. Live your daily life rather than worrying about the future; 4. Learn to relax at home and at work; 5. Be enthusiastic about your life and your work; 6. Once you discover a problem, work on getting rid of it. Write it down and try to answer some simple questions like: a. What is the problem? b. What is its cause/root? c. What are the possible solutions? d. What is the best solution for the problem? 7. Avoid “floating paper anxiety”: file and organize paperwork (especially post-its) that might be needed in the future. 8. Decide how much anxiety and worry you should give to a particular matter, and refuse to give it any more. We hope you will soon be able to say you are living a purposeful, fulfilling and stress-free life!

MARCH 2011

REAL ESTATE KINGS Last year the government announced a set of policies to curb property speculation. But the administration itself is gearing up to reap a huge profit from a public housing investment. The story goes like this, in 2005, to allow for the construction of Windsor Arch, a luxury residential development in Taipa, the government requested the developer, among other things, to build in return an 880-unit economic housing complex in Rua da Tranquilidade, on the peninsula. This type of housing is meant to be sold at controlled prices to people on low incomes. The government got 755 units for free, while the developer was authorised to sell the remaining 125 at government-set prices, stipulated in the 2005 contract. This year, the administration decided to buy all the developer’s units, at the 2005 prices, adjusted for inflation. The twist is that the government is revising the prices for economic housing, pushing them up. So, it bought the developer’s units to unify the prices for all the units to be put on the market. Note that none of the 880 units in the Rua da Tranquilidade housing complex have been sold to the public yet. According to the latest available information, the price per square foot of economic housing may jump to MOP1,100. In that case, estimates indicate that the government will more than double the investment it made when buying the developer’s 125 units. That is what Frozen Spy calls Solomonic justice – no economic housing applicant gets a cheap home and the government carries the burden of raking in extra profit.

RAISE YOUR GLASS TO THE NEW LOCAL MGM Macau’s president, Grant Bowie, is poised to become the city’s newest permanent resident. And he couldn’t be happier. Mr Bowie himself broke the news at his speech during last month’s media spring dinner hosted by MGM Macau. He says it is a sign of his personal commitment to the city. Mr Bowie was one of the first expats brought to the city after the liberalisation of the gaming industry. He was Wynn Macau’s president and general manager between 2003 and 2007. He started at MGM Macau in August 2008. In an industry where many senior executives find it hard even to warm up their seats in Macau, that is almost a record. Congrats, Mr Bowie.

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THE HIDDEN BILLS

COPYRIGHT ‘PANDAMONIUM’ Pandas Hoi Hoi and Sam Sam are not enjoying a quiet settling-in at their new home, at Seac Pai Van Park. The latest scandal broke less than one month after the panda pavilion opened to the public; counterfeit penholders were on sale at the pavilion’s souvenir shop. The penholders bore a character from the Japanese anime film “Totoro”. The Japanese firm that holds the copyright had not authorised its use. The government rushed to remove the penholders from the shelves. Eventually, it concluded that no copyright infringement had taken place because the brand was not registered in Macau. Frozen Spy wonders how such a screw-up was possible; the Japanese anime is quite famous in both SARs. But the best was yet to come. According to the Civic and Municipal Affairs Bureau, the body that manages the panda pavilion, a language barrier was to blame for the problem. “There were some English words written on the items [“Totoro”] and not everyone knows what they mean,” said one of the bureau’s officials. So, for all of you counterfeiters out there, it is easy to get around copyright laws in Macau. Put your copy in a strange language like English. Even the government will buy it.

GREAT GIFT, BAD TIMING Sands China has offered its workers something different to start the year: cars. The company gave away three in an employee-only lucky draw. But with about 200,000 vehicles on Macau’s roads at the end of last year, Frozen Spy wonders how useful the gifts may be, especially as the government has already warned it is seriously considering increasing public parking fees among other new measures to promote public transport. With a government-sponsored study predicting that the average motoring speed during rush hours on the peninsula will drop to walking pace by 2020, Frozen Spy wonders if the lucky employees with the new cars will be able to claim traffic jams for an excuse when arriving late for work.

The Commission of Audit’s report on the spending of civil servants when on official trips came as a shock. It seems our friends in the public service like to lead a lavish lifestyle while travelling on duty. Of course, the minor issue is that the bills are paid for with public money. Interestingly enough, neither the chief executive nor his secretaries’ spending was surveyed by the audit, covering July 2008 to June 2009. Frozen Spy wonders, if a member of the Sports Development Board splashed out almost MOP14,000 a night on a room, how much did our top officials spend? Revealing that information could be awkward, especially since Commissioner of Audit Ho Veng On was, at the time, the wingman of the former Chief Executive Edmund Ho Hau Wah. He accompanied Mr Ho on several of his trips abroad. Frozen Spy is no hotelier but bets that they never stayed at a bed-andbreakfast.

NO SHARK FIN HERE, PLEASE Unlike in Hong Kong, the movement to ban shark fin soup from restaurants is still in its infancy in Macau. But some companies are giving it a push. Last month, electricity utility CEM didn’t include the dish in its spring lunch with the media. It was no mistake. One of the company public relations team made it clear that the decision was part of CEM’s commitment to improving the environment and helping biodiversity. While it is a tough call – some might say it shows a lack of respect for local customs –CEM’s gesture is a step in the right direction. At least it raises the company’s profile among environmentalists, a difficult task for electricity utilities.

MARCH 2011

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March 2011

index

7 Luck Casino

www.7luck.com

Aristocrat

Page 4

www.aristocratgaming.com

AutoGaming

Page 25

www.autogaminginc.com

Bally Technologies

Page 15

www.ballytech.com

BNU

Page 21

www.bnu.com.mo

CEM

Page 73

www.cem-macau.com

Galaxy Entertainment

Page 5

www.galaxyentertainment.com

Macau Cultural Centre

IFC

www.ccm.org.mo

Macau Daily Times

Page 135

www.macaudailytimes.com.mo

Macau Post Office

Page 77

www.macaupost.gov.mo

Matrade

Page 79

www.matrade.gov.my

Melco Crown Entertainment

Page 12

www.melco-crown.com

MGM Macau

Page 2

www.mgmmacau.com

MGTO

Page IBC

www.macautourism.gov.mo

Microgaming

Page 7

www.microgaming.com

Morton’s The Steakhouse

Page 75

www.mortons.com

Our Dental Clinic

Page 51

www.ooioc.com

PokerStars Macau

Page 9

www.pokerstarsmacau.com

Sands China

Pages 26-29

www.sandschinaltd.com

Shuffle Master

Page 23

www.shufflemaster.com

SJM

Page 53

www.sjmholdings.com

Star City Hotel & Casino

Page 1

www.starcity.com.au

Zung Fu Motors – Mercedes

Page 3

www.zungfu.com.mo

MARCH 2011 JANUARY NOVEMBER 2011 2010