MB 84 | April 2011 by Macau Business

INVESTMENT WORLD’S BIGGEST BOND FUND MANAGER BETS ON MACAU APRIL 2011

ISSN 1812-6855

MACAU BUSINESS EXCLUSIVE

MAKING A DIFFERENCE It’s the non-gaming offering at Melco Crown that sets the operator apart, says operations boss Nick Naples

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

PARKING THE PROFITS

Stylish weddings for wealthy tourists and locals are helping fuel a new industry and revenue for the city’s hotels and resorts

CARPARKS EMERGE AS HIGH-REVVING PROFIT VEHICLES SEA CHANGE

SEASIDE WESTIN SET FOR A COMEBACK

APRIL 2011

52 Economy & Finance 28 Shine on SAR Macau’s economy delivers a star performance again 30 Big fish, big splash Pimco signs exclusive distribution agreement with ICBC Macau 32 New life Insurance company Fidelidade Mundial Seguros sets a target to become a top insurer by 2015

Politics 38 Megapolis mania Understanding the new framework agreement on cooperation between Macau and Guangdong 42 Lost in translation Clearer labour rules would be welcome, says the US consul 44 Changing gears Beijing wants to alter the mainland’s economic direction in the next five years 46 Youthful energy Former governor of Macau Garcia Leandro publishes his memoirs

Justice 49 Criminal stopovers A look into the local illegal drug trade

MB Report 52 Happily ever after The wedding business in Macau is becoming a big industry APRIL 2011

Property 58 Market watch The redevelopment of Macau’s older neighbourhoods is set to become the next big thing in real estate 64 A place to park your cash Investors are looking to private parking spaces as a profitable alternative to the residential property market

CEO Interview 68 Not just noodles Melco Crown’s non-gaming boss, Nicholas Naples, expects business to continue to grown this year

Gaming 74 Billions race New monthly record for casino revenue (again) 76 Stock watch After a bumpy February, gaming stocks are starting to get back on track 78 Trash talk Sheldon Adelson opens fire on former Sands China chief executive Steve Jacobs 80 Done deal Stanley Ho Hung Sun and his four families reach a deal over the control of his gaming empire 84 Lion City pride In its first year of operation, Marina Bay Sands has become a Singapore landmark

Photo: Carmo Correia

MARCH 2011

95 Hospitality 90 A beachfront renaissance The Westin Resort’s new manager, Stephan Winkler, wants to put the property back on the top 94 Changing rooms More than 100 suspected illegal inns have been shut down over the past six months 95 Full-course menu The Institute for Tourism Studies is offering Macau’s first bachelor’s degree in culinary arts management

Essential 97 Escapes Your guide to indulgence

MICE 113 The skills gap More training in languages is required to boost the local meetings and conventions industry, says expert

Technology 118 Business speak HNET Asia Ltd takes over the responsibility for registration and administration of the .mo-domain

Advertising 121 And the LongXi goes to... Macau to host the first LongXi festival APRIL 2011

Arts & Culture 124 True to its roots This year’s Macau Arts Festival puts the emphasis on traditional Chinese arts

Opinion 10 From the publisher’s desk Paulo A. Azevedo 13 Editorial Emanuel Graça 27 Jobs and structure in the global economy Michael Spence and Sandile Hlatshwayo 41 Deal with it José I. Duarte 48 The economic consequences of the Arab revolt Nouriel Roubini 63 High-rise living Keith Morrison 83 Please (don’t) tell me the one about the junkets again David Green 114 Conscious leadership Gustavo Cavaliere 119 The dirt on nuclear power Benjamin J. Sovacool 126 What a girl wants Ricardo Andorinho

MARCH 2011

Fact-free forecasts FOR THE PAST FOUR YEARS, EXPERTS FROM all over the world have predicted that Macau’s growth is unsustainable. Not a month goes by without a couple of analysts publicly guaranteeing that the city’s growth will slow. Their opinions are bolstered by what has been printed in the newspapers. They assert as a sure thing individual visas restrictions, then the global financial crisis which was likely

I suppose it is too late to appeal to competence, common sense and responsibility, as all public investment indicators are moving in the opposite direction of growth and inflation

APRIL 2011

to wreck the city and now, the probability of the market being exhausted. On what facts do they base their forecasts? Perhaps an in-depth study or information leaked by a “Deep Throat” within the government? Crystal ball? No. The estimates are not based on facts. Apparently it is all guesswork. I do not understand how is it possible to earn a living – and a comfortable one at that – forecasting on speculation. Meanwhile, Macau’s growth continues. GDP grew 26 percent last year in real terms over 2009 and per capita GDP increased at a similar rate. Driving growth is the gaming sector, breaking records every month, as it did again in March, with a 48 percent increase year-on-year, surpassing for the first time, the MOP20 billion (US$2.5 billion) barrier. It is not an incredible result for those who know Macau. What is incredible is the unwillingness of government officials to spend budgeted investments. It is incredible that the only thing to decrease in Macau is public investment rates. I suppose it is too late to appeal to competence, common sense and

responsibility, as all public investment indicators are moving in the opposite direction of growth and inflation.

Better late than never THE GOVERNMENT WILL INCREASE THE MONTHLY pension for the elderly and the disabled from MOP1,700 to MOP2,000, and the social relief pension from MOP1,115 to MOP1,310. It also announced it would raise the hourly salary for outsourced cleaning and property management service workers to at least MOP23. These measures, in the face of rising prices, are late but welcomed. For a long time, a few rare sectors of society have asked for additional support for the less fortunate. Cash handouts to both rich and poor, or the electricity subsidy to all households, either shacks

or palaces, are a sign of political laziness and demagogy. If the government wants to continue spending some of the money it accumulates without any apparent criteria â&#x20AC;&#x201C; there is no draft of an infrastructure plan, for example â&#x20AC;&#x201C; the least it should do is give it to those who need it most.

Under the rug THE LATEST REPORT BY HONG KONG-BASED POLITICAL and Economic Risk Consultancy places Macau in a comfortable sixth place among Asia-Pacific jurisdictions perceived as less corrupt. The report points out that Beijing should be prepared for an unpleasant surprise when the territory finally cracks down on private sector corruption. It is an obvious conclusion. I know I have a pessimistic nature and it does not help that I am a journalist, but from what I have seen over almost two decades, the surprise may be bigger than anticipated. It is an opinion based on the flagrant cases that have been reported over time and yet have not been investigated. There are countless examples that have apparently escaped a justified confrontation with the law. When can we expect the end of this eternal averting of the eyes? One day, when someone has the guts to lift the rug, he or she will be amazed with how much dirt was swept under there.

APRIL 2011

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

Jumping the bandwagon

The new framework agreement has more of a flavour of Fernando Chui Sai On and his team jumping onto the bandwagon to please Beijing, rather than using the pact as a development tool for Macau

MACAU AND GUANGDONG LAST MONTH SIGNED a framework agreement that will regulate cooperation between both parties for years to come. The newly inked pact is far reaching and intended to take the relationship across the Border Gate to a new level. In many regards, the Macau-Guangdong agreement is almost a no-brainer. If increasing integration between neighbours is a worldwide trend, there are even more reasons for these two parties to come closer. For starters, Macau and Guangdong are major partners in several key areas. They are part of the same country and share common interests. For Macau, the pact creates a platform to discuss matters such as regional transport, food imports and utilities. These are areas in which the territory is highly dependent on its neighbouring province. Instead of being an end-consumer, the new agreement means the SAR will be called on to have a more active role in planning and constructing the infrastructure that channel energy, water and gas from Guangdong to Macau.

Treasure Island

The singular issue within the MacauGuangdong agreement that has attracted most attention by the media and analysts has been the development of Hengqin Island. There is a strong argument for their enthusiasm. Macau needs land and the development could help to ease the pressure. The pact lays down a path for the island’s co-development. It mentions the creation of a traditional Chinese medicine industrial park and another zone to house the development of creative industries, among other things. Clearly, these are good intentions. But it seems there is a lot of naivety here too. For all that has been said and done, one cannot but wonder how much effort was put into assessing the potential success of the development strategy. On paper, boosting cooperation between Macau and Guangdong should be a truism.

Nevertheless, the reality has proven to be more complex. Think about the Zhuhai-Macau Cross Border Industrial Zone, a failed project. It is not the only failed enterprise. Highly praised, the Mainland and Macau Closer Economic Partnership Arrangement (CEPA) along with its seven subsequent supplements has failed to translate into substantial economic gains for the SAR.

A chequered past

According to government data, between January 2004 and February 2011, the total exports of CEPA goods to the mainland reached about MOP179 million (US$22.4 million) – as much as the gross gaming revenue from just one Macau casino on a good week. In face of these two recent failures, one would expect that any new framework for cooperation between Macau and Guangdong would be preceded by more exhaustive studies that would fine tune the proposals. That has not happened. There seems to be a gap between the direction politicians want business to go and where the latter is really heading. People are left puzzled to see the Macau and Guangdong governments investing millions in a traditional Chinese medicine industrial park on Hengqin for which there are no known, major parties that have signed up. It seems the Macau government is following the motto for Cotai laid down by Las Vegas Sands’ Sheldon Adelson: build supply first and demand will come later. With the benefit of hindsight, it seems Mr Adelson was right but past experience shows projects involving cooperation between Macau and Guangdong are less likely to succeed. That is why, unfortunately, the new framework agreement has more of a flavour of Fernando Chui Sai On and his team jumping onto the bandwagon to please Beijing, rather than using the pact as a development tool for Macau. Let’s hope this does not result in another golden opportunity spoiled. APRIL 2011

VOL.1 Nº84

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APRIL 2011

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APRIL 2011

Opening the wallet Government announces raises in social subsidies he government announced it is targeting to increase the pension for the elderly and the disabled from MOP1,700 (US$213) to MOP2,000, and also the social relief pension from MOP1,115 to MOP1,310 per month, starting this month. The government also said it will raise the hourly salary for its outsourced cleaning and property management service workers to at least MOP23. In 2007, the government started requiring that all companies it outsourced cleaning and property management services to, pay at least MOP21 per hour to its employees working at government facilities.

Last month, the government also announced the minimum subsistence index would go up around 14 percent starting in April. For a three-member family, the value will be increased to MOP7,340, from MOP6,460. The minimum subsistence index establishes an income ceiling for a minimum living standard in Macau, allowing people under that to apply for government support. Also last month, the Legislative Assembly approved a 5.08 percent pay rise for civil servants. The salary increase automatically covers high officials, like the chief executive and the secretaries, among others.

Cable TV breaks even

TCM makes MOP29 million gain

After years of losses, Macau Cable TV said it broke even in 2010. “After 10 years, we should be able to see that we have achieved a break-even situation,” the company’s chief executive officer, Angela Lam In Nie said, quoted by Macau Post Daily. She didn’t disclose final figures. In 2009, the company posted a loss of MOP1.5 million (US$188,000).

Bus operator TCM announced it posted a MOP29 million (US$3.6 million) profit for last year, similar to the amount reported in 2009. The company said its number of passengers increased by 7 percent last year, but didn’t disclose any final figures, Macau Post Daily reported. TCM also announced that it is going to increase its employees’ wages, but didn’t say by how much.

Transmac posts profit Public bus operator Transmac announced it achieved a profit before tax of MOP14.82 million (US$1.9 million) in 2010. The company also announced it will invest up to MOP19 million this year, to revamp its bus fleet. Transmac is targeting to buy 130 new buses. APRIL 2011

Landmark signs loan agreement New Macau Landmark Management Limited and the Industrial and Commercial Bank of China (Macau) Limited last month signed a HK$1.8 billion (US$230 million) five-year syndication loan agreement. The money will be used to revamp the Landmark hotel-casino, with the construction of a 5,600-square metre spa, according to Portuguese language newspaper Jornal Tribuna de Macau. Landmark will also renovate its hotel rooms, food and beverage outlets and retail.

APRIL 2011

“Yes” to new minibond pact Local banks to follow Hong Kong in Lehman Brothers minibond case, says regulator he head of the Monetary Authority of Macau, Anselmo Teng Lin Seng, said last month that three of the four local banks that sold Lehman Brothers minibonds have accepted to follow the new settlement proposed by Hong Kong’s financial sector to affected investors. The banks that have said they will follow Hong Kong’s latest settlement proposal are Bank of China (Macau), Weng Hang Bank and ICBC Macau. The remaining bank is expected to follow suit soon, Mr Teng said. According to Mr Teng, local investors would get “at least 80 percent or more” of their investment back. There were some 1,100 cases in Macau, involving about MOP700 million (US$87.5 million).

Under the current agreement, local investors are entitled to get back up to 70 percent of their investment. People who have already done so – the majority of Macau’s Lehman Brothers minibonds investors – are entitled to receive the remaining compensation under the new settlement offer. Of the 960 qualified investors, 955 had previously already agreed with the repurchase offers. Mr Teng also confirmed that the monetary authority has bought Portuguese bonds several times since the beginning of the year, the last time being “very recently,” prior to Portuguese Premier José Sócrates quitting office, last month. He didn’t disclose the amounts involved.

CAM confirms end of partnership with ADA Macau International Airport Company Limited or CAM confirmed last month it would not renew the service contract with ADA - Administration of Airports Limited for providing management and operational services at Macau International Airport. The contract will expire on September 11, 2011. “The reform in the airport management structure is only a part of a wider reform” of the airport, the company said in a press release, without adding further details. CAM also set its operational targets for 2011: to have 4.2 million passengers, handle 53,000 tonnes of cargo and 39,000 flight movements in 2011, which represent a growth of 3 percent, 2 percent and 5 percent respectively. “New destinations, such as India and Australia routes are important expansion targets in 2011,” CAM stressed.

Macau and Russia getting closer Macau and Russia are close to inking a visa exemption agreement. Officials from both parties met last month to discuss this issue. A final draft version of the agreement has already been drawn up. The signing ceremony is expected to be held within this year. Meanwhile, Macau passport holders can now obtain visas for tourism and business purposes upon their arrival at the international checkpoints of Cambodia. At present, a total of 88 countries and territories have agreed to grant visa-free or visa-on-arrival access to the Macau SAR passport holders. APRIL 2011

Air Macau posts profit Air Macau announced a MOP231.8 million (US$29 million) profit in 2010. It was the first time the company has been back in the black since 2005. In 2009, it posted losses of MOP257 million. “I believe that we will report a better performance in 2011,” chairman Zhao Xiaohang told reporters. He did not disclose any projections for this year.

APRIL 2011

No need for help SMEs’ requests for government subsidies drop he number of new applications for the governmentsponsored programmes to help small and medium enterprises (SMEs) dropped sharply last year. According to official figures, the number of new applications for the SMEs Aid Scheme dropped to 430 in 2010, a 71.3 percent year-on-year decrease. This scheme provides interest-free financial assistance to SMEs. Meanwhile, the number of new applications for the SMEs Credit Guarantee Scheme dropped to 73 from 75 in 2009. This scheme provides each beneficiary with a credit guarantee equal to 70 percent of the loan approved by the participating banks, with the maximum amount of guarantee offered of MOP3.5 million (US$437,500). As for the SMEs Credit Guarantee Designated for Special Projects, the number of new applications dropped to 5 from 12. This scheme provides a credit guarantee of up to 100 percent of the amount needed for SMEs to finance special projects, so as to support them in developing projects to reform and alter their type of business, to promote and advertise their own brands, or to improve the quality of their products.

Grand Prix programme announced The 58th Macau Grand Prix will be held from November 17 to 20. The programme includes three main events: the Formula 3 Macau Grand Prix; the FIA World Touring Car Championship - Guia Race of Macau; and the Macau Motorcycle Grand Prix. Other four support races are also on the programme: the Macau GT Cup; the Macau Touring Car Cup; the Macau Road Sport Challenge; and the Macau/Hong Kong Interport Race. Tickets are already on sale, ranging from MOP50 on practice day to MOP900 at the Lisboa Stand on race day.

APRIL 2011

New partner The circulation of Macau Business continues to grow and so does our network of partners. The latest to join is Sky Shuttle Helicopters Ltd. Your magazine of reference is now available at its helicopter lounges in Macau, Hong Kong and Shenzhen.

Hutchinson results jump Hutchison Telecommunications Hong Kong Holdings reported a net profit of HK$755 million in 2010, a year-on-year increase of 61 percent. Revenue went up by 17 percent to HK$9.88 billion. The company operates both in the Hong Kong and Macau markets, under the “3” brand. Revenue in Macau amounted to approximately HK$507 million, up 27 percent year-on-year. According to the company, in 2010, 3 has become the second largest mobile operator in Macau.

Macau to strengthen co-operation with Jiangsu Chief executive Fernando Chui Sai On said last month that Macau would strengthen co-operation with Jiangsu in tourism and other services industries. During a visit to that Chinese province, Mr Chui said he wanted to extend the co-operation between the two places and pledged that Macau would fully support Jiangsu’s promotional activities in the SAR. He also witnessed the signing of a memorandum of understanding between Jiangsu and Macau’s tourism authorities.

APRIL 2011

Govt and Mitsubishi sign LRT contract Mitsubishi Heavy Industries and the Macau government signed last month the contract for the Japanese company to supply the system and the rolling stock for the first phase of the city’s light rail transit system. The company won the contract with a MOP4.69 billion (US$586 million) bid. Now it must be able to deliver within just 47 months, plus two months for trials. Meanwhile, according to Macau Daily Times, the consortium between Bombardier Transportation and China Road and Bridge Corporation has filed a lawsuit related to the public tender. According to unnamed sources quoted by the newspaper, the consortium claims it was barred by the Transportation Infrastructure Office from analysing several documents from the tender process.

The first time Busted case of corruption in the private sector

he Commission Against Corruption announced last month that it has broken a case of bribe soliciting in the private sector. This is the first known case to be sent for prosecution after the graft buster had its investigation powers extended to the private sector. According to the commission, the main suspect is an employee of a construction project management company registered in Macau, which was in charge of the tender and management for a large construction project. In mid-January, the suspect met with a staff member of one of the bidding companies and offered him confidential commercial information in exchange of a reward amounting to 1 percent to 2.5 percent of the total cost of the project (around MOP1 million to MOP2 million), according to the Commission Against Corruption. He said the staff that the information would be very helpful to the company in the next stage of the tender procedure. This case aside, Macau is being perceived as less corrupt, the latest annual report of the Political and Economic Risk Consultancy shows. According to the report, published last month, Macau ranked sixth among the 16 Asia-Pacific countries and regions surveyed, with a grade of 4.68 compared to 5.71 points and a ranking of eighth last year. The three cleanest jurisdictions are Singapore, Hong Kong and Australia, respectively. In January and February 2011, through mails and interviews, the Political and Economic Risk Consultancy obtained responses from over 1,725 foreign businessmen and senior expatriates in the countries/regions surveyed. Grades were given based on their perception of corruption in the places they worked.

APRIL 2011

Law firm partners with major Portuguese player Local law office DSL Lawyers established last month a partnership agreement with Portugal’s largest law firm PLMJ. The partnership forms part of a network of partnerships and alliances – the PLMJ International Legal Network – mainly across Portuguese speaking countries. DSL Lawyers was founded in 2007 by a team of senior lawyers with over 15 years of experience as legal professionals in Macau. PLMJ is one of Portugal’s leading law firms, with more than 40 years of experience and 640 lawyers within its international network throughout Portuguese speaking countries (200 of whom are in Portugal).

Consumer complaints double The number of complaint cases received by the Consumer Council in 2010 increased 108 percent year-on-year. Complaint cases mainly related to telecommunications services, as well as prices and after-sales services of telecommunications products, according to a press release. The low-cost Viva Macau grounding also triggered a substantial number of complaints. Last year, the council received a total of 7,797 cases, a 60 percent jump, which consisted of 2,566 complaint cases, 5,116 inquiries, and 115 suggestions.

Former governor Pinto Machado passes away Pinto Machado, who was governor of Macau from 1985 to 1987 passed away last month. He was Macau’s 124th governor and was the first non-military official to hold the position. Born in 1930, Mr Machado was a doctor. He resigned in 1987.

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SME lending declines New small and medium enterprises (SMEs) lending approved by Macau banks witnessed a decline in the second half of 2010, according to statistics released by the Monetary Authority. In the second half of 2010, new SME credit limit totalled MOP8.5 billion, 17.5 percent down from the first half of 2010 or 3.7 percent down from the same period of 2009. As at end-December 2010, the outstanding value of total SME loans reached MOP24.9 billion, which represented a growth of 11.1 percent from endJune 2010 or 20.8 percent from a year earlier. The utilisation rate, defined as the proportion of outstanding credit balance to the credit limit granted, rose 4.8 percentage points from six months ago to 58.1 percent.

Deposits increase, but also loans

Following a trend that started in June 2010, the number of imported workers continues to increase month-on-month. In January 2011, the total number of non-resident workers in Macau stood at 77,900, an increase of almost 2,100 workers in just one month. In September 2008, Macau had a total of 104,000 imported workers, but since then the number had continually fallen month-tomonth until it rose back again for the first time in June 2010.

Deposits with the local banking sector grew 3.0 percent in January from a month earlier to MOP350.2 billion, according to the Monetary Authority. As loans grew faster than deposits, the loan-to-deposit ratio at endJanuary 2011 was 75.5 percent, up 3.2 percentage points from the previous month.

Less professionals applying for residency

Public revenue rises

Last year, the government received a total of 542 applications for temporary residency for managerial personnel, technical and professional qualification holders, a decrease of 211 compared with 2009. Approved cases amounted to 538 in 2010, a year-on-year decrease of 11. On the other hand, there was a slight increase in temporary residency applications for major investment and major investment plans to 36 from 31 in 2009. Approved applications totalled 22, an increase of 5 compared with last year. As for temporary residency applications for fixed asset purchases, they have been suspended since April 2007. However, some applications lodged before the closing date of the policy are still being processed. Therefore, there were 173 approved cases in 2010.

In the first two months of 2011, total public revenue (excluding the amounts from autonomous agencies) rose by 46.1 percent, in comparison with the same period last year, to a total of MOP15.63 billion (US$1.95 billion). This surge was due to noticeable increases in the government revenue generated by direct taxes from gaming, up by 46.4 percent, according to the Finance Bureau. Total public expenditure was MOP3.98 billion, an increase of 217.2 percent, which was caused by the increase of transfer payments to autonomous agencies and also the payment of the Wealth Partaking Scheme. A fiscal surplus of MOP11.65 billion was recorded for the first two months of 2011, up by 23.3 percent compared with the same period last year.

Big jump in imported labour

Exports down once again The value of total merchandise export for February amounted to MOP358 million (US$45 million), down by 20.2 percent year-on-year, the Statistics and Census Service announced. The value of total merchandise imports amounted to MOP3.53 billion in February 2011, up by 24.3 percent year-on-year. A merchandise trade deficit of MOP3.17 billion was recorded for February 2011. In the first two months of 2011, the total value of merchandise exports dropped by 5.1 percent year-on-year to MOP1.01 billion; meanwhile, the total value of merchandise imports rose by 32.3 percent to MOP8.43 billion. APRIL 2011

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

SANDILE HLATSHWAYO RESEARCHER AT THE STERN SCHOOL OF BUSINESS, NEW YORK UNIVERSITY

Jobs and structure in the global economy ALL COUNTRIES, ADVANCED AND EMERGING, HAVE TO ADDRESS ISSUES OF INCLUSIVENESS, DISTRIBUTION, AND EQUITY AS PART OF THE CORE OF THEIR GROWTH AND DEVELOPMENT STRATEGIES he global economy is at a crossroads as the major emerging markets (and developing countries more broadly) become systemically important, both for macroeconomic and financial stability and in their impact on other economies, including the advanced countries. Consider, for example, what has occurred over the past 20 years in the United States. Some parts of the tradable sector (finance, insurance, and computer systems design) grew in value added and employment, while others (electronics and cars) grew in value added but declined in employment, as lower value-added jobs moved offshore. The net effect was negligible employment growth in the tradable sector. The United States economy did not have a conspicuous unemployment problem until the crisis of 2008 because the non-tradable sector absorbed the bulk of the expanding labour force. That pace of employment growth now appears unsustainable. Government and health care alone accounted for almost 40 percent of the net increment in employment in the entire economy from 1990 to 2008. Fiscal weakness, a resetting of real-estate values, and lower consumption all point to the potential for long-term structural unemployment.

Better off?

One response is to assert that market outcomes always make everyone better off in the long run. But that is not supported by theory or experience. In the United States, for example, while many goods and services are less expensive than they would be if the country were walled off from the global economy, we cannot assume that these cost savings necessarily compensate for diminished employment opportunities. People might trade away cheaper goods for assurances that a wide range of productive and rewarding employment options would be available, now and in the future. A second response is to acknowledge the distributional implications, but to accept them as the price of efficiency and openness. According to this view, the alternative – not having an efficient market system operating in a relatively open global economy – would be far worse. There probably are real choices to be made between income levels and distribution, on the one hand, and the range of employment opportunities on the other. It is not realistic to define the challenge as resisting or overriding the powerful market forces operating in the global economy. Rather, the challenge is how best to shift incentives at the margin in order to improve the distributional effects. There are several dimensions on which action can be taken. On the supply side of the economy, the state can invest or coinvest with the private sector in physical capital (infrastructure), institutions, human capital, and the knowledge and technology underpinnings of the economy. These investments generally have the effect (in advanced and developing countries alike) of raising the return to private investment, causing the latter to expand in scale and scope, lifting employment along with it. Reforming the tax system to favour investment and eliminate complexity and inefficiency would help. High value-added, higher-paying jobs, especially in the tradable sector, generally require highly educated people. Of course, more and better education does not by itself guarantee that the number of such jobs is significantly expandable,

given the scope of the tradable sector. But more scientific and engineering degrees might promote job growth and – together with some public-sector investment in promising technologies – it might also expand the scope of the tradable sector as well.

Alignment problems

That said, private incentives and social objectives are not perfectly aligned. Nor are they are diametrically opposed either. Multinational firms have access to abundant global supplies of relatively low-cost labour in multiple skill categories, so there is not much payoff to investments that increase labour productivity in high-income countries’ tradable sectors. Public-sector co-investment properly targeted, however, could shift these incentives by lowering the cost of private technology investment. Similarly, investment in infrastructure would directly add employment and improve competitiveness and efficiency in a wide range of sectors. Given the difficult current fiscal situation, public-private joint ventures should be explored here too, building on a large body of experience with growth-supporting infrastructure investment in developing countries. Restoring elements of manufacturing competitiveness is hard. Once skilled labour, training programs, and technical institutions in specific industries are gone, it is difficult to get them back. Long-term policy should include an evolving assessment of competitive strength and employment potential across sectors and at all levels of human capital, with the goal of encouraging market outcomes that achieve social objectives. Most countries invest public resources in assets that have the effect of increasing their human capital and technological base, and thus their competitiveness. That will and should continue. It is a benign form of global competition that increases productivity everywhere, provided that the markets for final and intermediate goods and services remain open.

Equitable distribution

If a relatively open global system is to survive in a world where nation states are the principle decision makers, it will have to be managed wand guided not just to achieve efficiency and stability (important as these goals are), but also to ensure that its benefits are distributed equitably between and within countries. If employment in advanced countries like the United States recovers strongly along with growth, political support for an open global economy will be easier to sustain. But, given adverse trends in the tradable sector and the non-tradable sector’s exhaustion as a source of job creation, a more likely scenario is that unemployment remains stubbornly high, despite a return of normal growth. In that case, politics will become divisive and polarized, and the inclination toward protectionist “solutions” will increase, jeopardizing global economic openness. It is not a good idea to assume that markets will solve these distributional problems by themselves; the evolution of structure and the income distribution are largely the result of market incentives. All countries, advanced and emerging, have to address issues of inclusiveness, distribution, and equity as part of the core of their growth and development strategies. The late Paul Samuelson once said that every good cause is worth some inefficiency. Morally, pragmatically, and politically, he was right. APRIL 2011

Economy & Finance

Shine on SAR

GDP increased 26 percent last year and economists expect growth to continue, but at a slower pace

nce more, Macau can pop open the champagne. After posting a gross domestic product increase of 1.5 percent in real terms in 2009, when most countries were fighting the slide into recession, the territory’s economy again delivered a star performance last year. GDP for 2010 increased 26.2 percent in real terms, totalling MOP217.32 billion (US$27.2 billion) at current prices, according to the Statistics and Census Service. It was the first time Macau’s GDP has topped MOP200 billion. “The economic growth was spurred by the impetus of the outstanding performance of the tourism and gaming sectors that was also conducive to the development of the hotel, MICE, retail

APRIL 2011

trade, restaurant, financial and insurance and real estate sectors,” the bureau said. However, it also warned against “shrinking investment and still weakening merchandise exports”. For the year, gross gaming revenue surged 58 percent compared with 2009. Total visitor arrivals increased 15 percent, with per capita spending of visitors rising in every quarter. Gross fixed capital formation, a gauge of investment, contracted 20 percent, slowing further from the 32.3 percent decrease in 2009. Private sector investment in construction decreased 34.5 percent as many big tourism and gaming facilities were completed in 2009. Economic growth for last year’s fourth quarter stood at 27.9 percent in

Researchers at the University of Macau expect the local economy to grow 15.7 percent this year real terms, while the rate of increase for the second and third quarters was revised upward to 31.7 percent and 27.4 percent from 31.5 percent and 27.1 percent respectively.

Among the best Macau’s per-capita GDP at current prices amounted to MOP398,071 (US$49,745), a 25.8 percent year-on-year jump in real

Indicator

2006

2007

2008

2009

2010

GDP at current prices (billion MOP)

113.7

141.93

161.67

165.46

217.32

14.4

14.7

2.8

1.5

26.2

GDP growth in real terms (%) Per capita GDP at current prices (MOP) Per capita GDP growth in real terms (%)

227,710 269,960 294,505 9.1

Among analysts, the expectation is that Macau’s GDP will continue to expand this year, although at slower pace than last year. Researchers at the University of Macau’s Department of Economics expect the local economy to grow 15.7 percent this year. The reasons for the slowdown are the measures launched by the central government to control liquidity and inflation in the mainland. The estimates, released before the final GDP figures for last year were announced, project inflation in Macau to reach 4.6 percent this year and the unemployment rate to stand at 2.6 percent.

Photo: Carmo Correia

Slowdown looming

terms. That, according to the International Monetary Fund’s (IMF) latest worldwide estimates for per-capita GDP last year, puts the territory’s GDP among the world’s highest. According to the IMF’s October projections, which exclude the SAR, Macau’s per capita GDP at current prices for last year would rank seventh worldwide. The territory would come after Australia (US$54,869) but before Sweden (US$47,667). Luxembourg led the ranking with a projected GDP per capita of US$104,390 last year. Qatar would be the only Asian country ahead of Macau, with an estimate of US$74,423 for last year, the third highest in the world, after Norway (US$84,543), according to the IMF.

Inflation for February rose 4.7 percent year on year, according to Macau’s statistics bureau. For the 12 months to February, the average Composite Consumer Price Index (CPI), a measure estimating the average prices of products and services purchased by households, rose by 3.39 percent from the preceding period. The Economist Intelligence Unit,

8.9

303,992 398,071

-1.5

2.4

25.8

the business-to-business arm of The Economist Group that publishes the magazine of the same name, also expects a slowdown in Macau’s growth. According to its latest projections, released in mid-March, the territory’s economy is expected to see real average annual growth of 12 percent this year and 14 percent the year after. As for inflation in 2011, the research unit expects it to reach 3.9 percent, slowing to 3.2 percent the following year. Curiously, the Monetary Authority is among the less bullish observers of the city’s economy for the current year. “The economy is predicted to expand at a high-single-digit rate in 2011 under the key assumption that gross gaming receipts grow annually by an approximate 15 percent,” the authority reported in its latest Monetary and Financial Stability Review, published in late January. Such an estimate may be considered conservative, as several analysts predict gaming revenue to rise by up to 30 percent this year.

Party shoes T

he European Union last month dropped its penalty taxes on imports of Macau leather shoes. Applicable since 2008, the anti-dumping measure ended on March 31. The mainland and Vietnam were covered by similar levies, which were also dropped. The European Commission said it was “appropriate to monitor” the imports of leather footwear from Macau, the mainland and Vietnam for another year, “with a view to facilitate swift appropriate action should the situation so require,” according to a notice published in the bloc’s Official Journal. In 2008, the EU extended a 16.5-percent duty on mainland-made leather shoes to Macau. This was after finding that mainland exporters were shipping leather shoes via the territory or assembling them here. The move was intended to evade the levies imposed on the mainland since 2006 to punish exporters for selling leather shoes in Europe below mainland prices or below production costs. Macau imported 5.1 million pairs of shoes from the mainland between April and December 2007 compared with 40,000 during the same period in 2005, according to the EU. The EU’s decision to impose the levy in 2008 was the final straw for the industry here. Between 2007 and last year, shoe exports fell from MOP392.2 million to less than one-sixth of that amount, MOP61.5 million, according to figures from the Statistics and Census Service. APRIL 2011

Economy & Finance

Big fish, big splash Pimco, the world’s largest bond fund manager, has just entered the Macau market. Its goal is to become the biggest player in town in just five years BY EMANUEL GRAÇA

imco’s investment funds are now available to individual and corporate investors in Macau. Allianz Global Investors, the world’s second-largest asset management group, last month signed an exclusive agreement with the Industrial and Commercial Bank of China (Macau) Ltd (ICBC Macau) to distribute Pimco funds in the city. “This is an agreement where Pimco investment products – and this includes not only fixed-income products, but commodities products – will be offered to individuals here in Macau through a partnership with ICBC Macau,” Brian P. Baker, Pimco Asia Ltd’s chief executive, told Macau Business. “We think this is an incredibly

powerful partnership because it is one of the world’s pre-eminent and largest investment managers coupled with the world’s most profitable bank.” Mr Baker says the goal is for Pimco to be the largest financial investment provider in Macau within five years. However, he did not give projections for business volumes here. Pimco is the world’s largest bond fund manager and an arm of Allianz Global Investors. At the end of last year, Pimco had US$1,242.1 billion in assets under management. The company was founded in 1971 and has more than 1,400 employees in offices in 10 countries on four continents. Lawrence Tse, the chief marketing officer of Allianz Global Inves-

Untangling the regulatory net P

imco has been in the Asian market for almost 20 years. It began by offering services to institutional investors – central banks, pension funds, sovereign wealth funds and corporations – and eventually extended its reach into the retail and private banking markets. “As the Asian population continues to get wealthier, as their earnings continue to grow and they realise they need to start having their savings work for them, we are finding that Asians are more and more interested in investing in our global investment products,” says Pimco Asia Ltd chief executive Brian P. Baker. However, Mr Baker points out that this is a complex business in this part of the world. “It is a very hard market. It is hard because we have more and more competitors coming in – not only from overseas, but domestic competitors. It is a hard market because many countries are very restrictive in allowing foreign firms to offer their products domestically,” he says. Even when restrictions are dropped, there is an array of different regulatory systems that makes it difficult for international players to be present in several places, Mr Baker stresses. “It is a challenge. Our colleagues in Europe are dealing with much more synchronised regulatory bodies within the euro region. Here, the regulations are not so synchronised, so it is a challenge from a business management perspective in deciding what countries can we enter.” In Asia, Pimco has registered products in Japan, South Korea, Singapore, Taiwan, Hong Kong and Macau. APRIL 2011

tors Hong Kong Ltd, says planning for Pimco’s entry into Macau started last year. Besides registering several of its products with the Monetary Authority in July 2010, Allianz Global Investors and Pimco officials met four potential local distributors.

Pension traction Eventually, ICBC Macau got the deal. “The benefit of having an exclusive arrangement is there will be a commitment to educate retail investors in Macau,” says Mr Tse. Pimco is not only eyeing the retail market; it also wants to establish a firm foothold in the private pension fund sector. Its officials have already met several local companies to find out how they manage their retirement plans. “We hope to start gaining some traction with a lot of these domestic opportunities,” says Mr Baker, noting that Macau’s economic boom has led many

Pimco also wants to establish a firm foothold in the private pension fund sector. Its officials have already met several local companies to find out how they manage their retirement plans “What investors have learned is that you need to diversify your portfolio into safe investments and risky investments,” he says. “If you have all your money in risky investments, the reason why they give high returns is that you have to accept higher risk. A well-positioned portfolio has as the foundation some less risky, more stable incomeproducing assets; and then, layered on top of that, the more risky assets that have the bigger, fatter tails.”

Gross returns

corporations to set up their own private pension funds. This explains in part why Pimco chose ICBC Macau. “If you take a look at the ICBC Macau structure, they have a specialised team on pension funds. That is one of the opportunities that we would like to explore together,” says Mr Tse. He also points out the good busi-

ness relationship between the bank and several casino operators. As for Macau’s individual investors, Mr Baker acknowledges that until now they have preferred to put their savings into equities rather than mutual funds, but he says the international financial crisis has helped to change their minds.

Performance car A

common complaint among investors who use mutual funds is about the fees charged by the asset managers. Pimco Asia Ltd’s boss, Brian P. Baker, says you pay for quality. “There is a reason that Mercedes can charge more for a car than Toyota. People will pay higher fees for products that deliver more consistent and better returns. You get a differentiation in the market, and you get what you pay for,” he stresses. Mr Baker says that at Pimco, there is little pressure from investors for the company to lower fees. “We don’t see significant fee pressures. Only in those firms that aren’t producing good returns do they have to lower their fees to compete on price, because they don’t deliver the performance. They try to attract those investors that are very price-sensitive, but ultimately what those investors save in fees they typically more than lose in performance.”

Mr Tse thinks the confidence of Macau investors took longer to recover from the global meltdown than the confidence of Hong Kong investors, but he says people are starting to flock back to financial markets. “There is no doubt the economy in Macau is booming, even after the financial tsunami exploded. However, we do see some signals of substantial need for diversification of assets,” he says. One product important to Pimco’s debut in Macau is its Total Return Bond Fund. Managed by famed investor Bill Gross, it is the world’s largest bond fund and has posted a stellar average return of 8.42 percent per year since its inception in 1987. In the near future, Pimco is also keen to promote its Emerging Asia Bond Fund in Macau, which invests in Asian bonds and overlays emerging market currencies on top of that, Mr Baker says. This product was registered with the Monetary Authority in February. Pimco is not a complete newcomer to Macau. It has been catering to the provident fund scheme for civil servants since it began in 2007. APRIL 2011

Economy & Finance

New life

nsurance company Fidelidade Mundial Seguros is looking for a fresh start. After some tough times, management has set a target to become a top insurer by 2015. “In three to five years, Fidelidade Mundial targets to be one of the three biggest insurance companies in Macau in all its business areas; life, non-life and private pension fund management,” general manager Paulo Barbosa told Macau Business. AIA dominates the insurance sector in Macau with 30.1 percent of market share in gross revenue in 2009, according to the Asian Banker Research. AXA was second, with a market share of 11.9 percent, followed by MassMutual, which holds 8.5 percent. Macau’s insurance industry is made up of 23 insurance companies, two of which are under Fidelidade Mundial, for life and non-life business, respectively. Fidelidade has already set demanding targets for this year: to post 25-percent growth in the non-life business; a 100-percent rise in the life business; and a 50-percent increase for the private pension fund segment. “These are ambitious goals, but all the data from the first three months of 2011 indicates they are achievable,” Mr Barbosa says. One of the ways to accomplish such targets is by further boosting the company’s partnership with Banco Nacional Ultramarino (BNU) bank. According to Mr Barbosa, Fidelidade was the first to sell insurance online, namely travel insurance, through BNU’s online banking platform. Two products are set to be launched soon: an educational plan and personal accident cover. “Currently in Macau, Fidelidade and BNU are the only ones offering insurance through the Internet,” Mr Barbosa says. “We want to develop the bancassurance channel as well as the direct business channel.” Fidelidade Mundial is the local branch of the largest Portuguese insurer, Companhia de Seguros FidelidadeMundial, part of Caixa Geral de Depósitos Group, which also owns BNU bank.

Fidelidade Mundial has set its sights on becoming one of Macau’s top insurance firms within five years, a business reincarnation after a rough decade

BY EMANUEL GRAÇA

Photos: Carmo Correia

Fortune seekers

Paulo Barbosa

APRIL 2011

The first results of Fidelidade’s growth master plan are quite positive. From a MOP13 million (US$1.6 million) premium turnover in 2008, the company jumped to MOP94 million last year, a seven-fold increase.

Essential Macau launch issue

Now on sale at selected bookshops Also find us at luxury hotels in Macau, Hong Kong and in the mainland APRIL 2011

Economy & Finance

Paulo Barbosa and Ivan Cheung Ming Fai

Fidelidade also became Macau’s fifth biggest insurance company in the non-life market, Mr Barbosa says, as its market share for this segment rose to 5.9 percent from 1.4 percent in 2008. “In the life business, we are still taking the first steps. We will take more serious ones in 2011.” As for the private pension fund management market, for several years the company’s only client was the BNU workers’ pension fund. In late 2009, an aggressive strategy was implemented to find more business. Soon after, the company started managing electricity utility CEM’s workers’ pension fund. Mr Barbosa says it is “one

Growing sector

acau’s insurance sector has been expanding fast in the past few years. According to data from the Monetary Authority, total premiums reported for last year totalled MOP3.78 billion (US$473 million), a year-on-year increase of 15.7 percent. Of those, life business contributed MOP2.69 billion (71.2 percent) and MOP1.09 billion (28.8 percent) by non-life business. Authority records show premiums have already recovered to the levels prior to the global financial crisis. Last year, both life and non-life businesses showed double-digit growth. Life business marked an increment of 15.3 percent year on year and non-life business expanded 16.7 percent. APRIL 2011

From a MOP13 million (US$1.6 million) premium turnover in 2008, Fidelidade jumped to MOP94 million last year of the most important in this field”. Last year, Fidelidade launched five open pension funds with different portfolios and associated risk levels, available to all workers and without membership restrictions. The performance returns for last year were positive, Mr Barbosa says, ranging from 3.63 percent to 15.76 percent. Fidelidade had roughly MOP430 million in assets under management in its pension funds, but “with a strong growth trend”, the general manager stresses.

Difficult decade Fidelidade Mundial started its Macau operations in 1999. According to Mr Barbosa, at first it mostly offered insurance products in association with BNU. As the insurer was expanding its activities, it suffered a big hit with the disappearance of general manager Leonel Rodrigues from a Thai beach in the 2004 Indian Ocean tsunami. The 55-year-old Portuguese was with his wife at Le Meridien in Khao Lak, Phang Nga, north of Phuket, when he was swept out by the first wave that hit the beach resort on December 26, according to a message

still posted on a special missing-persons web page set up by an NGO. His wife was spared. The loss put Fidelidade’s growth strategy for Macau on standby, according to Mr Barbosa. The revival began in late 2009 when he and Ivan Cheung Ming Fai were invited to become the insurer’s joint directors general. They took up the positions in October 2009. “A new project was created, with the admission of experienced and knowledgeable local staff,” Mr Barbosa says. “There was a big investment both in human and material resources.” Currently, the company has 20 employees, with an average of between 10 and 20 years’ experience in the local insurance sector, stresses Mr Barbosa, a Portuguese national who has been working in Macau since 1997. He explains that the option to hire experienced staff to relaunch Fidelidade’s expansion strategy is related to local market characteristics. He adds that good personal relationships with customers are, and remain, a crucial part of the firm’s rebirth.

Economic Trends by JosĂŠ I. Duarte

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

165,457

million

Consumption (in MOP)

46,154 31,885 16,009 - 35,249 106,535 164,159

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

2.3 4.2 - 36.6 13.2 - 13.6 15.2 1.5

Latest

Notes

% var

64,568

million

13,626 10,059 6,062 - 12,357 84,217 60,322

million million million million million million

34.6 9.7 24.2 17.9 24.2 48.0 27.9

Q4 Q4 Q4 Q4 Q4 Q4 Q4

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 104.25 (2010) 0.50 %

% var

23.8 11.8 10.1 11.8 2.81 --

Latest

Notes

% var

43,721 million 243,247 million 130,677 million 237,626 million 107.16 base - 2008 0.5 %

13.4 14.6 29.2 14.6 4.92 --

Latest

% var

December December December December January January

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

2010

% var

552,300 331,000 9,000 2.7 %

1.9 2.8 -- 0.3

Notes Q4 Q4 Q4 December, var

Construction

Major sectors

1,835,174 1,271,509 Cement (Apparent consumption) 214,166 Transactions/Commercial (in MOP) 6,580 Transaction/Residential (in MOP) 45,939 Started

Finished

m2 tons million million

- 19.8 - 9.6 - 22.6 117.0 113.0

Latest

1,119 135,591 19,436 1,136 3790

m2 m2 tons million million

% var

Notes

- 96.3 310.4 3.7 90.0 21.0

January January January January January

Gaming 2009 Gross revenue (in MOP) Casinos Tables Machines

189,588 33 4,770 14,363

million (2010)

% var

Latest

57.0 2 18.7 21.1

18,670 33 4,791 14,050

% var million

32.9 0 0.4 - 2.2

Notes January Q4, var, ytd Q4, ytd Q4, ytd

Tourism 2009

24,965,000 (2010) 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

15.0 - 6.5 -9.8 -2.9 0.6

Latest

2,076,000 1,812 0.90 days 20,091 87.7 % 1.41 nights

Notes

% var

January 1.4 Q4 0.3 Q4, var - 0.20 days December 4.3 5.46 December, var

- 0.05

December, var

%var - % change on homologous period; var - absolute variation; ytd - % change, year-to-date; x - discontinuous series

2010(New 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 APRIL 2011

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

2009 Population

Economic Trends by José I. Duarte

Inflation, overstated

GRAPH 1 - Macau’s annual inflation rate

A rebound in the inflation rate last year after a significant decrease in 2009 has raised concerns that there is significant pressure on prices. Taking into account February’s 4.7-percent year-on-year rise in the Composite Consumer Price Index and the 3.4-percent average annual growth for the 12 months ended February, the data shows that the current level of inflation is low by most common standards.

9.00 8.00 7.00 6.00 5.00 4.00

GRAPH 1

3.00 2.00 1.00 2005

2006

2007

2008

2009

2010

This graph places the inflation rates of the past five, full years into perspective. Before 2009, inflation was generally greater than 4 percent a year and reached a peak well above 8 percent in 2008. While it does not mean inflation is a non-issue, it does suggest a need to reframe the debate on rising prices. GRAPH 2

GRAPH 2 - The percentage deviation from the average inflation rate for selected components of the basket of goods used to calculate CPI Food & non-alcoholic beverages Health

(% points)

Transport

Housing & fuels

Clothing & footwear Communication

Recreation & culture

Education

30 20 10 0 -10 -20 -30 -40 -50 -60

2004

2005

2006

2007

2008

2009

2010

GRAPH 3 - Month-to-month change of selected CPI components Overall Consumer Price ndex

Food & non-alcoholic beverages

GRAPH 3

Clothing & footwear

Housing & fuels

The month-by-month comparison of some of the biggest components in the CPI basket shows several interesting features. For this graph, we use the time series of the 2008/09-based Composite CPI. Both food and clothing prices have increased consistently over the three-year period illustrated here. Clothing is subject to strong seasonal oscillations. There have been only small changes in housing prices, which have been mostly stable. Fluctuations within 3 to 4 percentage points seem at odds with other data and economic indicators.

120 115 110 105 100 95 90 85 Jan 2008

May 2008 Sep 2008 Jan 2009 May 2009 Sep 2009 Jan 2010 May 2010 Sep 2010 Jan 2011

APRIL 2011

The commonly-held belief is that food and housing are the main drivers of inflation and that continued upward pressure on these Consumer Price Index (CPI) components should be expected. The second graph highlights the behaviour over time of selected components of the CPI. The food and non-alcoholic beverage category, and the housing and fuel category rise well above the other constituents. Taming prices in these two categories is mostly beyond the scope of the authorities. Macau imports inflation with its food imports from the mainland and the renminbi has appreciated against the pataca. The government has also been slow to define and implement housing and urban development policies that affect costs. The increases in other categories have fallen below the average CPI but their weight in the basket of goods that serves as the benchmark is of far less significance.

Measuring the basket

GRAPH 4 - Current weights of CPI components

To give our analysis of inflation some perspective, let us look at the composition of the basket of goods use to measure the CPI.

Period: 4/2008 - 3/2009

Food & non-alcoholic beverages

GRAPH 4

Housing & fuels

The current composition of the basket of consumer goods is shown in Chart 4. Consumer expenses that are deemed as basic and unavoidable - food, housing and clothing - represent almost two-thirds of a familyâ&#x20AC;&#x2122;s typical consumption. These items are likely to be subject to the most significant upward price movements and, in light of the earlier analysis, seem most likely to trend upwards. The remaining items in the basket are currently subject to more moderate increases in price and are consumed less frequently.

Clothing & footwear Household goods & furnishings Alcoholic beverages & tabacco Health Transport Communication Recreation & culture Education Miscellaneous goods & services

GRAPH 5

GRAPH 5 - A comparison of the cumulative weights of the major components in the CPI basket over time 100 Education and recreation & culture

Transport & communication

Health

Clothing & footwear

Housing & fuels Food & non-alcoholic beverages

50 40 30 20 10 0 10/1999-9/2000

7/2004-6/2005

4/2008-3/2009

GRAPH 6 - A comparison of consumer price indexes over time

The inflation rate is calculated by using a recently adopted basket. Chart 5 shows how the weight of the major components in the CPI basket has changed over the past decade. Changes to the basket were made after family expenditure surveys were carried out in 1999/2000, 2004/05 and 2008/09. Big-picture consumption patterns did not change radically between these surveys. However, given the rise in income in that period, the basic expenses of food, housing and clothing should have seen their combined share decrease slightly, and spending on health should have increased. That change was marginally clear in both cases. Education shows a somewhat surprising decrease in the last survey, perhaps due to sensitivity to government policies and subsidies. This may also go some way to explaining the low level of medical expenses. Note that, for the sake of comparison, some items were aggregated. GRAPH 6

CPI

CPI(A)

CPI(B)

120

100 80

The Statistics and Census Service uses three inflation indices. There is the main index, CPI, and two other indices. The first is CPI(A), which uses data from families with an average monthly expenditure between MOP6,000 (US$750) and MOP18,999 and represents about half of all households. The second index is CPI(B), which includes families with incomes from MOP19,000 to MOP34,999 and represents about 30 percent of households. Chart 6 shows that the differences between the two indexes do not seem significant.

0 2004

2005

2006

2007

2008

2009

2010

APRIL 2011

Politics

Megapolis mania The new framework agreement on cooperation between Macau and Guangdong envisages Hengqin Island as the cornerstone of a grander edifice

fter months of negotiation, Macau and Guangdong have signed a framework agreement on cooperation. The agreement is meant to spur regional integration, and at its heart is the development of Hengqin Island. In its 38 articles and 7,500-odd words (in the unofficial English translation) is found the skeleton on which the parties to the agreement hope to build cooperation in the economic, social, welfare and cultural fields until 2020. The goal of the agreement is nothing short of “creating the most dynamic and internationally competitive megapolis in the Asia-Pacific region”. This “megapo-

APRIL 2011

lis” includes Hong Kong, which last year signed an agreement with Guangdong similar to Macau’s. The Macau-Guangdong agreement, although signed only last month, was approved by the State Council in December. It is the result of several meetings of officials from both sides of the border, who started to draft the document in March 2010. There are four immediate aims, according to chief executive Fernando Chui Sai On: the establishment of a Chinese medicine industrial park and the joint development of cultural and creative industries on Hengqin, the improvement of tourism training and the expan-

sion of cooperation in the convention and exhibition industry. Mr Chui and the governor of Guangdong, Huang Huahua, signed the agreement in Beijing, with vice-president Xi Jinping, who oversees Macau affairs for the central government, looking on. There will now be regular meetings between the parties to discuss details of how to put the plan into action. The first meeting will take place later this month.

Great tidings At the signing ceremony, Mr Chui hailed what he called a historic agreement and pledged to make what it

Two cheers O

Photo: Luís Almoster | mspagency.org

Chief executive Fernando Chui Sai On and Guangdong’s governor, Huang Huahua, sign the framework agreement, with vice-president Xi Jinping as a witness

envisages reality. He said it would bring a lot of benefits to Macau, advancing the diversification of the city’s economy while increasing its appeal as a destination for international tourists. Mr Huang stressed the variety of fields covered by the agreement. The secretary for social affairs and culture, Cheong U, said the agreement

was “good news for Macau”. He said it would help turn the city into an international leisure and tourism centre, while improving cooperation in social fields. Asked by reporters about the possibility of the agreement allowing Macau to open homes for the elderly across the border, he said the present strategy was to have them built here, while keeping the mainland as a potential alternative. In the face of popular opposition to the opening of new homes for the elderly in Macau, the government came up with a MOP50 million project to build one in Guangdong instead. It dropped this project last year, reportedly because of legal problems with the ownership of the site. One of the most important ideas in the agreement is the use of Hengqin, three times the size of Macau, as the pilot area for cooperation. This cooperation includes the joint construction of an industrial zone covering five square kilometres of the island. The first project in the zone will be the Chinese medicine industrial park, meant to support the development of the traditional Chinese medicine industry.

Seeing for himself Other co-developments on Hengqin include a resort centre, a cultural and creative district and a central business district. Zhuhai will have the leading role in these projects, while Macau will provide funding, expertise and industrial support, according to the agreement.

bservers seem bullish about the likely effect on Macau of the Macau-Guangdong framework agreement on cooperation. One is National People’s Congress deputy Paula Ling. “I think this is a great agreement because it will help Macau develop in the next few years,” she told the Portuguese news agency Lusa. Macau lacks land area, she said, and “could only expand in cooperation with the neighbouring province”. Leonel Alves, a legislator and Macau representative at the Chinese People’s Political Consultative Conference, agrees. “Macau’s entire future depends on the success of this cooperation,” he told Lusa. Mr Alves said the co-development of Hengqin Island is the right step to further the integration of Macau and Guangdong. He said the island is ideal because it is close to Macau and so could help alleviate the city’s shortage of land.

Small and invisible T

he Macau-Guangdong framework agreement on cooperation stresses the need to promote the development of small and medium-size enterprises (SMEs) to drive economic growth. The agreement says there is a need to support the expansion of Macau SMEs into the mainland, which would help diversify Macau’s economy. The obstacles to SMEs taking part in the development of Guangdong are now “relatively high,” said the chairman of the Small and Medium Enterprises Association of Macau, Stanley Au Chong Kit. “The SMEs are a disadvantaged group that is being nearly forgotten,” he told reporters. “The business environment is very tough for us.” Mr Au asked for more support from the government. The secretary for economy and finance, Francis Tam Pak Yuen, said he had already ensured that the authorities were willing to support local SMEs. But he stressed that companies cannot rely only on government help, and that they must work by themselves to grab the opportunities generated by the new agreement.

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Politics

Macau residents working or living on Hengqin will be subject to the employment and social security systems of the mainland, except those on the University of Macau’s Hengqin campus, where Macau law will apply. But Macau residents working on Hengqin will enjoy tax privileges. Shortly after the agreement was signed, Mr Chui went to Hengqin to see how the construction of the University of Macau campus is going and to get updates on the Chinese medicine in-

dustrial park project. The development of Hengqin is meant to increase its population from 5,000 currently to 280,000 by the end of 2020. But the aim is to avoid harming the island’s environment, the agreement says. The development strategy for Hengqin includes changes in arrangements for crossing the border between Macau and the island, with a view to keeping the crossing open 24 hours a day and allowing access to the island for cars that

have only Macau registration plates. The agreement says that later on Macau and Guangdong will work together to develop the Nansha district of Guangzhou. One of the main aims of the agreement is to reduce Macau’s reliance on gaming by fostering new industries. But while the document mentions the need for “adequate” diversification of Macau’s economy a total of 11 times, no clear targets are set. The head of the Macau government’s Policy Research Office, Lao Pun Lap, said this was because it was hard to quantify “adequate” economic diversification. “For example, although the gaming industry last year was still Macau’s main source of income, tax income from other industries has grown too,” he said.

On the borderline In the financial field, the agreement proposes promoting the settlement in renminbi of payments for investment transactions between Guangdong and Macau. It envisages trying out investment funds for industrial development on Hengqin. The agreement gives importance to cross-border infrastructure, with the parties pledging to cooperate in planning and building transport, water, electricity and gas connections. The agreement aims to gradually increase the operating hours of border checkpoints, until the most used crossing, the Border Gate, is open round the clock. Mr Lao says the Border Gate is expected to be open two or three hours longer each day by early next year. It is now open from 7 a.m. until midnight. Increased cooperation in education and training is also proposed. The Hengqin campus of the University of Macau will be the base for further cooperation in science, technology and tertiary education. The agreement says there is a need for greater integration in the fields of medical services, public health, culture, sport, environmental protection, livelihood programmes and welfare. In the field of tourism, the aim is to establish the Macau-Guangdong nexus as a “world famous travel and leisure tourism” destination. To this end, there is a project to create a “multi-destination tour”, connecting Macau’s historical centre, the Kaiping watchtowers in Diaolou and Shaoguan’s Mount Danxia. APRIL 2011

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

Deal with it

A NEW FRAMEWORK AGREEMENT BETWEEN MACAU AND GUANGDONG SIGNED LAST MONTH IS DESIGNED TO BRING THE TWO NEIGHBOURS CLOSER TOGETHER BUT ITS LONG-TERM EFFECT ON THE TERRITORY IS UNCLEAR acau and Guangdong recently signed a broad bilateral cooperation agreement. Its wide range of aims includes giving impetus to scientific development in Guangdong and economic diversification in Macau. It is a 26-page document, in its unofficial English translation, and is not always an easy one to understand. It has eight chapters. It is occasionally repetitive, sometimes too general and, at times, slightly confusing. It is a pity that its contents were not more widely discussed publicly beforehand, and it is not clear which government departments or organisations were involved in its drafting, nor at what points they were involved. We know only that a task force including officials from both parties began drafting the agreement in March last year. So we cannot analyse the document as fully as we would like. But from a Macau perspective, this document raises some interesting questions. The agreement touches on very broad and complex issues – opportunities and challenges alike – which could affect all aspects of life in the city, but this column will focus on the big picture. In the first chapter, where the general principles are outlined, the wide scope of the agreement becomes obvious. Cooperation is meant to “facilitate integrated development” in various areas, such as the economy, society, culture and lifestyle.

Fuzzy logic

There is nothing modest about the ambitions for integration. Several aspects of the foundations of future cooperation stand out. First, the Macau-Guangdong nexus is meant to become an integrated world tourism and leisure destination. Second, a common industrial platform will be created, combining Guangdong’s industrial strategies with “momentum for adequate diversification of Macau’s economy”. Note that the word “diversification”, when applied to Macau’s economy, is always qualified by the word “adequate”,

although nowhere is it explained what “adequate” means in this context. Third, Macau is seen as a platform for business services and trade, and as a link to several areas of the world, such as Europe, Portuguese-speaking countries and countries belonging to the Association of Southeast Asian Nations. Several sectors in which development is planned are prominent, notably traditional Chinese medicine, conventions and exhibitions, creative and cultural industries, education and training, and tourism and leisure. Over the years the development of each of these sectors has been mooted as a way to reduce the dependence of Macau’s economy on gaming. But the second chapter indicates that all these activities will be pursued mostly, if not exclusively, on Hengqin Island, within cooperation zones. If this is meant to be the answer to Macau’s need for economic diversification, it is a rather puzzling answer.

Issues for the future

The rest of the document only adds to the reader’s puzzlement. The paper calls for the enhancement of the flow of labour and capital within the Macau-Guangdong nexus and common “public service systems”. Public service systems is an allencompassing category that includes education, health services, social benefits, legal and security arrangements, for example. It says mainland labour rules and social benefits will apply on Hengqin Island. The agreement also commits the parties to increasing the use of the renminbi. No doubt the execution of this agreement will create opportunities for those able to take advantage of them. What is left for Macau as a distinct economic entity, besides gambling and its associated facilities, and its public administration, is less clear. It is probably too soon to draw conclusions, however one cannot help but wonder if the negotiators of this agreement on the Macau side, properly considered the possible or probable effects of the agreement on Macau’s status as a singular and autonomous social, political and economic entity. APRIL 2011

Politics

Lost in translation

Clearer labour rules would be welcome, says the US consul S consul-general for Macau and Hong Kong Stephen Young has said there is a need for more “understandable and transparent rules” on imported labour in Macau. Mr Young believes that not only American investors but all the business community “would like to have a little bit more flexibility” in importing labour. Last month, in his first meeting with the Macau media since he took office in March 2010, Mr Young said that labour issues continued to be the topic of conversations between US diplomats and the Macau government. “A flexible labour policy would be essential” for eco-

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nomic diversification, which in turn would benefit Macau and its population, he said. Mr Young played down worries about Macau being a money-laundering centre, saying money laundering is a problem associated with the fast growth of the gaming industry in recent years. “It is not that gaming is bad; it just brings some issues you have to follow up,” he said. Mr Young would not comment on the court cases in the United States and Macau involving Sands China ex-chief executive Steve Jacobs and his former employer, saying that to do so would be inappropriate. In a lawsuit filed in Nevada, Mr

Stephen Young

Jacobs alleges he was wrongfully fired. In the court filings, he accuses Sands China and its parent company, Las Vegas Sands, of using improper leverage on Macau government officials. Mr Young also declined to comment on – or confi rm the authenticity of – a

series of cables obtained from WikiLeaks and published by Reuters containing expressions of concern by US diplomats about the VIP segment of the Macau casino industry and its connections with organised crime. However, he admitted that how the junket business really works in Macau is “still a little puzzling” to him – specifically, how the money flows from the mainland to Macau and vice-versa and how gambling debts are collected by junket operators across the border. In the leaked cables, Macau’s Gaming Inspection and Coordination Bureau is accused of barely enforcing its own rules on VIP junkets. Roughly 4,000 US citizens live in Macau, according to Mr Young. The United States has no plan for now to open a consulate here.

Politics

Changing gears Beijing wants to alter the mainland’s economic direction in just five years to place quality ahead of quantity BY MARIA JOÃO BELCHIOR IN BEIJING

eeking to cool the mainland economy and more evenly distribute wealth, Chinese Premier Wen Jiabao appears to be adhering to the words of English poet Robert Browning. “Less is more” could be the theme of the 12th FiveYear Plan announced last month during the annual session of the National People’s Congress. Passed by the congress’ nearly 3,000 members, the plan aims to lower economic growth to 7 percent a year until 2015 in order to get a grip on inflation and transform its development from quantity to quality. Beijing will emphasise domestic consumption and services and allow for a broader distribution of wealth, thereby lessening the country’s dependence on exports. The plan to stop excessive reliance on selling abroad was floated in 2008 as part of the stimulus package launched to weather the global financial crisis. Beijing had previously set an annual

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target for economic growth of 8 percent for seven straight years. Growth always surpassed that figure with a peak in 2007 of 11.4 percent. The next year it fell to 9 percent. This five-year plan also aims to reduce energy consumption per unit of GDP by 16 percent, with the government looking to cut carbon intensity by 17 percent during that period. Carbon intensity measures the amount of carbon dioxide emitted per unit of GDP.

Inclusive growth In the short term, Mr Wen’s focus will be on fighting inflation, which Beijing wants to see at 4 percent this year. It will prove to be difficult. The inflation rate has hovered around 5 percent this year, with the National Development and Reform Commission forecasting consumer price rises of 4.8 percent to 5 percent for the first half. Creating a balanced economy with a

strong domestic market is a long way off. Beijing wants to rearrange investment, consumption and exports to extend development to the mainland’s rural areas, where increasing purchasing power would help to build the country’s domestic market. On one hand, non-agricultural rural employment is expected to aid the development of medium- and large-sized cities far from the coastline. On the other, investment in infrastructure is seen as essential to the modernisation of agriculture. Besides irrigation, the central government has pledged to improve warehousing, processing, transport and marketing of the nation’s agricultural products. Reflecting those goals, Beijing introduced the concept of “inclusive growth” at this year’s meeting. The environment is also a major area of concern for the next five years. The mainland relies heavily on coal; renewable

Budget breakdown

or this year’s budget targets, Beijing expects total national revenue (combining central and local budgets) to reach about 8.9 trillion renminbi (MOP10.9 trillion), up about 8 percent from last year. Beijing has forecast total national expenditures of 10 trillion renminbi, an increase of 11.9 percent. The deficit should be around 900 billion renminbi or 2 percent of GDP. The budgeted deficit for last year was 2.5 percent.

SPENDING HIGHLIGHTS Defence: 601 billion renminbi, up 13 percent Public Security: 624 billion renminbi, up 14 percent Education: 1.4 trillion renminbi, up 14 percent Social Security: 1 trillion renminbi, up 14 percent Science and Technology: 369 billion renminbi, up 14 percent Energy Conservation: 281 billion renminbi, up 16 percent MJB

energy consumption accounted for about 8.3 percent of the total in 2009. The plan hopes to raise the figure to 11.4 percent. Beijing is also more sensitive to the impact of environmental degradation on economic growth. Mr Wen pledged a 281 billion renminbi (MOP344 billion) handout this year for environmental protection. To tackle urban unemployment, the plan hopes to create 45 million new jobs.

Those vacancies should be mainly generated in the service sector, another key area for development presented by the Chinese premier. Urban registered unemployment has to be kept at less than 5 percent, according to the central government.

Watching world Mr Wen also urged Chinese enterprises to innovate more. In 2009, there were

Recycled promises for Macau

eijing’s new five-year plan devotes a full chapter to Hong Kong and Macau for the first time. However, the document brings little new news for both SARs, as it mostly reiterates past pledges. It is only the second time the blueprint has mentioned the two territories, which received brief mentions five years ago. According to the plan for 2011-2015, Beijing will boost cooperation between Hong Kong, Macau and the mainland. The goal of turning Macau into an international entertainment and leisure hub will be pushed further, while promoting economic diversification through the convention and exhibition industry, the creative industries and traditional Chinese medicine. The role of Macau as a launch pad for links between China and Portuguesespeaking countries was also revisited.

600,000 new Chinese registered patents but Beijing hopes the figure will reach 2 million a year by 2015. The five-year plan also encourages more companies to “go global” and continue to invest abroad. He said the government aimed to create a fair platform for national and international companies to compete at the same level in the country’s market. Even so, some areas would remain out of reach for foreign investors. The mainland’s five-year blueprint had brought hope and confidence not only to China, but to the entire world, the premier said. “China’s opening-up policy will remain unchanged and we will further strengthen, rather than weaken, our policies for drawing foreign investment, advanced technologies, as well as management experience,” he told about 70 overseas delegates at the China Development Forum in the Great Hall of the People at the end of last month. APRIL 2011

Politics

Youthful energy Garcia Leandro, arguably the most important governor of Macau in the 20th century, has just published his memoirs BY JOÃO PAULO MENESES IN LISBON

hen Colonel Garcia Leandro arrived in Macau to become the territory’s governor, Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau (STDM) was paying the government about MOP9 million a year to run the casino monopoly. That was in November, 1974. Concerned about insufficient funds, Mr Leandro took advantage of the impending revision to the gaming concession contract and offered a deal that left STDM in a state of shock; make it pay MOP120 million a year. It is one of many revelations included in Mr Leandro’s memoirs of his 51 months as governor. “Macau nos Anos da Revolução Portuguesa, 1974-1979” or

“Macau during the Years of the Portuguese Revolution, 1974-1979”, was published in Portugal in February and is available only in Portuguese. Mr Leandro is the second former governor to publish his memoirs in the past six months, following on from the city’s last Portuguese governor, General Vasco Vieira. Mr Leandro is due to visit Macau this month at the invitation of chief executive Fernando Chui Sai On. Another former governor, Carlos Melancia, will join him. In his book, Mr Leandro says talks on the STDM concession lasted for months. At the time there were reports of alleged betrayals among STDM’s main shareholders – Mr Ho, Henry Fok, Yip Hon and Teddy Yip Tak Kei.

The revision of the gaming contract was among Mr Leandro’s achievements

At the Macau ferry terminal, with a group of fan dancers, just before leaving Macau in 1979

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A proposal was initially accepted by Mr Fok but later rejected, once the arithmetic had been done. Finally an amount was agreed upon, to be updated yearly; around MOP75 million for the first year (1976/77), in cash and services, much higher than the MOP9 million figure, but less than what Mr Leandro wanted. Nevertheless, from then on the city’s budgets started producing surpluses. The revision of the gaming contract was among Mr Leandro’s achievements as the first governor after the 1974 Carnation Revolution that overturned Portugal’s longstanding dictatorship and established democracy.

Taste of democracy It was on Mr Leandro’s watch that Macau got its Organic Statute, the predecessor of the Basic Law. The statute came into force in 1976 and remained in place until the handover in 1999. With the introduction of the Organic Statute, Macau was no longer regarded as a Portuguese colony but as a Chinese territory under Portuguese administration. It also saw the end to armed troops being stationed in the city. The Organic Statute created the Legislative Assembly, elected in part by a popular vote, something new at the time – even for Hong Kong, as Mr Leandro stresses in the book. He wrote that he considered a fully elected parliament but admits it would have been a big mistake. Mr Leandro explains

47 that several people had called his attention to the expected low voter turnout for the first elections, held in 1976, especially among the Chinese community, as indeed occurred. With a fully elected Legislative Assembly, there was therefore the risk that the parliament wouldn’t reflect the society’s composition. To reduce these asymmetries, it was decided that the Legislative Assembly would include three types of legislators, as it still happens today: directly elected, indirectly elected by associations, and appointed by the governor. The goal of the latter two groups was to balance the parliament’s composition, according to Mr Leandro. Mr Leandro is also remembered for other achievements, notably the acceleration of the development of the city’s infrastructure. But there were changes he was unable to make, such as the creation of a Bank of Macau. At the time, Banco Nacional Ultramarino or BNU had myriad functions all over the Portuguese-speaking world but it paid little attention to Macau, according to Mr Leandro – even though it was the local noteissuing bank. Mr Leandro drove the process to create a new bank that would serve Macau, with revenue raised in Macau and decisions taken in Macau. The move was opposed by BNU and conservatives. While his successor dropped the idea, BNU learnt its lesson and became one of the city’s most important financial institutions. Mr Leandro, born in 1940, was Macau’s youngest governor, taking office when he was just 34 years old.

Military mission

C Speaking at the Legislative Assembly in 1976

Shaking hands with lawmaker Ho Yin, with Chui Tak Kei and Anabela Ritchie in attendance

During the Lunar New Year festivities in 1977, with Stanley Ho Hung Sun

At the 1977 celebrations of China’s national day held by Nam Kong, with the company’s president, Chen Peng

The opening of a textile factory

With the former Hong Kong governor, Sir Murray MacLehose, in 1977

olonel Garcia Leandro served in several Portuguese colonies, mainly in Africa. Just a few weeks after the April 1974 Carnation Revolution in Portugal, he was sent to East Timor and Macau to explain what was happening in Lisbon. He had previously been posted in Dili and was quite knowledgeable about East Timor but knew far less about Macau. The situation in Macau was complicated because the new regime in Lisbon ruled the governor, Nobre de Carvalho, still appointed during the dictatorship, could stay in office for a couple more months, until the opening of the eponymous bridge. It resulted in political tension in Macau and in Portugal. Mr Leandro was eventually appointed as governor and commentators consider it as the high point of his career, which included high-ranking positions in Portugal. Today he is a general with the armed forces reserves.

Integral evolution

hen Colonel Garcia Leandro arrived to become governor in 1974, he encountered rampant corruption, especially in the middle ranks of the civil service. He was the first governor to acknowledge publicly that corruption existed and that it was a problem. Mr Leandro mounted a wide-ranging campaign to enforce discipline and root out corruption. The head of the Information and Tourism Division and the president of the Islands Municipal Council were disciplined. Ten policemen were dismissed for embezzlement and corruption. In his memoirs, Mr Leandro talks about the “long tradition of gifts given to public servants who helped solved any problem,” something he considered inappropriate. He moved swiftly to promulgate a law banning the acceptance of gifts in December 1974 and worked to persuade citizens to stop offering them. “It was a bombshell,” he wrote in the book. “Misunderstood by many and accepted by few, it brought me a lot of ill will. I was even accused of questioning the local culture and of hindering Portuguese exports to Macau.” At the time, Mr Leandro says, Hong Kong had similar ambitions to root out corruption, a purge led by the newly created Independent Commission Against Corruption. Many years later, when one of his daughters visited the city, Mr Leandro was offered a grab-bag of gifts by prominent members of the community who were quick to assure him that their value was symbolic only. APRIL 2011

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

The economic consequences of the Arab revolt SEVERE UNREST IN THE MIDDLE EAST HAS HISTORICALLY BEEN A SOURCE OF OIL-PRICE SPIKES, WHICH IN TURN HAVE TRIGGERED THREE OF THE LAST FIVE GLOBAL RECESSIONS olitical turmoil in the Middle East has powerful economic and financial implications, particularly as it increases the risk of stagflation, a lethal combination of slowing growth and sharply rising inflation. Indeed, should stagflation emerge, there is a serious risk of a double-dip recession for a global economy that has barely emerged from its worst crisis in decades. Severe unrest in the Middle East has historically been a source of oil-price spikes, which in turn have triggered three of the last five global recessions. The Yom Kippur War in 1973 caused a sharp increase in oil prices, leading to the global stagflation of 1974-1975. The Iranian revolution in 1979 led to a similar stagflationary increase in oil prices, which culminated in the recession of 1980-1981. And Iraq’s invasion of Kuwait in August 1990 led to a spike in oil prices at a time when a US banking crisis was already tipping America into recession. Oil prices also played a role in the recent finance-driven global recession. By the summer of 2008, just before the collapse of Lehman Brothers, oil prices had doubled over the previous 12 months, reaching a peak of US$148 (MOP1,184) a barrel – and delivering the ‘coup de grâce’ to an already frail and struggling global economy buffeted by financial shocks. We don’t know yet whether political contagion in the Middle East will spread to other countries. The turmoil may yet be contained and recede, sending oil prices back to lower levels. But there is a serious chance that the uprisings will spread, destabilizing Bahrain, Algeria, Oman, Jordan, Yemen, and eventually even Saudi Arabia.

Fear premium

Even before the recent Middle East political shocks, oil prices had risen above US$80-US$90 a barrel, an increase driven not only by energy-thirsty emerging-market economies, but also by non-fundamental factors: a wall of liquidity chasing assets and commodities in emerging markets, owing to near-zero interest rates and quantitative easing in advanced economies; momentum and herding behaviour; and limited and inelastic oil supplies. If the threat of supply disruptions spreads beyond Libya, even the mere risk of lower output may sharply increase the “fear premium” via precautionary stockpiling of oil by investors and final users. The latest increases in oil prices – and the related increases in other commodity prices, especially food – imply several unfortunate consequences (even leaving aside the risk of severe civil unrest). First, inflationary pressure will grow in already-overheating emerging market economies, where oil and food prices represent up to two-thirds of the consumption basket. Given weak demand in slow-growing advanced economies, rising commodity prices may lead only to a small first-round effect on headline inflation there, with little second-round impact on core APRIL 2011

inflation. But advanced countries will not emerge unscathed. Indeed, the second risk posed by higher oil prices – a terms-of-trade and disposable income shock to all energy and commodity importers – will hit advanced economies especially hard, as they have barely emerged from recession and are still experiencing an anaemic recovery. The third risk is that rising oil prices reduce investor confidence and increase risk aversion, leading to stockmarket corrections that have negative wealth effects on consumption and capital spending. Business and consumer confidence are also likely to take a hit, further undermining demand. If oil prices rise much further – towards the peaks of 2008 – the advanced economies will slow sharply; many might even slip back into recession. And, even if prices remain at current levels for most of the year, global growth will slow and inflation will rise.

The need for immediate action

What policy responses are available to dampen the risk of stagflation? In the short run, there are very few: Saudi Arabia – the only OPEC producer with excess capacity – could increase its output, and the US could use its Strategic Petroleum Reserve to increase the supply of oil. Over time – but this could take years – consumers could invest in alternative energy sources and reduce demand for fossil fuels via carbon taxes and new technologies. Because energy and food security are matters of economic as well as social and political stability, policies that reduce commodityprice volatility should be in the interest of producers and consumers. But the time to act is now. The transition from autocracy to democracy in the Middle East is likely to be bumpy and unstable, at best. In countries with pent-up demand for higher income and welfare, democratic fervour could lead to large budget deficits, excessive wage demands, and high inflation, ultimately resulting in severe economic crises. So a bold new assistance program should be designed for the region, modelled on the Marshall Plan in Western Europe after World War II, or on the support offered to Eastern Europe after the collapse of the Berlin Wall. Financing should come from the International Monetary Fund, the World Bank, the Europeawn Bank for Reconstruction and Development, as well as from bilateral support provided by the US, the European Union, China, and the Gulf states. The goal should be to stabilize these countries’ economies as they undertake their delicate political transitions. The stakes are high. Unstable political transitions could lead to high levels of social disorder, organized violence, and/ or civil war, fuelling further economic and political turmoil. Given the current risk-sensitivity of oil prices, the pain would not be confined to the Middle East.

Justice

Macau is being used as a transit point on the drug smuggling trail that links the mainland to the rest of the world BY LUCIANA LEITĂ&#x192;O

he trade in illegal drugs is a multi-billion-dollar global business, with the United Nations estimating that the heroin market alone generates a worldwide annual turnover of up to US$55 billion (MOP440 billion). There are no reliable estimates for the size of the trade in Macau but according to the US Department of State, it is one of the primary sources of money laundering and financial crimes in the territory, side by side with other forms of organised crime and illegal gambling. One of the few indicators to assess the size of Macauâ&#x20AC;&#x2122;s illegal drug trade is seizures. The Judiciary Police reported

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Illustrations: Rui Rasquinho

Criminal stopovers

Justice

a total of 102 drug-trafficking cases last year, a slight increase from 99 in 2009. The seizures, the majority of which are believed to be in transit through the territory, were valued at MOP5.03 million (US$625,000), a year-on-year drop of 41 percent. According to the Judiciary Police, heroin accounted for MOP3 million of that haul. Early last month, Customs Service officers found 1.1 kg of heroin at Macau International Airport. Officials say the haul would have fetched about MOP1.2 million on the street. The alleged trafficker was a 35-year-old jobless woman from Sichuan province who had flown from Kuala Lumpur. It was the first drug-smuggling case detected at the airport this year. Shortly after, two other cases were detected. While the street values of drugs in Macau have varied little over the past two years, the Judiciary Police said the trade remained a lucrative earner. One gram of cocaine – by far the most expensive drug in Macau – could fetch up to MOP2,400. Judiciary Police sub-director Chau Wai Kuong explains that basic economic principles of supply and demand rule drug prices. “If the amount [of drugs] circulating in the market is huge, then of course the price will be lower. If the source is scarce, the price will be higher. So, for example, people taking cocaine will be those with higher salaries,” he says.

Risk and reward Factors such as police strategies for curbing drugs, legal penalties and the degree of public awareness regarding drug fighting also had an influence on price, Mr Chau notes. That explains why prices in Macau, Hong Kong and the mainland were different. “Ketamine in India serves as anaesthesia, so the value will be very low. But for Macau, because there is a market, the price will be higher,” he says. According to figures released by the Judiciary Police, heroin was the drug most intercepted last year. At 7.04 kg, the haul was around 60 percent smaller than the quantity seized in 2009. Mr Chau says the drug, which is believed to be mostly destined for the mainland, was intercepted in the city’s main international entry points. “This large number reflects heroin imported by drug mules in transit using Macau International Airport.” APRIL 2011

Ketamine follows heroin on the scale of quantity seized. Last year, 1.1 kg were captured, which amounted to a total street value of MOP341,700. Cannabis, which according to the United Nations remains the most widely used illicit substance in the world, is less popular in Macau.

In transit The Judiciary Police believe most of the drugs in circulation in Macau are in transit to the mainland, which could explain why most of the major discoveries take place at Macau’s entry points. At the airport alone, 13 drug couriers were arrested in 2009. Last year, the number increased to 16. According to the sub-director of the Judiciary Police, the couriers had mainland cities such as Guangzhou or Shenzhen as their final destinations. Mr Chau says heroin found in the SAR was not usually destined for Macau’s streets. Cocaine, given its high price, was usually destined for use by expatriates. The main users of ketamine and crystal methamphetamine, better known by its street name “ice”, are visitors from the mainland, but residents are becoming increasingly big users, he adds. “The drugs come from the mainland and the mainlanders come as tour-

ists and use it here or sell it to someone else. There are also drug addicts from Southeast Asia that use it in Macau,” he says. According to the UN Office on Drugs and Crime’s “World Drug Report 2010”, Macau was also one of the jurisdictions in Asia reporting a rise in use of the party drug, ecstasy.

Small-time users Who are the local users? Where are they buying? And from whom? Augusto Nogueira, president of the Association of Rehabilitation of Drug Abusers of Macau, has learned from the dozens of people that arrive daily at his association’s outreach centre – usually addicted to heroin – that they are buying mostly from minor dealers, who sell just enough to be able to afford the drugs they also consume. Areia Preta is one of the main places drug sales are carried out in Macau, especially in the Triangle Garden area, Mr Nogueira says. People that usually contact his association use an amount of heroin averaging at around MOP200 to MOP300 a day. Given price differences, they also go to the mainland to buy product. “Sometimes they just send an old lady,” he says. As for ketamine, ice and other

MACAU DRUG SEIZURES IN 2010 Drug

Quantity seized (grams)

Street value per gram (MOP)

Total street value (MOP)

HEROINE

7,035.3

420

2,954,826

COCAINE

550.8

2,400

1,321,920

CANNABIS

204.5

14,315

KETAMINE

1,139

300

341,700

1,000

METHAMPHETAMINE (ICE) – CRYSTAL

395

1,000

395,000

METHAMPHETAMINE (ICE) – POWDER

1,000

METHAMPHETAMINE (ICE) – FRAGMENTS

1,000

MDMA (ECSTASY)

4.6

200

920

NIMETAZEPAM

0.3

100

AMPHETAMINE

Total street value of drugs seized

MOP5,028,771

ACCORDING TO FIGURES RELEASED BY THE JUDICIARY POLICE, HEROIN WAS THE DRUG MOST INTERCEPTED LAST YEAR. AT 7.04 KG, THE HAUL WAS AROUND 60 PERCENT SMALLER THAN THE QUANTITY SEIZED IN 2009 recreational drugs, Mr Nogueira, also a member of the government’s anti-drug committee, believes these are usually sold at entertainment venues and are sourced in the mainland. Even though he thinks the quantity of ketamine circulating in Macau might be higher than that of heroin, it is still relatively small, he says. As for why Macau is used as an intermediary point in international drug trafficking to the mainland, it all comes down to legislation, Mr Nogueira says. “In Hong Kong, there is stricter border control as well as a stronger penalty, life in prison.”

Trends emerge It is difficult to gain a complete idea of who uses drugs in Macau. Updated estimates on the percent-

age of population that consumes drugs are not available. A survey from 2002 found that around 0.9 percent were drug abusers. According to the sub-director of the Judiciary Police, two trends are clear: users are picking up drugs at increasingly younger ages and casino personnel are prevalent among the users. Mr Nogueira says among those attending his centre are several croupiers, all addicted to some kind of drug – mostly because they were unable to handle their job pressure or, given the nature of their work, were at some point exposed to the temptation to use. The situation has already propelled some casinos to ask for help from his association to provide assistance to workers. With drug use rising in youngsters,

Teen Challenge, another local drug rehabilitation group, switched in 2008 from dealing with heroin addicts to teens addicted to party drugs. “In the beginning, only rich people used these. Later on, these drugs got into the discos and regular teens [can now] get them,” Teen Challenge men’s centre director Chang Chi Ning says. Currently, 10 men and three women are being treated at Teen Challenge. Most of them have used cocaine, ketamine and ice. However, the group’s 12-month programme has a high success rate, Mr Chang says. “Party drugs are different from heroin, and the chances of getting rid of them are higher.” Heroin ranks very high on most lists grading the addictive properties of commonly abused drugs. APRIL 2011

mbreport WEDDING 52

Happily ever after

India is a growing source of couples wishing to get married here

The wedding industry is booming in Macau. Couples â&#x20AC;&#x201C; locals and tourists â&#x20AC;&#x201C; want to make their weddings as special as they can be, and that comes with a price tag. Associated businesses are looking forward to many years of bliss BY ALEXANDRA LAGES

53 ason proposed to Sally earlier this year and the big day is set for November. Time is running short and the couple is already planning the wedding ceremony and reception. Although November is a very auspicious month, according to feng shui principles, they are looking “for something simple and casual” and not too traditional. In Macau, they can find everything they need, the couple tells Macau Business. “And it’s not very expensive,” one says. Macau residents are not afraid of taking the plunge. Official figures show an upward trend in the number of marriages over recent years. Altogether, 3,103 marriages were registered last year, 3,035

in 2009 and 2,778 in 2008. In 1999, only 1,367 weddings were registered. Not only locals get hitched in Macau. More and more tourists from Hong Kong, the mainland, Taiwan and other places are coming to Macau to get married or just to take the pre-ceremony photos. Getting married in Macau is becoming more than a matter of exchanging vows and celebrating with family and friends. Weddings are turning into a true industry. Although there are no official figures on the economic importance of the wedding industry, the general feeling among those involved is that business is expanding fast. Jonathan Choy has been in the wedding dresses and photography businesses for 25 years. His company, Modern Classic, is based in Hong Kong, but has branches in Macau and Zhuhai. Mr Choy is expecting growth of 30 to 40 percent in his business this year. The Macau branch of his company is the most profitable.

Say cheese The makeup and hairdressing industry is also eyeing double-digit growth in business derived from weddings this year. In’s Bio Beauty Centre manager Kelly Tong foresees a 20 to 30 percent increase in revenue. Clara Petula Chin, director of the CS Wedding specialist beauty centre, is hoping for 20 percent growth this year. “All brides are very concerned about how they look on the big day and spend much money,” she says. In contrast, business is merely steady for companies that hire out cars for weddings. Vang Iek Rent-a-car Service Co general manager Nicholas Fong says weddings account for 20 percent of its revenue. “Weddings are seasonal,” he explains. “They’d rather get married at the beginning or at the end of the year.”

Photographers are also hoping for growth in revenue this year. With its Eastmeets-West character, Macau is becoming increasingly popular as a backdrop for wedding photos taken before the ceremony. In recent years the Macau Government Tourist Office has been promoting the city as a place for couples to pose for the camera. Its efforts seem to be paying off, with couples from Japan, Singapore, Malaysia, Taiwan and Hong Kong coming here for their photo shoots.

Raise your glasses The tourist office describes Macau as “a natural and beautiful shooting site that impresses couples”. It believes the city is more competitive than other places when it comes to photo locations, costs and time spent travelling. “Wedding photography thus attracts young visitors to Macau, which is also beneficial to the related sectors like hotels, spas, restaurants, retail shops and entertainment,” the office says. The government agency adds it will continue to take part in international wedding expos to promote Macau. Jewellery retailer Maria Fatima is hoping wedding photographers will boost its business by getting the company to supply accessories for couples to wear during photo shoots. “We hope they can order big quantities,” says company representative Daniel Sousa. Even wine merchants are elbowing their way in, in an effort to have Portuguese wines served at wedding banquets. NextV Wine is trying to approach couples directly, bypassing the hotels, which dominate the catering business. “We want to get in this market, but it’s difficult because hotels have their own wine suppliers. Thus it’s easier to target the couples directly, rather than the hotels,” says Ricardo Almeida of the company’s marketing department.

Photo: Carmo Correia

WHAT A MACAU WEDDING COSTS Invitations Venue and Chinese banquet Venue and Western banquet Flowers Bride’s outfit hire Groom’s suit hire Makeup and hairdressing Jewellery hire Photography Car hire

MOP1,000 to MOP2,000 MOP6,000 to MOP15,000 per table MOP499 to MOP688 per person MOP8,800 upwards MOP6,000 upwards MOP1,880 upwards MOP3,000 to MOP5,000 per day MOP288 upwards MOP4,000 to MOP30,000 MOP1,200 for eight hours APRIL 2011

mbreport WEDDING 54

Jet-set nuptials Hotels and resorts are luring more and more couples from abroad to get married here BY ALEXANDRA LAGES

ndian weddings are known for their exotic customs. Traditionally, the groom shows up riding a white elephant. In Macau, Indian grooms are offered a white horse instead. Hotels and resorts do their best to put on weddings that resemble as closely as possible what couples from abroad would expect in their own countries. Weddings abroad are the new trend in the global tourism industry and Macau is looking to grab a share of the market.

APRIL 2011

Most of the couples from abroad who get married here come from Hong Kong or Taiwan, but plenty of others are from India or Korea. The Venetian Macao’s executive director of conference management, Gene Capuano, told Macau Business that 80 to 85 percent of the weddings the hotel puts on are for locals and the rest are for couples from abroad. The Venetian started betting big on the wedding business only last year, but it

is already trying to expand. Mr Capuano says one aspect of coming to Macau to get married is that couples usually want their families to attend. “People can basically organise a vacation around it, and that’s important for a couple. It’s getting more of a trip than a wedding.” The Venetian is expecting growth of 30 percent in its wedding business this year. Mr Capuano says weddings already account for 10 percent of the ho-

tel’s banquet revenue. “It’s a big number, and we want to get that to the 15 to 20 percent range.” There is a similar picture at Wynn Macau. A company spokesperson says all the auspicious wedding dates for this year were booked one year in advance. “And even dates that are not auspicious have mostly been confirmed.” The spokesperson says the hotel’s wedding business is expanding. “We see no drop in demand, and we think there’s plenty of room for business growth.”

Spice of life India is a growing source of tourists for Macau generally, and a growing source of couples wishing to get married here. “We see a good environment for business from India, and that’s why we created a wedding package specifically for this country. It’s a three-to-fiveday [package] for the wedding and a

very cultural type of event. They fly in with 50 to 300 members of their family and friends,” says the Venetian’s Mr Capuano. But luring Indians to Macau is a big challenge, as it requires a lot of research and participation in trade shows. “We have regional sales representatives. Indian weddings require a lot of details. We do a lot of research, trade shows, and we reach out to their wedding planners to understand what we have to do,” Mr Capuano says. Apart from India, the Venetian is also looking for wedding business from the mainland, Taiwan, Japan and Korea. MGM Macau is aiming for the same markets. In July 2008 it put on a large, one-of-a-kind traditional Indian wedding that made the news. Some 500 guests and a service staff of around 200 came from abroad, most on specially chartered flights from Mumbai. The tra-

ditional Marwari Hindu wedding was prepared by a team of professional planners, decorators and chefs, who worked for months in India and in Macau before the event and who had authentic Indian materials and food shipped over. Contacted by Macau Business, MGM would not say what its plans for the wedding business are. It said only that patronage has been increasing since the hotel opened in 2007.

Beats the beach Wynn Macau and the Westin Resort Macau welcome couples from abroad, but local couples account for most of their wedding business. “Our local guests are very important to us, as weddings are important events for the Macau community. However, in line with our overall approach, we will also continue to attract elite international guests from across the world,” says APRIL 2011

mbreport WEDDING 56 a spokesperson for Wynn. “Our weddings are ideal for sophisticated consumers who require the highest standards in luxury and service, especially from key regional markets such as the mainland, Taiwan, and around Asia.” The Westin Resort is targeting the Philippine and US markets, betting on Western-style weddings. “Approximately 70 percent of the clients are from Macau, and 30 percent are from overseas, such as Hong Kong, the mainland, the United States and the Philippines,” says the hotel’s marketing communications manager, Ada Chan. Each hotel or resort tries to offer its own special wedding packages, industry insiders say. This gives Macau a competitive advantage. “You can’t get that in Thailand or some other resort destination. There you get only a resort on the beach and that’s your selection: a beach wedding. Here you can do different themes. There’s a lot of different areas where you can do a wedding”, the Venetian’s Mr Capuano says.

Cutting the cake The Venetian offers a one-stop shop. “We have an in-house florist. They actually do all the décor for weddings. We are extending it to do more in-house business, as opposed to having it outsourced,” he says. The Westin Resort Macau’s position by the sea has proved to be a selling point. “In 2007 we set up a unique outdoor marquee, and our wedding business has continued to increase ever since. Most of our clients prefer to do their wedding at our hotel because of our outdoor venue, where they have more flexibility to create their once-in-a-lifetime memorable wedding,” Ms Chan says. Every big hotel has a wedding planning department that oversees both the venue and the banquet. But competition seems not to bother them. There is room in the market for everyone, Mr Capuano says. “If you look at each one of the hotels, we are a little bit different from each other. Six to eight weddings per month for us would be probably our maximum, because we utilise our meeting space for corporate events during the week,” he says. “The smaller hotels like Wynn and MGM won’t be necessarily looking for destination weddings like we are, because they want to use their rooms for casino guests.” APRIL 2011

Wanted: value for money

The wedding industry is racing ahead, but faces some hurdles BY ALEXANDRA LAGES

igher quality across the full range of services is needed to improve Macau’s wedding industry, says Hong Kong wedding planner Jacco Yeung Kit Lung. Mr Yeung believes that not only hotels but also professional photographers, gown designers and wedding planners

have to enhance the quality of their services so they can compete with Hong Kong and the mainland. “This comprehensive, full service is where other cities, like Hong Kong, are stronger than Macau at the moment,” he says. To meet this need, the Macau Productivity and Technology Transfer

Photo: Carmo Correia

Go East, young man and wife T

Centre has been promoting its Wedding Gown and Bridal Image course for more than five years. The centre’s senior manager, Victoria Alexa Kuan, says quite a lot of people have taken the course, with intakes of around 15 each time. Ms Kuan is not bothered by the question of whether the wedding industry has sufficient skilled workers, stressing instead the importance of dress design to the fashion industry. Mr Yeung says there is increasing price competition in the wedding industry, with mainland cities leading the way. Some local couples are already looking at the other side of the border as a place to wed. Johnny and Andy are planning to get married at the end of the year, but they are worried about the cost of the wedding. “Prices are rising and that means pressure for young couples,” one says. “We

can see a five to 10 percent price rise for all things related to weddings, especially food and beverage and photography.” The director of the CS Wedding beauty centre, Clara Petula Chin, says local couples are willing to spend more on their weddings, and that the industry is taking advantage of this and strong demand. “In the past two years, the Macau economy developed a lot, and people spend extra on makeup and hairstyling for the big day,” she says. Even with the need to improve quality and the increasing competition, Mr Yeung is sure that the wedding industry will continue to grow in Macau as the purchasing power of locals increases. This means business opportunities, he says, pointing out that Macau has a few freelance wedding planners, but no company that fully integrates all the elements of a putting on a good wedding.

raditionally, red is the colour of Chinese weddings. The bride’s wedding gown is often red, as are the wedding invitations, wedding gift boxes or lai si envelopes for cash gifts. Usually, only the couple’s close relatives and friends attend the wedding ceremony. Just after that and before the wedding reception and banquet, the bride will serve tea to her in-laws. Before the big day, the couple will usually go to a professional studio for wedding pictures. Chinese wedding photo albums do not contain pictures of the ceremony, but photographers are usually hired to record it anyway. The reception is very elaborate. After a speech delivered by a specially hired master of ceremonies, there is the ritual of cutting the cake. Cakes have many layers, symbolising a ladder to success that the couple will climb. That is why couples cut the cake from the bottom and work their way up. The banquet that follows may consist of a nine-course or 10-course meal and musical entertainment. Some brides change their outfits at least three times during the reception. Chinese weddings are still very traditional. But they are becoming more Western. “More and more you see modernstyle weddings, because people are influenced by different cultures,” says industry insider Jonathan Choy. APRIL 2011

Property | Market Watch

Old gold

Photo: Carmo Correia

The redevelopment of Macau’s older neighbourhoods will be the next big thing in real estate but only after the politicians have had their say

he bill that draws the outline for the renovation of city’s old neighbourhoods has finally reached the Legislative Assembly, having had its first reading last month. The renovation of older districts could unlock as much as MOP50 billion (US$6.3 billion) in real estate value, according to some industry insiders. The price of property near the

APRIL 2011

redevelopment zones is also expected to rise. The government says there are about 3,600 buildings that are at least 30 years old, containing about 29,000 homes and other premises. The authorities have been discussing renewing old districts since at least 2006. The redevelopment bill, if passed, would give most of the task to private developers. It says work in redevel-

opment zones can start if a developer owns 80 percent of a building. Otherwise, the government will get redevelopment going, but only if 70 percent of the owners support the project – in which case the authorities will hold an open tender to find a developer. It is a rule that would make conflicts between owners and developers likely, according to several legis-

lators, who have pressed for changes. The bill has gone to a Legislative Assembly committee for further review and amendments are likely. Among the members of the committee dealing with the bill are notable developers Fong Chi Keong and Mak Soi Kun. The committee’s work is expected to last several months. Only after it issues its report will the legislation

Record land repossession T

he government took back 71,800 square metres of land in the Seac Pai Van area last month. It is the largest plot ever repossessed, according to official records. It will now be used for roads serving the future Seac Pai Van public housing complex. The plot consists of a parcel of 50,000 square metres that was allegedly illegally occupied and 17 other adjacent pieces of land, with a combined area of 21,800 square metres, that were being used for purposes other than those for which they had originally been granted. In the last two years the government has taken back 25 plots of land, with a combined area of around 141,000 square metres.

Shun Tak profit drops S receive a final reading and be put to the vote. After that, complementary legislation will be required.

On the right foot Even with the renovation of old neighbourhoods still some way off, the property market continues to perform strongly. According to the latest data from the Statistics and Census Service, 2011 start-

ed off on the right foot. In January, 1,541 homes were sold, 19 percent more than a year before. These deals were worth MOP3.79 billion (US$473 million), 21 percent more. There were 532 transactions in the primary market, 52 percent more than a year before, with a value of MOP2.14 billion, 7 percent more. Ricacorp (Macau) Properties executive director Jane

hun Tak Holdings announced that its annual net profit fell 70 percent last year to HK$853.3 million, owing to poor performance in its property, transport and investment divisions. Revenue rose 0.9 percent to HK$3.2 billion from HK$3.17 billion. The One Central complex, a joint venture between Shun Tak and Hongkong Land Holdings, continued to be one of the jewels in the companyâ&#x20AC;&#x2122;s crown. By last month 79 percent of the space in The Residences and Apartments at Mandarin Oriental had been sold, and by the end of last year 97 percent of the apartments in One Central Residences had been handed over and 81 percent of the shopping mall leased. The company expects a â&#x20AC;&#x153;busy year aheadâ&#x20AC;?, as it plans to put space in several big developments on the market, including Nova City phase four and a columbarium, both in Taipa. Investment bank Morgan Stanley expects Shun Tak to make profit of HK$222 million on the columbarium and of HK$539 million on the serviced apartments at One Central this year. APRIL 2011

Property | Market Watch

Residential units sold as per record of stamp duty* Year 2010

2011

Average transaction value of residential properties Value (MOP thousand)

Month

Number of Transactions 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 January 1,541

5,000

4,000

3,000

2,000

1,000

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

Month

2010

January March April May June July August

Source: DSEC

September October November December 2011

January

2,209

Mar

Apr

May

Jun Jul 2010

Aug

13%

Non-Residents

Nov

Dec

Jan 2010

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

Q3 Q4 2007

Q3 2008

Q3 2009

Total value of residential transactions in the first month of 2011:

MOP

3,790,497,000

87%

Apartments in the second phase of One Oasis Cotai South went on sale last month and more than 600 of the 700 on the market were snapped up within a week, at prices ranging from HK$4,700 to HK$5,500, making it the hottest property in the first quarter. Ms Liu believes the mo-

Q3 2010

Proportion of buyers

20% 80%

Non-Residents

Residents

APRIL 2011

Oct

Value (MOP)

Proportion of buyers

Liu says the market has performed well so far this year. Space in Villa de Mer Residence Towers in the Oriental Pearl district went on sale at the Lunar New Year and 80 percent of the batch of 350 apartments have been sold at prices ranging from HK$4,500 to HK$5,500 per square foot, she says.

Sep

35,000

* Notes: 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.

Total number of buyers in residential transactions in the first month of 2011:

Feb

Average transaction price of residential units per square metre

Value (MOP million) 3,140 1,995 2,806 6,180 4,281 3,319 2,642 1,889 3,687 3,421 7,569 5,010 3,790

February

Jan

Residents

mentum will continue, as it is expected that space in a number of new housing developments will go on the market this year, including the complex developed by Chinese Estates at Avenida Wai Long in Taipa, near the airport. With the opening of Galaxy Macau in May and,

later on, the development of Sands Chinaâ&#x20AC;&#x2122;s parcels five and six in Cotai, more labour is expected to flock into the city, driving up demand for apartments. As there were fewer than 1,000 dwellings under construction last year, Ms Liu expects prices to continue to go up.

Property | Market Watch

61 Notable residential property transactions - 16/02 to 15/03, 2011 District Taipa Taipa Coloane Macau Macau Macau Macau Taipa Macau Coloane Coloane Macau Macau Macau Macau Macau Macau Macau Taipa Macau Macau Macau Coloane Coloane Coloane Taipa Coloane Taipa Coloane Macau Macau Coloane Macau Macau Coloane Macau Macau Taipa Taipa Macau Macau Macau Taipa

Building/Street One Grantai Kings Ville One Oasis Cotai South One Central The Residencia Macau The Residencia Macau L’Arc One Grantai L’Arc One Oasis Cotai South One Oasis Cotai South The Residencia Macau The Residencia Macau The Residencia Macau The Residencia Macau The Residencia Macau La Oceania The Residencia Macau Nova City The Residencia Macau One Central The Residencia Macau One Oasis Cotai South One Oasis Cotai South One Oasis Cotai South Pearl on The Lough One Oasis Cotai South Nova City One Oasis Cotai South Polytec Lote P Polytec Lote P One Oasis Cotai South The Residencia Macau Villa de Mer One Oasis Cotai South Polytec Lote P Polytec Lote P The Buckingham Supreme Flower City The Residencia Macau Villa de Mer One Central Tak Fok Hoi Keng Un

Unit Block 1, L/F, unit A Block 1, H/F, unit B (with car park) Block 4, L/F, unit B Block 4, H/F, unit A Block 2, M/F, unit A Block 2, M/F, unit A H/F, unit E Block 3, L/F, unit K H/F, unit F Block 6, L/F, unit A Block 1, L/F, unit B Block 3, L/F, unit A Block 5, L/F, unit A Block 3, L/F, unit A Block 5, L/F, unit A Block 5, L/F, unit B H/F, unit D Block 5, L/F, unit B Block 7, L/F, unit A (with car park) Block 5, L/F, unit A Block 7, H/F, unit G Block 5, L/F, unit B Block 9, M/F, unit E Block 2, M/F, unit D Block 2, L/F, unit D Block 2, L/F, unit H (with car park) Block 9, M/F, unit C Block 7, M/F, unit A Block 9, L/F, unit C Block 7, H/F, unit A Block 7, H/F, unit B Block 9, L/F, unit C Block 1, M/F, unit C (with car park) Block 2, M/F, unit A Block 9, L/F, unit D Block 7, H/F, unit B Block 7, H/F, unit B L/F, unit B (with car park) M/F, unit I Block 1, H/F, unit C Block 7, H/F, unit C Block 1, M/F, unit A M/F, unit C (with car park)

61 61

Source: Centaline, Ricacorp & Midland

Floor area (sq. ft) 5,205 3,230 3,333 2,326 2,448 2,448 2,261 2,211 2,261 2,170 2,361 1,750 1,690 1,750 1,690 1,696 2,214 1,580 2,505 1,690 1,178 1,696 1,246 1,781 1,699 2,055 1,811 2,503 1,818 1,128 1,128 1,818 1,570 1,695 1,770 1,128 1,128 1,873 2,060 1,575 1,193 1,273 3,400

Sale price (HK$) 42,161,000 22,000,000 21,265,000 17,440,000 14,156,400 13,723,000 13,380,000 13,044,900 11,983,300 11,880,000 10,500,000 9,412,000 9,044,000 8,883,000 8,871,000 8,857,000 8,800,000 8,572,800 8,400,000 8,380,100 8,300,000 8,206,200 8,152,650 8,000,000 7,953,000 7,950,000 7,841,000 7,800,000 7,759,000 7,617,000 7,566,000 7,516,000 7,500,000 7,500,000 7,499,000 7,406,000 7,326,000 7,242,800 7,180,000 7,097,000 7,062,000 7,000,000 7,000,000

Price per sq.ft. (HK$) 8,100 6,811 6,380 7,498 5,782 5,605 5,918 5,900 5,300 5,474 4,447 5,378 5,351 5,076 5,249 5,222 3,975 5,426 3,353 4,959 7,046 4,839 6,543 4,491 4,681 3,869 4,329 3,116 4,267 6,753 6,707 4,134 4,777 4,424 4,236 6,566 6,495 3,867 3,485 4,506 5,920 5,498 2,059

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

Notable commercial property transactions - 16/02 to 15/03, 2011 Type Shop Shop Shop Shop Shop Shop Shop Shop Shop Shop Office Office Office

Building/Street Rua do Dr. Pedro José Lobo Rua do Cunha Avenida de Almeida Ribeiro Avenida da Praia Grande Avenida do Almirante Lacerda Escada Quebra-Costas Rua do Campo Avenida do Almirante Lacerda Leisure Garden Rua do Rosário Centro Comercial Wa Pou Centro Comercial Wa Pou Centro Comercial Wa Pou

Unit Shop Shop Shop Shop Shop Shop Shop Shop Shop Shop L/F, unit L L/F, unit C L/F, unit A

Source: Centaline

Floor area (sq. ft) 9,000 1,800 3,000 3,185 2,088 1,382 700 671 725 1,260 903 788

Sale price (HK$) Price per sq.ft. (HK$) 82,000,000 42,000,000 27,500,000 20,000,000 12,500,000 10,000,000 9,800,000 9,380,000 6,300,000 3,500,000 1,638,000 1,174,000 1,024,000

9,111 23,333 9,167 6,279 4,789 7,091 13,400 9,389 4,827 1,300 1,300 1,299

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

APRIL 2011

Property | Market Watch

Notable residential property rentals - 16/02 to 15/03, 2011

Source: Centaline, Ricacorp & Midland

District

Building/Street

Unit

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

One Central Macau Residences One Central Lâ&#x20AC;&#x2122;Arc One Central Macau Residences Nam Van Peninsula Nova City One Central Edf. Kam Fai Kok Nova City Nova City Edf. Kam Yuen One Central Nova City Prince Flower City The Residencia Macau Nova City Prince Flower City Nova City Nova Taipa Garden Nova City Kings Ville The Praia The Praia Nova City Kings Ville The Pacifica Garden The Pacifica Garden The Pacifica Garden Kings Ville The Praia Prince Flower City La Cite Treasure Garden Nova City Nova City Nova City Nova City Nova City Nova City The Residencia Macau The Residencia Macau Jardins do Oceano La Cite The Residencia Macau La Cite The Praia Nova Taipa Garden The Pacifica Garden Flower City The Praia The Praia Nova City Edf. Walorly Edf. I On

Block 1, H/F, unit E Block 4, H/F, unit B M/F, unit A Block 4, M/F, unit B Block 3, H/F, unit E L/F, unit G Block 7, H/F, unit H L/F, unit CD Block 11, H/F, unit B Block 9, M/F, unit D (with car park) M/F, unit J Block 1, H/F, unit C Block 13, M/F, unit A Block 2, H/F, unit I Block 4, L/F, unit C H/F, unit C Block 3, M/F, unit N Block 15, H/F, unit A Block 23, H/F, unit H Block 16, L/F, unit C Block 3, L/F, unit I Block 1, L/F, unit D Block 3, M/F, unit M H/F, unit F Block 2, H/F, unit F Block 2, M/F, unit I Block 2, M/F, unit K Block 2, M/F, unit K Block 1, M/F, unit A Block 3, M/F, unit N Block 2, M/F, unit G Block 2, L/F, unit D Block 2, M/F, unit G Block 6, L/F, unit B Block 6, L/F, unit B Block 14, L/F, unit F Block 15, M/F, unit F Block 6, L/F, unit F L/F, unit A Block 4, M/F, unit C Block 4, L/F, unit C Magnolia Court, L/F, unit G Block 4, L/F, unit A Block 5, L/F, unit D Block 4, M/F, unit A Block 4, H/F, unit W Block 20, L/F, unit C H/F, unit K Block 5, M/F, unit AD Block 4, M/F, unit Y Block 4, H/F, unit U Block 13, H/F, unit C L/F, unit Z L/F, unit G

Floor area (sq. ft) 1,819 2,585 2,261 2,585 3,150 2,505 1,235 1,591 1,984 2,503 1,349 918 1,731 1,645 1,209 1,318 1,522 1,731 1,880 1,314 1,511 1,558 1,558 1,339 1,422 1,197 1,216 1,216 1,496 1,558 1,674 1,696 1,708 1,318 1,318 1,340 1,731 1,340 1,088 1,209 1,209 1,503 1,616 1,199 1,624 979 1,177 1,216 1,475 938 1,046 1,333 1,600 1,600

Rent price (HK$) 30,000 29,000 28,000 27,000 25,000 20,000 18,000 16,500 16,000 16,000 15,000 13,000 13,000 12,800 11,000 11,000 11,000 11,000 11,000 10,000 10,000 10,000 10,000 9,800 9,800 9,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 9,490 9,460 9,300 9,300 9,008 9,000 9,000 9,000 9,000 9,000 8,800 8,800 8,500 8,500 8,300 8,300 8,000 8,000 8,000 8,000 8,000

Price per sq.ft. (HK$) 16.49 11.22 12.38 10.44 7.94 7.98 14.57 10.37 8.06 6.39 11.12 14.16 7.51 7.78 9.10 8.35 7.23 6.35 5.85 7.61 6.62 6.42 6.42 7.32 6.89 7.94 7.81 7.81 6.35 6.10 5.68 5.60 5.56 7.20 7.18 6.94 5.37 6.72 8.27 7.44 7.44 5.99 5.57 7.34 5.42 8.68 7.22 6.83 5.63 8.53 7.65 6.00 5.00 5.00

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

Notable commercial property rentals - 16/02 to 15/03, 2011 Type

Property

Unit

Shop Shop Shop Office Office Office

Avenida de Almeida Ribeiro Edf. Vai Chui Garden Avenida de Horta e Costa China Civil Plaza Centro Comercial Grupo Brilhantismo Centro Comercial Grupo Brilhantismo

Shop Shop Shop L/F, unit C H/F, unit O H/F, unit P

Source: Centaline

Floor area (sq. ft) 1,668 8,292 630 1,000 653 653

Rent price (HK$) 350,000 90,000 45,000 13,500 8,000 8,000

Price per sq.ft. (HK$) 209.83 10.85 66.67 13.50 12.25 12.25

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

APRIL 2011

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

High-rise living IF YOU WANT TO MOVE TO YOUR OWN HOME, THERE ARE ONLY TWO CHOICES; DREAM ON OR MOVE ON acau’s property prices are sky high. I despair at the triumphalist tone of those in Macau who equate rising property prices with success. If ever there were a false equation, it surely must be this. Apartment prices do not just rise; they “soar”, “rocket” or “boom”. This is the language of the gross, the greedy, the gluttonous. Set this against the reality of the single adult, newly-weds or would-be weds, seeking to be first-time buyers in Macau, each earning the median salary of MOP9,000 a month (US$1,125). It would take a single person on MOP9,000 over 27 years’ income to buy a property costing MOP3 million: over half of a working lifetime’s income, even if one excludes every other expenditure and the interest payments. And, by definition, 50 percent of the working population earns less than the median monthly salary. Low-income individuals or families cannot consider buying even a cheap property, as just saving for the down payment is unaffordable. To talk about high property prices being somehow “good”, or about “affordable housing” (the latest catchword in Macau) at MOP1.5 million to MOP3 million, is utterly unrealistic. It is inexcusable for the greedy property speculators, many from outside Macau, to try to exonerate themselves with their talk of “market forces”, the benefits of the “free market”, increasing people’s opportunity to move up the value chain, and the need for non-interventionist policies in order to let the blind wisdom of the market exert its own invisible hand for the social good.

Poor second best

Behind the glitz of Macau’s property market are grubby little speculators rubbing their hands with glee. Their ampliative promise is a chimera for all but high earners. Their uncaring pursuit of profit in the housing market, at the expense of humanitarianism and serving the social good, is gutter behaviour. The government talks of building more social housing. Social housing is better than nothing, but it is a poor second best. As a local economist wrote: “Social housing is a symptom of a sick housing market. It is a poor substitute for ensuring a sufficient supply of housing such that their price is in line with local incomes. Macau should not follow the example of Hong Kong, and need not do so, because of the ease of [land] reclamation.” There must be a massive and rapid increase in the housing stock in Macau. Why are there protracted government delays in land reclamation and housing construction? Such delays benefit the rich, not the rest of us. The director of the Lands, Public Works and Transport Bureau is on record as saying that the government has been trying to persuade developers to build “affordable housing” rather than luxury units. But where is the evidence of developers paying any attention, or even of any realistic assessment of what “affordable housing” really means? It is simply noise. It does not make the problem of sky-high property prices

go away but creates an underclass in Macau of those in social housing, rented or very cheap property. The low-paid become the left-behind, the left-out, the excluded. In a society that purports to value inclusion, harmony, and – if we believe the government’s televised blather “building a lovely home,” this is a cruel joke.

The lumpenproletariat

What is being overlooked here is the reality of affordability. Property and property prices must be considered relative to income, not as an absolute measure separate from income. Rising property prices do not always indicate that the market is booming, only that the price is going up or that people are increasingly consumed by greed. The government’s present actions in the property market do not tackle the sources of the problem: low incomes, undersupply and over-demand for genuinely affordable homes, high start-up costs for first-time buyers and so on. The president of the Association of Real Estate Agents in Macau is on record as forecasting that despite the government’s measures to curb property speculation in the property market the prices will go on rising by between 5 and 10 percent in 2011. It makes no difference to many people whether property prices are MOP1.5 million or MOP8 million; they are still unaffordable. The simple message is that they do not have the money. It is not a matter of climbing up the property ladder, it is about getting on the wretched ladder in the first place. So, gone are the days of citizens even contemplating owning their own home. Say hello to a lifetime of rented accommodation, lining landlords’ pockets, and keeping Macau’s low-paid workers as the lumpenproletariat. APRIL 2011

Property

Photo: LuĂs Almoster | mspagency.org

A place to park A your cash Private parking spots are proving to be a good investment, with double-digit rates of return BY MANDY WONG

APRIL 2011

s the government tries to cool the residential property market in Macau, investors are looking to private parking space as a cheaper but also profitable alternative. The lack of parking spots in the city and the growing number of private vehicles almost makes such investment a no-brainer, industry insiders say. What is more, the authorities have already warned they are considering increasing public parking fees, besides introducing other measures to promote public transport. So it is expected that the price for private parking space will

65 a year before. Prices have also risen in areas like NAPE, where there was an increase of 30 to 40 percent last year, Mr Chan says. In Taipa and Coloane, parking space is not as scarce as it is on the peninsula but prices have surged by more than 40 percent in some areas, he says. There are two driving factors: the low base for comparison and the construction of hotels and high-end housing. In the fourth quarter of last year, 2,990 car and motorcycle parking spots were sold, more than double the number sold in the third quarter, Statistics and Census Service data show. The average price was MOP319,000, 42 percent more than in the fourth quarter of 2009. In contrast, the average price of residential space in the fourth quarter of last year was MOP33.397 per square metre, 30 percent more than a year before.

High demand Mr Chan says demand for private cars and parking space alike has gone up with the rapid economic development

IN THE FOURTH QUARTER OF LAST YEAR, 2,990 CAR AND MOTORCYCLE PARKING SPOTS WERE SOLD, MORE THAN DOUBLE THE NUMBER SOLD IN THE THIRD QUARTER continue to go up in the near term. According to the real estate registry, a car parking spot in the crowded Areia Preta district can cost up to MOP750,000 (US$93,750), 25 times more than in 2005. Eric Chan Lik Kei, the general manager of CarparKing Co Ltd, a real estate agency specialising in parking space, says prices are expected to continue to rise this year. The company’s figures indicate that last year a parking spot on Avenida Horta e Costa could fetch up to MOP950,000, 50 percent higher than

that has followed the liberalisation of the gaming industry. But it is only recently that a rise in the supply of parking space has begun to follow the rise in demand. According to official figures, 5,100 new car parking spots were built last year, when the number of private cars grew by only 3,300. However, demand has always been greater than supply. Mr Chan estimates that there are only about 40,000 private parking spots, meaning there is roughly one for every two private cars. Exacerbating the shortage of parking space is the practice of

owning more than one parking spot – typically one where you live and another where you work. For the government, this is not a big problem. Officials have often dismissed the idea that there is lack of available parking by remarking that several public car parks are still far from being fully utilised, particularly their motorcycle bays. Even so, the government has been encouraging the inclusion of parking space in new developments. Developers agree with the need for more parking space. In February , the head of the Macau General Real Estate Association, Chong Sio Kin, said the government should make it a policy to allow developers to add more parking space in residential projects in response to increasing demand.

Low maintenance Some investors contacted by Macau Business said they had already seen the value of their parking slots increase 20fold. The rise in prices is due not only to economic growth but also to the 2007 traffic law, which increased fines for parking offences and made it tougher to avoid paying them, thus increasing the attraction of private parking spots. Buying parking space, whether you want it for your own use, for renting out or for a long-term investment, is a peculiarity of Macau, says Mr Chan. The cost of a parking spot can be below MOP1 million, making it a real estate investment within the reach of many people that cannot afford to invest in residential or commercial real estate. You can even get a mortgage from a bank for parking space. And it is a type of real estate that is easier to manage than residential or commercial property, having low maintenance costs. Mr Chan says the average rent for a parking spot can be close to MOP2,000 in areas where few other options are available. He says a short-term investment in parking space in Avenida Horta e Costa, Patane or Areia Preta is likely to deliver good returns because demand exceeds supply there, at least for now. Taipa and Coloane are good for long-term investment, because of the big residential and other projects due to be undertaken there, Mr Chan advises. ADDITIONAL REPORTING BY EMANUEL GRAÇA APRIL 2011

Property

One Oasis phase II South Residence Achieves Remarkable Market Response Huge patronage from local and Mainland buyers

APRIL 2011

ne Oasisâ&#x20AC;&#x2122; second phase South Residence, an upcoming new landmark of luxury residential complex development in Macau driven by a joint venture of well-established developers, has unveiled its brand new show suites and kicked off its public sale. Within the public sale, more than 600 units (over 95%) were fetched up by purchasers. The average selling price was capped at close to HK$5,000 per square foot, generating a total revenue of HK$5 billion. During the public launch, a record high transaction price for South Residence was recorded at over HK$6,000 per square foot. This highest price was achieved by a four-bedroom unit in tower 7 with a GFA of approximately 2,700 square feet and commanding a panoramic view of the Cotai Strip, an international golf course and a Southern Europeaninspired garden. According to the developers, there has been a lot of pent-up demand accumulating in the market for a period of time. As such, the public launch of South Residence aroused great interest and hot responses from the market. South Residence is the first launch of a new large-scale residential development in Macau this year. The developmentâ&#x20AC;&#x2122;s sales office featuring exquisitely decorated show suites is located on 3/F and 4/F, Central Plaza, 61 Avenida De Almeida Ribeiro, Macau. The exquisitely decorated and spacious show suites offer world famous brands as a standard provision of both kitchen and bathroom fittings, and were highly praised by potential buyers and viewers. The purchasers of South Residence mainly came from Macau. Others were from Hong Kong, Mainland China and overseas,

Sponsored Feature

Lotus Bridge

Cotai Strip* Caesars Golf Macau

Upcoming University of Macau Hengqin Campus

Macau Tower

Upcoming tunnel linking University of Macau Hengqin Campus

*Including The Venetian Macao, City of Dreams (Crown Towers, Grand Hyatt and Hard Rock hotels), Four Seasons Hotel, Galaxy Macau and many more.

showing the marketâ&#x20AC;&#x2122;s appetite for high quality luxury residences. One Oasis comprises residential apartments, deluxe villas, a central clubhouse, a one-stop lifestyle shopping centre, a hotel and landscaped gardens. Its second phase South Residence containing four residential towers with approximately

700 units is due for completion at the end of 2014. Bordering an internationalstandard golf course and boasting 50 million square feet of greenery, One Oasis is also in close proximity to a treasure trove of entertainments at the Cotai Strip. In neighbouring Hengqin, billions of dollars worth of investment led by the

Central Government of China are being funneled into the development of a variety of landmark projects. In addition to the strategic location, another prominent feature of One Oasis is its southern European-styled clubhouse, Club Oasis, which is one of the latest masterpieces of Steve Leung, a globally famous interior design-

er. Club Oasis brings over 100 facilities and services under one roof and boasts Macauâ&#x20AC;&#x2122;s largest outdoor infinity pool. The vast lush spaces will ensure that One Oasis is above all a green community, offering its privileged residents a healthy living environment. (For more information, please visit www.one-oasis.com or contact 853-2823 2323)

APRIL 2011

“‘THE HOUSE OF DANCING WATER’ IS MOVING TOWARDS PROFITABILITY. IT IS AT A BREAK-EVEN LEVEL CURRENTLY” APRIL 2011

CEO Interview

Not just noodles

Melco Crown Entertainment has just added one more asset to its non-gaming portfolio, with the opening this month of Cubic, a 2,800 square metre, two-storey nightclub at City of Dreams. In an exclusive interview with Macau Business, the company’s co-chief operating officer for operations, Nicholas Naples, says Galaxy Macau is not a threat, and says he expects non-gaming business to continue to grow this year at Melco Crown BY EMANUEL GRAÇA PHOTOS BY CARMO CORREIA hat has the performance of non-gaming been like, both at City of Dreams and Altira Macau?

Nicholas Naples The performance of non-gaming this year has been particularly excellent. Not only has there been stunning market growth, but City of Dreams and Altira have both become a popular choice for casino gaming and leisure seekers coming to Macau from all over Asia, predominantly China. Our hotels are very busy, running very good occupancy rates. It seems Melco Crown has a clear non-gaming positioning for each of its properties: family entertainment at City of Dreams and fine dining at Altira.

Each property does have a different strategy. Altira is a Forbes five-star

recognised hotel that does have highend food and beverage. It has a very strong local following from the food and beverage and from the gaming perspectives. It is more of an urban concept, so you don’t see families attracted to that product. It is more couples and singles that go there, and the locals that are looking for a unique dining experience. City of Dreams is different in the sense it is an integrated resort, offering amenities for all kinds of visitors, whether you are a family or whether you are single. Our target customer, between the ages of 25 and 55, will find something in City of Dreams. Clearly, “The House of Dancing Water” was a change-trigger. Did it help in raising City of Dreams’ profile?

It made the market more aware that City of Dreams exists and that it is a high-quality player in Macau. The show

itself is world-class, but City of Dreams is also world-class. The two together became a very powerful combination that helped get the word out faster – and to a wider market – that we exist in Macau. When the show opened, some analysts were worried the running costs of “The House of Dancing Water” were very high. Is the show sustainable on a standalone basis?

The show certainly is sustainable on a stand-alone basis. It is performing beyond anybody’s expectations. From our perspective, “The House of Dancing Water” is a unique element to City of Dreams that none of our competitors will be able to duplicate any time soon. Is the show profitable?

The show is moving towards profitability. It is at a break-even level currently. APRIL 2011

CEO Interview

What has been the occupancy rate for “The House of Dancing Water”?

It is hovering around 95 to 96 percent. Now, there is Club Cubic. How does that add to the overall offering of City of Dreams?

Cubic is also very unique. It is going to be one of the most unique nightclubs in Asia. Certainly I have never seen anything like it in Hong Kong or around the region. So I think what it does is reinforce the statement that City of Dreams is the centre of entertainment in Macau and that what we offer is truly unique to the region. Again, some analysts wonder if the place is not too big for the local market.

It is a big space but it is actually broken down into approximately three or four spaces. There is the main nightclub, there is the VIP nightclub and there are party rooms and such. There is a line-up of different amenities in the way the space is portioned. So, when you walk in, you don’t sense it is an enormous club. But it does have different offerings for different levels of customers. So, we believe it is appropriately sized for the type of clientele that it will attract. The opening of Cubic symbolises the last major piece missing in the original City of Dreams layout. Are you working on any other new additions to the property on the nongaming side?

We have a number of things we would like to do in the future. We have some undeveloped space that we are looking at and trying to determine strategically what is the best use for it, whether it is in the casino, adjacent to the casino or in terms of hotels and restaurants. There are a number of options available to us right now. Now it is a good time, with Galaxy Macau opening, with [Sands China’s] parcels five and six [in Cotai] opening, for us to stand back and assess how the market is growing and then add some new offerings in 2011 and 2012 that further differentiate our proposition from our competitors’. APRIL 2011

That is inside the City of Dreams. But on the plot where it sits, you still have an undeveloped parcel of land.

destination? Currently, you already run a joint shuttle bus connecting the properties.

We consider the hotel development to be a mid-term project. It is something we are studying very carefully right now, to make sure we build the right product at the right time.

We are very eager to increase cooperation and have done so with executives from Sands China, as well as from Galaxy Entertainment. The more cooperation amongst the concessionaires in Cotai, the better off we will be.

Galaxy-sized growth In May, Galaxy Macau will open its doors. They do replicate things that have been successful in City of Dreams, like the wave pool, and they will also have a big nightclub. Are you afraid of that competition?

Actually, we welcome competition. Galaxy Macau is also a new proposition. They will bring a lot of new people to Macau. People usually go to more than one place – that is just the way Macau works. If Galaxy Macau helps to grow the market, City of Dreams will get its fair share automatically and we will both do better. Will we see more cooperation in the future between the gaming operators in Cotai to promote that

Reason to smile N

icholas Naples started as Melco Crown Entertainment’s co-chief operating officer for operations last August. He is responsible for the operations of all the leisure and hospitality businesses, across the organisation, including marketing and brand strategies. He has had reason to smile, so far. In the fourth quarter of last year nongaming revenue at City of Dreams was 109 percent higher than a year before at US$47.6 million (MOP381 million), while at Altira Macau it was US$7.6 million, falling by 1 percent. However, that represented just 7 percent of Melco Crown Entertainment’s total operating revenue. With 25 years of experience in the hospitality industry, Mr Naples has held executive leadership positions in several luxury hotel and casino companies, including Harrah’s Entertainment, Four Seasons and Ritz-Carlton. Before joining Melco Crown Mr Naples was the consulting executive vice-president of Sands China, and before that he was chief operating officer at Macau Studio City. He holds degrees in economics and business and a master’s degree in management from Cornell University Graduate School of Hotel Administration.

That being said, what are your growth prospects for non-gaming across Melco Crown properties in 2011?

We are very fortunate that our nongaming areas already do very well. It would be conservative to say we expect to see another 10 to 15 percent growth in our non-gaming areas. However, we cannot really grow “The House of Dancing Water” much more. But we are seeing a very healthy growth over 2010 already.

Changing focus Nevertheless, that is still below the 30 percent growth analysts are expecting for gross gaming revenue in Macau in 2011. Is the territory still a very gaming-focused market?

It is gaming-focused but, from my perspective, our gaming customers rely very heavily on the non-gaming experience as part of their choice of where to game – to the extent that if we provide excellent service in the nongaming environment, then my gaming counterparts will do very well also. Have we passed the stage where punters would come to Macau, play like there was no tomorrow for hours and then just sleep on the hotel lounge sofas and eat a bowl of noodles?

We are definitely evolving away from that. We don’t see a lot of that in City of Dreams. We certainly have a very large number of day-trip customers that come here and do that for a period of hours, but for the most part they enjoy the facilities. Certainly our noodle restaurants are very popular, but it is more than just a bowl of noodles. Non-gaming is still residual in the revenue mix for all gaming operators. How important is it really for the overall success of a property?

“CUBIC IS GOING TO BE ONE OF THE MOST UNIQUE NIGHTCLUBS IN ASIA. CERTAINLY I HAVE NEVER SEEN ANYTHING LIKE IT IN HONG KONG OR AROUND THE REGION” APRIL 2011

CEO Interview

That is exactly the opportunity. Gaming isn’t the differentiator. The services, the amenities, the quality of everything you do is the differentiator, and is what attracts customers to your property. That is the main reason why we are engaged in trying to help diversify Macau as an integrated resort destination, particularly in Cotai. How do you evaluate the overall non-gaming offering in Macau nowadays?

The offering is excellent. We have very good hardware in Macau. We have some of the most beautiful properties ever built. They certainly compare to Las Vegas standards and in some cases [are] better.

In the last 10 years, Las Vegas has become the largest convention market practically in the world. Certainly it is the largest in the United States, surpassing places like New York, Orlando and Chicago, which were always the top three. The complexion of Las Vegas and the mix of businesses are very different from Macau. If Macau were able to become a major MICE destination, it would only be better for the territory. But there is a lot of competition here, with Hong Kong. Even Shanghai and Beijing compete with Macau. Singapore does. There are a lot of big convention markets in Asia. It is not clear to me whether Macau will ever have that success in the MICE business.

Growing-up gaming

How is your MICE business in Grand Hyatt performing?

Are you expecting the newer properties to roll out bigger and bolder non-gaming attractions?

It has become very good. Grand Hyatt is enjoying a very high level of occupancy now. But it is really a combination of leisure, MICE and casino. It is not strictly a MICE hotel. It has a mix of all of those three.

I think you will see that in the Cotai area. I don’t think the peninsula is predisposed to resort amenities. That is more a gaming-centric market and Cotai is really more of an integrated resort market. In Cotai, you will see a lot of resort amenities and in time to come you will see more shows, more restaurants, more entertainment, for sure. Is the current non-gaming offering in Macau enough to build the city as an international leisure and entertainment destination?

Because Macau is a growing market by definition, there isn’t enough yet. But it is slowly becoming a much more diverse market and will offer more as time goes on. By the time Galaxy opens, and Sands China’s parcels five and six, let alone Wynn, the entire picture of Cotai will change. And that is just down the road a bit. Then, what happens in 10 years from now? But will non-gaming here ever be as big as it is in Las Vegas?

I don’t know if it will be as big because the marketplace here is more gaming-centric than in Las Vegas. It certainly will be popular. Is building up the meetings, incentives, conventions and exhibitions (or MICE) sector essential for that? APRIL 2011

You mentioned Macau already has world-class hardware. What about software?

My feeling is that software is harder to achieve. Over time, you can achieve it and certainly it is our goal to be the best service provider. Are you short on people?

I don’t necessarily feel we are short on people as much as we maybe are short on having experienced people.

Fighting talk L

ast October City of Dreams had an unpleasant surprise when a mixed martial arts event was abruptly cancelled amid allegations that the promoter had embezzled about HK$13 million. But Melco Crown Entertainment’s co-chief operating officer for operations, Nicholas Naples, says the company has not quit the business of promoting fights in Macau. “The promoter cancelled the event and we didn’t really receive the details on it,” says Mr Naples. “We look forward to doing this kind of event in the future because they are popular and they do attract the local and regional audience.” Is it something Melco Crown will try again this year? “We hope to,” Mr Naples says.

There has been a push to promote City of Dreams abroad. What are the international markets you are targeting?

We are targeting India, Korea, Taiwan, Japan, Indonesia and Malaysia, aside from China. Is it important to have a more developed airport, or at least one with more international routes, to attract more visitors?

That would be very helpful. Infrastructure probably is one of the most important development items for any sort of high-volume destination. An international airport would be a very welcome addition to the landscape. Did you feel any impact from the Japan earthquake, namely reservation cancellations?

We haven’t begun our Japaneseoriented marketing strategies yet. It was actually scheduled for later in the year. We haven’t seen any reduction in visitation coming from Japan. Melco Crown was one of the operators that decided to stop allocating its top executives by property, and start doing it by business segment, namely gaming and non-gaming. How has that been beneficial for the overall operation?

The benefit of the current structure, which is really reflective of us becoming a more mature organisation, is that it has helped us to increase communication across the business. As opposed to being very vertically focused, we are now very horizontally focused. From a non-gaming perspective, I work across the business, as opposed to just working inside a hotel. It means we get things done faster and more efficiently, and with a greater level of consistency. From a partnership perspective, it also helps the synergy between the gaming and the non-gaming elements of our business. Instead of having one person sitting over two or three properties, Ted [Chan Ying Tat, cochief operating officer for gaming] and I, in a partnership, basically collaborate on everything, together. It certainly bridges gaps in communication, it helps the team, the esprit de corps, and keeps us focused on the same objectives.

“THERE ARE A LOT OF BIG CONVENTION MARKETS IN ASIA. IT IS NOT CLEAR TO ME WHETHER MACAU WILL EVER HAVE THAT SUCCESS IN THE MICE BUSINESS” APRIL 2011

Gaming | Billions Race

Smashing results

For a second consecutive month, casinos have set a record for gross gaming revenue

ith a gross revenue of MOP20.1 billion (US$2.5 billion), last month’s take by Macau’s casinos eclipsed the record it had set last February. March’s result was the first time monthly casino gross gaming revenue stood above MOP20 billion. Casino gross gaming revenue at the end of last month was up 48 percent year-on-year, according to data from the Gaming Inspection and Coordination Bureau (DICJ). The total casino gross gaming revenue for the first quarter was up 42.9 percent year-on-year to MOP58.5 billion. Expect to see something similar this month too. Bank of America Merrill Lynch analyst Billy Ng has forecast continued strong performances due to this month’s public holidays and the fact that there are five weekends in the month. Information compiled by Macau Business indicated that Galaxy Entertainment Group left the bottom of the mar-

ket share ranking, with a market share of about 12 percent, marginally above MGM Macau, with about 11 percent. Stanley Ho Hung Sun’s Sociedade de Jogos de Macau (SJM) continues to lead the ranking, with a March market share of 34 percent, followed by Las Vegas Sands, 16 percent, and Melco Crown, with a market share of about 14 percent. Wynn Macau came very close to that, with a market share of also about 14 percent.

VIP acceleration Analysis by Morgan Stanley says VIP gaming continues to set trends. In an investor’s note, analysts Praveen K. Choudhary and Calvin Ho said that February’s VIP rolling chip volume grew 72 percent year-on-year. Mass market revenue grew a more modest 39 percent. Overall, Macau’s gross gaming revenue was up 48 percent year-on-year in February. For the first two months of this year,

Gaming Results: Gross Revenue

gross gaming revenue grew 40 percent year-on-year, driven by 44 percent growth in VIP revenue and 31 percent in mass market revenue, the report said. According to Wells Fargo Securities analyst Carlo Santarelli, VIP gaming is the segment most likely to feel any impact from the earthquake, tsunami and nuclear crisis that has plagued Japan. Even so, casinos in Macau should feel only a limited effect from the tragedy, he said. “Given our belief that the majority of the Japan gaming business is VIP play, we would expect any impact to be isolated to the VIP segment of the market,” he said. According to Mr Santarelli, less than 2 percent of the Macau’s visitors come from Japan. “That said we do not believe even a long term disruption of visitations from Japan would have a meaningful impact on gross gaming revenue or operator fundamentals.”

In Million MOP

22,000 20,000 18,000

17,075

16,000 14,000

18,869

13,569

14,186

16,310

15,773

15,302

Aug 2010

Sep 2010

17,354

18,883

18,571

Dec 2010

Jan 2011

19,863

20,087

Feb 2011

Mar 2011

13,642

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

Mar 2010

Apr 2010 APRIL 2011

May 2010

Jun 2010

Jul 2010

Oct 2010

Nov 2010

Gaming Results: Market Share Per Operator 2010

2011

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

SJM

34%

32%

30%

32%

29%

30%

32%

31%

30%

31%

34%

Sands China

20%

21%

19%

22%

19%

20%

19%

15%

17%

18%

16%

Galaxy

11%

10%

12%

13%

12%

10%

11%

12%

Wynn

13%

14%

16%

17%

15%

14%

12%

14%

17%

14%

15%

14%

MPEL

13%

14%

13%

15%

17%

14%

15%

14%

MGM

10%

11%

12%

11%

12%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

Mar 2010

Apr 2010

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Jan 2011

Feb 2011

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

MARCH 2011

Mar 2011

Gaming | Stock Watch

Don’t cash out yet

SJM posts strong results, while Galaxy disappoints analysts BY RAY CHAN

fter a bumpy February, gaming stocks are starting to get back on track. Several factors have helped, starting with the announcement of a deal to settle Stanley Ho Hung Sun’s family dispute, which was depressing the price of SJM Holdings (880.HK) stock. Galaxy Entertainment Group (0027. HK) announced the opening date for its Galaxy Macau which was within analyst predictions. However, the company’s results for last year were poorer than expected.

Despite the series of family disputes among the Ho family, SJM Holdings, Macau’s largest casino gaming operator by revenue reported a set of results that beat analyst estimates. Gaming revenue last year was 68 percent higher than the year before at HK$57.2 billion and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) was 113 percent higher at HK$4.8 billion. Net profit was HK$3.56 billion, a 292.4 percent increase. The management proposed a final dividend of HK$0.30 per

share, giving a yield of around 3 percent. The company’s market share increased to over 31.3 percent from 29.4 percent. Notably, the adjusted EBITDA margin of its flagship, the Grand Lisboa, fell to 16.4 percent from 17.5 percent, while the group’s overall adjusted EBITDA margin increased to 8.5 percent from 6.7 percent.

Dimmer Galaxy SJM Holdings stock was trading at the end of last month at undemanding valuations of about 10 times EBITDA, with an

Wynn must wait

Melco Int reduces losses

iti says Wynn Macau (1128.HK) may have to wait until at least 2016 to open a resort in Cotai. This is due to several factors, including the lack of updates on Wynn Macau’s land concession request and the lack of available labour, Citi analysts say. Citi notes that Wynn Macau said in its 2010 annual report that the company “cannot prepare a final timeline or budget until the Macau government approval of the land concession is received.” In February, Wynn Macau chairman Steve Wynn said ground could still be broken for the Cotai project in the first half of this year, with a view to opening the development in late 2014 or early 2015. APRIL 2011

elco International Development Ltd. announced last month that it narrowed its net loss in 2010 by 86 percent year-on-year, to HK$209.5 million (US$27 million) from HK$1.45 billion in 2009. The driver of the improved results was gaming operator Melco Crown Entertainment’s performance, of which Melco International has a share of 33.4 percent. Melco Crown accounts for about 90 percent of Melco International’s net asset value, according to Bank of America Merrill Lynch. The company, which is headed by Lawrence Ho, didn’t recommend a final dividend.

First-time impact Analysts say Galaxy Macau’s opening is unlikely to take significant market share from other operators. “I think for the first three or four months first-timers will want to get in there and try it out. I think that is where the major impact is going to be,” RBS analyst Philip Tulk told Reuters news agency. “I feel that all operators to some degree will feel the impact for the first few months.” Morgan Stanley says it expects Melco Crown Entertainment’s (0200. HK) EBITDA to be 19 percent higher in the first quarter of this year than in the fourth quarter of last year and Sands China’s (1928.HK) to be 14 percent higher. These EBITDA growth rates would be the highest among Macau gaming operators and should drive Melco Crown and Sands China shares to outperform in the near term, the investment bank said. Melco Crown has added one new entertainment venue to the offerings at its City of Dreams, with the opening of Club Cubic, a 2,800 square metre foot, twostorey live entertainment nightclub.

Share price performance (in local currency)

Name

52-week high 52-week low

15.0

SJM Holdings Ltd.

Change (%)

3/25/2011

4.6

Month-to-date* Year-to-date

14.0

22.0

13.3

Galaxy Entertainment Group

13.0

3.2

11.8

17.9

34.5

Wynn Macau Ltd.

22.3

10.0

21.5

1.9

23.6

Sands China Ltd.

20.5

9.9

17.6

(4.6)

3.3

7.9

3.4

7.7

10.1

20.3

Melco Crown Entertainment

6.4

2.8

5.3

8.8

20.3

24,988.6

18,971.5

23,158.7

(0.8)

0.5

Las Vegas Sands Corp.

55.5

18.1

41.9

(10.1)

(8.7)

MGM Resorts International

16.9

8.9

13.1

(6.0)

(11.8)

132.3

65.8

124.2

1.1

19.6

2.4

0.9

2.0

6.8

(6.8)

Melco International Develop. Hang Seng Index

Wynn Resorts Ltd. Genting Singapore PLC

38.2

22.3

35.1

(2.0)

(0.2)

12,391.3

9,614.3

12,170.6

(0.5)

5.1

1,344.1

1,010.9

1,309.7

(1.3)

4.1

Penn National Gaming Inc. Dow Jones Indus. Avg. S&P 500 Index * As of March 25, 2011

Macau gaming operators’ share price performance (HK$)

450 400 350 300 250 200 150 100 50 0 Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

SJM Holdings Ltd. Sands China Ltd.

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Galaxy Entertainment Group Ltd. Melco International Development

Dec 2010

Jan 2011

Feb 2011

Mar 2011

Feb 2011

Mar 2011

Wynn Macau Ltd. Hang Seng Index

US gaming operators’ share price performance (US$)

400 350 300 250 200 150 100 50 0

Jan 2010

Feb 2010

Mar 2010

Apr 2010

Las Vegas Sands Corp. Penn National Gaming Inc.

May 2010

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Wynn Resorts Ltd. Melco Crown Entertainment-ADR

Nov 2010

Dec 2010

Jan 2011

MGM Resorts International S&P 500 Index

APRIL 2011

As of March 25, 2011

earnings per share growth rate of 30 to 40 percent for this year. Over the month its price rose 25 percent, making it the biggest gainer among the gaming stocks. Galaxy Entertainment Group reported an 18 percent drop in annual net profit. The company announced a net profit of HK$898 million for last year, compared with the forecast of HK$1.2 billion by Thomson Reuters Starmine. Revenue was HK$19.3 billion, 57 percent more than the year before. Before the results announcement, the company had revealed that it would open its HK$14.9 billion Galaxy Macau in Cotai on May 15. The property will include three hotels (although only 1,400 of the 2,200 rooms and suites will be ready when it opens), a skytop wave pool, and 50 food and beverage outlets. The casino will open with 450 tables and 1,100 slot machines, and is capable of being expanded to hold over 600 tables and 1,500 slot machines. A HK$600 million, 15,000-square metre entertainment facility is under construction and will open by the end of September, Galaxy announced. This will include Macau’s only modern cineplex – a nine-screen, 3D-compatible, multi-function cinema complex with 1,000 seats – as well as a 1,000 square metre multi-purpose event plaza.

Gaming

Trash talk Sheldon Adelson opens fire on former Sands China chief executive Steve Jacobs, giving him both barrels

he chairman of Las Vegas Sands and subsidiary Sands China, Sheldon Adelson, is known for being outspoken. His latest target is Sands China’s former chief executive, Steve Jacobs, who is suing his former employer, alleging he was wrongfully fired. Mr Adelson made his first published remarks about the case in the middle of last month. “While I have largely stayed silent on the matter to this point, the recycling of his allegations must be addressed,” he told The Wall Street Journal. “We have a substantial list of reasons why Steve Jacobs was fired for cause and, interestingly, he has not refuted a single one of them. Instead, he has attempted to explain his termination by using outright lies and fabrications which seem to have their origins in delusion.” In his court filings, Mr Jacobs accused Sands China and Las Vegas Sands of using improper leverage on Macau government officials. Mr Adelson’s remarks prompted Mr Jacobs to add defamation to the list of complaints in his lawsuit. But this did not stop the casino mogul from persisting with the trash talk. Later on last month Mr Adelson told a forum that Mr Jacobs’s lawsuit was not a “serious” case. “It is pure threatening, blackmailing and extortion. That is what it is all about,” he said. As for the allegations that Sands

Search called off

ands China’s acting chief executive, Michael Leven, has told the Macau Daily Times that the company has abandoned its quest for a replacement for Steve Jacobs as permanent chief executive. The company will maintain its present arrangement, with president and chief operating officer Edward Tracy leading its operations, Mr Leven said. But Sands China is still looking for a representative to confer with the government. “The person would have some government experience,” Mr Leven said. APRIL 2011

China and Las Vegas Sands used improper leverage on Macau government officials, Mr Adelson does not seem worried at all – even though the accusations have prompted the Nevada Gaming Control Board, the US Securities and Exchange Commission, the US Department of Justice and the FBI to investigate. And the Macau government has asked Sands China for a report, which was submitted last month. Also last month, Sands China announced it was under investigation by the Hong Kong Securities and Futures Commission for alleged breaches of regulations, but didn’t say if the case was related to Mr Jacobs’ allegations. The company added it was not permitted to comment further at this time. Mr Adelson said his companies were cooperating with the authorities and he played down Mr Jacobs’s accusations. He wondered, sarcastically, if Mr Jacobs’s lawyers were expecting to hear the former chief executive, Edmund Ho Hau Wah, his successor, Fernando Chui Sai On, and secretary for economy and finance Francis Tam Pak Yuen say they had received bribes from him.

Small victory “When the smoke clears, I am 1,000 percent positive that there won’t be any fire below it. What they [investigators] will find is a foundation of lies and fabrications that were designed for the sole purpose of trying to make a settlement for a lot more money than what he [Mr Jacobs] felt he was entitled to.” Mr Jacobs won one small victory last month when a judge decided that his lawsuit will be heard in the Clark County District Court in Nevada. Las Vegas Sands and Sands China had argued that the case should be dismissed and that any dispute between the parties should be resolved in the Macau courts. The judge called the parties to a meeting on April 22 to discuss the possibility of a settlement. Meanwhile, Sands China filed a criminal complaint in Macau against Mr

Jacobs accusing him of defamation and extortion. “It didn’t come as a shock. It seems punitive,” Mr Jacobs’s attorney, Donald Campbell, commented. Mr Adelson also accuses Mr Jacobs of destroying Sands China’s relationships with junket operators in Macau. “One of the reasons why we fired him [was because] we told him not to get involved with direct premium players the way he wanted to,” Mr Adelson said. “He kicked off all the junket reps.” To rebuild the relationship, the com-

Sheldon Adelson

pany is cooperating with junket operators in the design of the customised VIP rooms to be built on parcels five and six in Cotai. Sands China is also building new rooms for junkets in the Plaza casino at the Four Seasons, which should be ready in six months. Mr Adelson confirmed that his company is in talks with InterContinental Hotels and with Marriott International and Hilton about a contract to manage one hotel tower on parcel five. Sands China announced last month the termination of

an agreement with Shangri-La to manage the hotel tower. â&#x20AC;&#x153;The termination was mutually agreed upon between the company and Shangri-La and the matter has been resolved in an amicable manner,â&#x20AC;? Sands China said. It gave no reasons for the termination. Sands Chinaâ&#x20AC;&#x2122;s management agreement with Starwood Hotels to operate hotels on parcel six under its Sheraton and St Regis brands remains in force, the company said.

Although time is running short, Mr Adelson is still aiming to open the first stage of parcels five and six by the end of this year, and others in March and May next year. As for the employees needed to run the properties, he said the government had assured him that Sands China would have to hire one local for each imported employee, unlike Galaxy Entertainment Group, which has had to hire two locals for every non-local to staff at its Galaxy Macau, which is set to open in May 15. APRIL 2011

Gaming

Stanley Ho and his feuding family members have agreed on a plan that redistributes the mogul’s fortune, with Angela Leong viewed as the big winner

Done deal tanley Ho Hung Sun and his four families have reached a deal over the control of his gaming and business empire after two months of public battle. Some details have emerged but the final redistribution of Mr Ho’s 31.655-percent interest in Sociedade de Turismo e Diversões de Macau (STDM) is not totally clear. STDM is the parent company of Hong Kong-listed SJM Holdings, which owns Macau-based gaming operator Sociedade de Jogos de Macau. Hong Kong’s Apple Daily newspaper reported that former Macau chief executive Edmund Ho Hau Wah and former Hong Kong secretary for justice Elsie Leung Oi-sie helped mediate the dispute. Beijing’s top representative in Macau, Bai Zhijian, has denied the central government had any active role in resolving the family tussle. He did admit that the end of the dispute was good news for the gaming industry and for Macau. According to a stock filing by SJM Holdings, a 0.117 percent and 6 percent interest in the 31.655 percent interest in

APRIL 2011

STDM are now owned by Mr Ho and by his fourth wife, Angela Leong On Kei, respectively. “The remaining 25.538 percent interest in STDM is to be separately and/or beneficially owned by members of Mr Ho’s families,” the filing said. SJM Holdings stressed that it remains of the view that the share redistribution “has no effect on the company and there will be no change in management or strategic direction”.

Key player The 6 percent stake in STDM effectively raises Ms Leong’s interest in SJM Holdings to nearly 11 percent from 7.6 percent. The agreement also states that Ms Leong, managing director of Sociedade de Jogos de Macau, will continue to be responsible for the management of the gaming business for another six years, according to media reports. “This consolidates her position in SJM,” gaming analyst Huei Suen Ng at brokerage CLSA told news agency AFP. “Ms Leong is a director and she is involved in the [firm’s] operation so it is not a huge surprise that her shares have been bumped up.”

Expressions of interest S

JM Holdings chief executive Ambrose So Shu Fai says the company is interested in investing in the development of Hengqin Island. The Chineselanguage newspaper Macao Daily News quoted Mr So as saying SJM Holdings had no concrete plans for development on the island, which will be developed by the Macau and Guangdong governments. Mr So forecast an easing in the labour market after the opening of Galaxy Macau on May 15. The pressure on human resources in the gaming industry should ease because the opening is likely to be the biggest this year. Sands China says it is planning to open the first stage of its projects on parcels 5 and 6 in Cotai by year’s end.

Brawl between Stanley Ho and sister goes on

It is unclear if Ms Leong is now the single largest shareholder of the gaming business among Mr Ho’s sprawling family. The agreement also hands control of the mogul’s mansion at Repulse Bay Road in Hong Kong to Angela Ho, Mr Ho’s daughter from his first marriage. Meanwhile, Mr Ho’s daughter Pansy Ho Chiu King will begin representing the so-called Stanley Ho Group on the supervisory board of BCP bank, Portugal’s biggest private bank. She replaces Patrick Huen Wing Ming, who was viewed as one of Mr Ho’s longest-serving lieutenants. The Stanley Ho Group includes Mr Ho’s 0.64 percent share in BCP, plus STDM’s 1.62 percent stake. The announcement of the end of the family brawl took place just a few days before SJM announced a stellar 2010 performance. The company posted a net profit of HK$3.56 billion last year, a 292.4 percent year-onyear increase. Read more about the company’s result in Stock Watch.

ngoing for 10 years already, the brawl between casino mogul Stanley Ho Hung Sun and his sister Winnie Ho Yuen Ki had a new episode last month, as Ms Ho’s representatives were once again barred from attending Sociedade de Turismo e Diversões de Macau’s (STDM) annual general meeting. The two have been in a long running STDM shareholding dispute, with Ms Ho accusing her brother of trying to oust her as a shareholder, after the shareholder registry book of the company was allegedly lost in 2001. STDM is the controlling shareholder of Hong Kong-listed SJM Holdings, with a 56 percent stake. Ms Ho’s representatives said they were also denied access to company documents and are now considering to go to the courts again. They allege that STDM has not been paying Ms Ho its part of the company’s annual dividend. The long fight between the two siblings has already sparked more than 30 court cases both in Macau and Hong Kong.

APRIL 2011

Gaming

Gaming in need of workers The number of vacancies in the gaming sector has surged by almost nine-fold year-on-year, according to the Statistics and Census Service. At the end of last year, there were 3,800 job vacancies, a year-on-year increase of 885 percent. Of those vacancies, 2,100 were for dealers. The sharp increase was due to Galaxy Macau, which is schedule to open on May 15. At the of 2010, Macau’s gaming sector had 44,800 employees, excluding junket promoters and junket associates, up by 1.8 percent year-on-year. Of these, 19,100 were dealers. In December 2010, average earnings (excluding bonuses and allowances) of full-time employees rose by 4.0 percent year-on-year to MOP15,700 (US$1,963), with dealers earning MOP13,610 on average.

Ramesh Srinivasan to lead Bally

Simply the best Wynn Resorts the most admired casino company in the world: Fortune ortune magazine has released its annual list of the “World’s Most Admired Companies”, putting Wynn Resorts as the leader among casinos. This is the third straight year in which Wynn Resorts has taken the top spot in the industry. According to Forbes, Wynn Resorts was ranked fourth in the category of hotels, casinos and resorts. Wynn Resorts is the parent company of Wynn Macau. The second casino company on the list is MGM Resorts International, which was placed at spot No.7 in the category of hotels, casinos and resorts. It was No.5 in 2010. MGM Resorts International owns MGM Macau in a partnership with businesswoman Pansy Ho Chiu King. One spot behind was Las Vegas Sands, standing in spot No. 8 in the in the hotels, casinos and resorts category, up one spot from the previous year. Las Vegas Sands is the parent company of Sands China. Harrah’s Entertainment was the only other casino operator in the top 10, grabbing the last spot. The company owns a golf course in Macau. Overall, Marriott International, followed by Hyatt Hotels and Starwood Hotels & Resorts, led the category of hotels, casinos and resorts. Once again, Fortune’s “World’s Most Admired Companies” ranking was topped by Apple, with Google coming in at No. 2. Berkshire Hathaway was third.

APRIL 2011

Bally Technologies, Inc. announced last month the promotion of Ramesh Srinivasan to president and chief operating officer. Mr Srinivasan will be responsible for all of Bally’s worldwide games, systems, and server-based solutions, as well as customer service, reporting to chief executive officer Richard Haddrill. Mr Srinivasan joined Bally in 2005 as executive vice president of Bally Systems. Gavin Isaacs, the company’s chief operating officer for the past four years, departed Bally effective March 30 to join Shuffle Master, Inc. as its chief executive officer.

Macau Poker Cup gets makeover

PokerStars Macau at Casino Grand Lisboa has released its official schedule for the next Macau Poker Cup, which will run from May 28 to June 5. Organizers have given the poker series a makeover to accommodate the rapid growth in player numbers. The Macau Poker Cup includes a programme that features eight official Asia Player of the Year events running over nine days. The signature Red Dragon tournament guarantees a HK$3 million prize pool and this main event is now a four-day event.

83 DAVID GREEN GAMING CONSULTANT, NEWPAGE CONSULTING

Please (don’t) tell me the one about the junkets again THERE IS NO LONGER, IF INDEED THERE EVER WAS, A GOLD STANDARD OF CASINO REGULATION hile I am not an apologist for the Macau junket model, I do get irritated by the numerous journalistic “exposés” which provide chewing gum for the minds of their readership. The latest in what has become a lengthy line of articles was that circulated via Reuters on March 11, 2011 as “Special Report - The Macau Connection”. It is hard to discern what makes it “special”… It is obvious that it takes its cues from the popular premise that Macau is essentially an unregulated gaming environment, riddled with criminal influence and widespread corruption. As is usual with such pieces, some pertinent facts are largely, or totally ignored, or are founded in statements attributed to “trusted sources” unwilling to put their names to them. Let’s strive for some balance here, even if it gets in the way of a good story. Consider the following. By Administrative Regulation 6/2002, Macau introduced a requirement for junket licensing. Junket licensing criteria include the suitability of an applicant corporation or individual to be licensed. This is not simply a one-off test; there is a continuing obligation to remain suitable throughout the term of a junket’s licence, and suitability is reassessed as a matter of course when junket licences are renewed.

Lack of understanding

Commentators often suggest that police clearances alone, which are relied upon by the Gaming Inspection and Coordination Bureau (DICJ) to determine suitability for licensing, are not adequate to fully assess suitability. Rather, it is said, attention should also be paid to things such as police intelligence, rumour, innuendo, commercial and personal associations, history of regulated operations and “reputation”. Irrespective of the merits of that expansive view of the scope of the suitability criterion, to suggest that it is purely the responsibility of DICJ to investigate and draw conclusions concerning such matters smacks of cultural imperialism. More importantly, it betrays a lack of understanding of how junket regulation in Macau has been structured legally. While DICJ licensing is a threshold requirement for junkets to participate in the gaming industry in Macau, it does not relieve the casino operators of their responsibility to themselves establish and monitor the suitability and activities of their contracted junkets. Indeed, the concession companies and their contracted junkets are severally liable under Administrative Regulation 6/2002 for any and all activities conducted within casino premises by junkets, and generally for their compliance with applicable laws and regulations, including the provisions of the administrative regulation itself. The administrative regulation specifically requires concessionaires to monitor the activities of the junkets, and to notify the gaming regulator, DICJ, of any suspicion of criminal activities by junkets, especially in relation to money laundering. The point to be made is that while junket suitability is initially assessed for licensing purposes by reference to police records, it is a matter for the concessionaires to decide who they contract with, and upon what terms, and to provide close monitoring of the activities of their contracted junkets and junket collaborators, to ensure they are compliant with their legal obligations. This extends to casino operators ensuring that those junkets remain continuously suitable to conduct their activities.

It is simply an abrogation of the concessionaires’ responsibilities should they seek to shift all monitoring and enforcement responsibility to the gaming regulator. The flip side to the benefits of the junket system for their businesses is the responsibility they assume to exercise effective oversight of their contracted junkets’ operations.

The gambling debts issue

There is nothing, aside from purely commercial considerations, which prevents casino concessionaires in Macau dispensing entirely with junket operators. The reasons they have not done so, and have continued to embrace them, rest largely on the fact that gambling debts are legally unenforceable in the mainland, the source of most VIP gamblers, together with the fact that the junkets have become highly skilled practitioners of the banking mantra “know your customer”. Moreover, the volume of junket-introduced play has smoothed out the volatility of casino hold, reducing the risk of catastrophic loss for operators. Junkets are in fact effective risk mitigators for concessionaires, and are remunerated accordingly. Whether their rewards are proportionate to the risk assumed is not an objective question; the answer can only lie with the subjective value that a junket operation has to an individual concessionaire. It is also generally overlooked in the quest to pillory the junket model that at least five of the largest junket operators in the Macau market have associated companies listed on the Hong Kong Stock Exchange. The same exchange lists four of the existing six casino concessionaires operating in Macau - Wynn Macau, Sands China, Galaxy Entertainment Group and SJM Holdings. They are required to comply with the exchange’s listing requirements, and the Hong Kong Securities and Futures Commission regulates persons who promote or deal in those stocks. The parallel is obvious with what happened in Las Vegas, as casino companies progressively recognised that they had more to gain by listing and submitting themselves to securities regulation than by conducting illegal activities. Perhaps because Hong Kong is also part of China, that parallel doesn’t count, right? However, the United States gaming companies with operations in Macau are subject to the foreign gaming operations rules contained in legislation such as that found in Nevada and New Jersey. When “The Macau Connection” report says that Macau casino concessionaires themselves enter legal grey zones in their dealings with the junkets, with little fear of investigation, the question is, why aren’t US regulators more active in enforcing the requirements of those rules, given that gaming is claimed to be one of the most regulated of all industries operating in that country? New Jersey did of course find Pansy Ho Chiu King an unsuitable associate for MGM International Resorts, but note what has happened since: New Jersey has changed its regulatory system, in part to allow it to respect the findings of agencies in other jurisdictions as to the suitability of persons licensed or associated with New Jersey licensed entities. The point is that there is no longer, if indeed there ever was, a gold standard of casino regulation which can be cookie-cut to fit every situation. Please don’t tell us the junket story again... APRIL 2011

Gaming

Lion City pride In its first year of operation, Marina Bay Sands is already a roaring success for Singapore and Las Vegas Sands. But the casino resort still has hurdles to clear, including finishing construction and finding a new chief executive BY MUHAMMAD COHEN

n its first year of operation, Marina Bay Sands has become a Singapore landmark. Since opening last April 27, the casino resort, known as “MBS” has become Las Vegas Sands’ most profitable property, even though it has yet to be completed. “They have had an amazing year. Marina Bay

APRIL 2011

Sands has become one of the world’s truly iconic tourist attractions, and one of the most profitable,” says HSBC senior regional consumer and gaming analyst Sean Monaghan. “The integrated resorts have also been great in terms of building Singapore’s tourist brand and ‘hip’ appeal

globally,” he says. “Over 11 million visitors from the region and around the world have walked through our doors,” says a Marina Bay Sands spokesperson. “Marina Bay Sands is also experiencing solid momentum on the meetings, incentives, conventions and exhibitions (MICE) front,

with over 1,155 deals sealed so far which will bring around 670,000 participants till 2012 to Sands Expo and Convention Centre, the biggest MICE facility in Singapore.” Marina Bay Sands is the most expensive stand-alone casino resort ever built, costing US$5.5 billion (MOP44

Big but not fun A

rchitect Moshe Safdie’s Marina Bay Sands is indisputably extraordinary. The crowning touch, the 12,400-square metre SkyPark connecting the three hotel towers 200 metres above Singapore, is an engineering and creative triumph. Inside the resort, though, it is debateable whether the hotel, casino and other elements have been well executed, and whether the complex has the feel of a resort. “There is little that suggests fun in the building, and I could go on for hours on this subject,” says Mike Stewart, Asia director of architecture and design firm YWS. “Its biggest strength is its scale and iconic nature, while its biggest weakness is also its scale and size,” says Robert Hecker, managing director of hospitality consultant Horwath HTL-Asia Pacific. “It’s designed for large-scale crowds, which makes it less approachable and/or enjoyable for individual travellers.” The 22-storey atrium lobby linking the three hotel towers, which contains monumental works of art, is the most striking part of the interior. “It is large, impressive, photogenic, and makes a statement. However, this is at the expense of putting people in an environment that has nothing to do with them; it is all about the building,” Mr Stewart says. He says it is unfair simply to blame the architects and designers. “Not knowing what the project team was dealing with on this project – in terms of politics, schedules, budgets, et cetera – I will simplify my comments to: I was hoping for a resort but got a nice piece of architecture.” MC

billion). It has 2,560 hotel rooms in three towers, a shopping mall, 122,000 square metres of convention facilities, and a three-tier casino with more than 600 tables and 1,500 machines.

Fulfilling hopes Genting’s US$4.7 billion Resorts World Sentosa

opened in February last year, and features a Universal Studios theme park along with a casino, plus (eventually) 1,800 rooms in six hotels, and retail outlets. The new casino resorts helped Singapore attract a record 11.6 million visitors in 2010. “The integrated resorts

appear to be doing exactly what the Singapore government hoped they would when the plans for launching two integrated resorts and casino licenses were made,” says hospitality consultant Horwath HTL-Asia Pacific’s managing director, Robert Hecker. “Both properties com-

plement each other,” says the dean of the University of Nevada Las Vegas’ Singapore campus, Andy Nazarechuk. “Marina Bay Sands seeks the MICE market and professional-type customers, and Resorts World Sentosa has captured the family and leisure market. As both properties mature, they will APRIL 2011

Gaming

both grow their various revenue streams.”

VIP hiccup Las Vegas Sands reported that Marina Bay Sands made US$305.8 million in adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) in the fourth quarter of last year, with an EBITDA margin of 54.6 percent - both figures are company records. Over the eight months it was in operation last year, EBITDA was US$641.9 million and EBITDA margin 50.8 percent. Casino revenue was US$1.1 billion. In the fourth quarter alone, it was US$457.1 million, 10.3 percent more than in the third APRIL 2011

quarter. However, VIP volume was 20.6 percent lower in the fourth quarter than in the third – possibly a factor in the sudden departure of Marina Bay Sands chief executive Thomas Arasi in February, after barely 18 months in the job (See story in these pages). Genting reported that Resorts World Sentosa’s adjusted EBITDA was S$1.4 billion (MOP8.9 billion) last year, or US$1.1 billion. The company does not give a breakdown of gaming revenue (See story on these pages). “Marina Bay Sands is viewed as the up-market property, and I think it has a larger share of the local market,” Mr Monaghan says. Its

superior situation and striking architecture heighten its appeal.

Growing pains “The [MBS] property capitalised on its location in the CBD [central business district]. It is part of – actually a focal point of – the bay, and has utilised its location as an opportunity not only to take advantage of the views from the site, but also to show itself off as a unique piece of architecture,” says Mike Stewart, Asia director of architecture and design firm YWS. However some have questioned whether the architecture is conducive to the creation of a resort personality for the place. (See

story on these pages). The lack of a chief executive will not help. Las Vegas Sands’ bid to build a casino resort in Singapore was successful in part because of its development of Las Vegas as a MICE destination, and Marina Bay Sands has won CEI Asia’s Best MICE Hotel award. But its hotel and MICE operations have experienced some growing pains, including public mudslinging and duelling lawsuits with its first convention client before reaching a settlement. “Singapore’s largest hotel prior to Marina Bay Sands was around 1,200 rooms,” Mr Nazarechuk says. “It has taken some time for the staff to understand the magnitude

Counting the chips S

urprisingly, neither the Singapore government nor Resorts World Sentosa owner Genting releases casino revenue numbers. So understanding the local casino market requires guesswork, whether you are a stock market analyst, idle speculator or potential entrepreneur who wants to start a complementary business. Casino revenue at Marina Bay Sands in 2010 was US$1.1 billion (MOP8.8 billion), growing 10.3 percent in the fourth quarter to US$457.1 million, according to owner Las Vegas Sands. Resorts World Sentosa got a head start by opening 10 weeks before Marina Bay Sands, and one Asian casino expert who prefers not to be identified believes that Resorts World Sentosa turned this advantage into a 60 percent slice of the local market. The expert believes that Marina Bay Sands recovered from its later start to draw even in the third quarter, and finish last year with 55 percent of the market.

Distant second

The value of Singapore’s gaming market is estimated to have been US$2.8 billion last year, or about one-eighth the value of Macau’s market, according to PricewaterhouseCoopers. PricewaterhouseCoopers forecasts that Singapore’s gaming market this year (the first full year for both its casino resorts) will be worth US$5.5 billion, making it the second-largest in the Asia-Pacific region. But it would still be less than 20 percent the size of Macau’s. Singapore limits casino revenue with a variety of restrictions. Junket operators face stringent licensing and disclosure rules, and none have been licensed, though reports of unlicensed junket activity persist. Singapore residents must pay a casino entry fee of S$100 (MOP633) or S$2,000 per year. Government restrictions on local advertising and marketing led to a ban on free casino shuttle bus services last September. Its tax regime favours premium play, taxing it at just 12 percent, compared with 22 percent for mass play. Both casinos rely on players from neighbouring Malaysia. The casino expert who prefers not to be identified believes Malaysians and local players account for at least 75 to 80 percent of casino patrons. Complaints from Malaysia led Singapore to open its voluntary casino exclusion regime to foreigners. Any local backlash against the growth of gambling in Singapore could bring higher taxes or more restrictions on residents. The expert says the casinos are hoping to attract more of the growing tourist traffic from China, India, Malaysia, Indonesia and Australia. “But [Singapore’s] attraction will dwindle down after five years. Shanghai and Korea theme parks will take over. Casino revenue will stagnate at around US$6 billion to US$7 billion,” the expert says. “This is no Macau.” The Singapore authorities aim to keep it MC that way. APRIL 2011

Gaming

THROUGHOUT ITS FIRST YEAR MARINA BAY SANDS HAS BEEN ADDING FEATURES. THE SKYPARK, THE 57-STOREY PLATFORM CONNECTING THE THREE TOWERS, WITH THE HOTEL SWIMMING POOL AND OBSERVATION DECK, OPENED IN JUNE

of running a property of this size and scope. While there have been some operational and service issues this past year, they are slowly being corrected and heading in the right direction.” Throughout its first year Marina Bay Sands has been adding features. The SkyPark, the 57-storey platform connecting the three towers, APRIL 2011

with the hotel swimming pool and observation deck, opened in June.

Coming attractions Space in the shopping mall above the casino has been filling up. The mall has room for 300 stores. “It’s simply the best retail in Singapore – great use of natural light,” Mr Monaghan says. “It could

do with some more restaurants, but then again it’s not complete.” The advantage of all the construction is that it provides new attractions to keep visitors coming back. An indoor skating rink opened in December and the Art and Science Museum, with its lotus-inspired design, in February. Last month the per-

manent production of “The Lion King” opened in one of the two theatres, where concerts and other performances began in November. Two crystal pavilions for a Louis Vuitton flagship store and a nightspot, plus a 55thfloor spa are among features still in the works. The disadvantage is that Marina Bay Sands feels like

Messing with success? W

ith Marina Bay Sands enlivening Singapore and being the most profitable property in the Las Vegas Sands portfolio, the departure in February of the property’s chief executive, Thomas Arasi, left Asian gaming insiders speculating about why he left. George Tanasijevich stepped in as interim chief executive. After 18 months in the job, Mr Arasi said he wanted to spend more time with his family. Several experts believe Mr Arasi, an appealing spokesman for Marina Bay Sands and Las Vegas Sands, was pushed out. “I think Mr Arasi left as the fit with the company was not what it could be,” says HSBC senior regional gaming analyst Sean Monaghan. “It’s an iconic property and very important to Las Vegas Sands, and they need that person to be what Sheldon wants,” he says, referring to the company’s chairman and chief executive, Sheldon Adelson. “[I’m] not sure what happened but [it was] not a big shock, as management turnover at Las Vegas Sands is higher than the industry average,” says CLSA analyst Aaron Fischer.

Singapore experience

“Having George Tanasijevich take on the role of CEO is a very good move,” Mr Monaghan says. “He was actually there from day one in Singapore, and headed the bid team. He is respected by everyone, a really nice guy.” Mr Tanasijevich, who was the Marina Bay Sands managing director of global development, joined the property after a stint in Macau as the Las Vegas Sands director of development for Cotai projects, and has previous experience in Singapore as a senior vice-president of CapitaLand, the city’s largest property developer, which is controlled by the Singapore government. Mr Arasi came to Marina Bay Sands with two decades of experience in hotel development and operations for several global chains. It is hard to blame him for Marina Bay Sands having opened behind schedule or for its construction-site flavour, since he joined only eight months before the opening, giving him little time to change the course of a mammoth project. He also arrived too late to make more than cosmetic changes to the hotel rooms, which are not the most memorable feature of Marina Bay Sands.

Filling a gap

a building site. “It opened while it was still heavily in the construction phase,” Mr Monaghan says, “and I think that never really gives the visitor the best first experience.” As the amount of work in progress diminishes, most experts expect revenue to grow in a year or two and beyond. “Local demand will only improve again as the

property becomes complete,” Mr Monaghan says. “The MRT [subway] line needs to open. That will bring massive amounts of people to Marina Bay Sands.” The subway line is due to open in 2013. By then the resort should be complete and should have established a definitive personality for itself.

Mr Arasi’s hotel background may not have been ideal for the boss of a property that derives 80 percent of its revenue from its casino, Mr Monaghan suggests. “The CEO’s major shortcoming was his lacking the necessary operating knowledge of casino management,” says an Asian gaming expert who declined to be identified. “He let the teams run loose.” VIP volume at Marina Bay Sands was 20.6 percent lower in the fourth quarter of last year than in the third. Las Vegas Sands’ appointment in January of Rob Goldstein as president of global gaming operations seemed an ideal way to fill a gap left by Mr Arasi’s lack of casino management experience. Neither Las Vegas Sands nor Mr Arasi had any comment for Macau Business on his departure or replacement. Don’t shed too many tears for Mr Arasi. On leaving Marina Bay Sands he cashed in 75,000 Las Vegas Sands stock options, half of the amount he was given on joining the company, and pocketed a US$2.7 million (MOP21.7 million) profit. MC APRIL 2011

Hospitality

A beachfront renaissance Having for years been regarded as one of the best hotels in the city, the Westin Resort Macau has had a tough time keeping up with the newer luxury hotels. Its new general manager wants to put the Coloane landmark back on top BY JOÃO FRANCISCO PINTO PHOTOS BY CARMO CORREIA

n a market now dominated by megahotel-casinos, the Westin Resort Macau is trying to reassert itself in the niche market for small or mediumsize hotels without gaming facilities. The task is now in the hands of Stephan Winkler, the man appointed in January as its general manager. The Westin Resort is in Coloane, near the beachfront. For more than a decade after it opened in 1993, its name was synonymous with top accommodation and service. But with the gaming boom and subsequent mushrooming of new luxury hotel-casinos, the Westin Resort’s lustre has gradually been outshone. Mr Winkler, a specialist in opening hotels, now has the job of putting the Westin Resort back among the most prestigious hotels in the city. “With my experience of opening hotels, I think we can do a very good job bringing this property back to the level that the Macau market has seen recently,” he told Macau Business in an exclusive interview. Mr Winkler says he wants the Westin Resort to be the “preferred

resort of choice for the Pearl River Delta region”. To achieve this, he needs to rejuvenate the ageing property, create new food and beverage outlets and educate the market, the new general manager says. The Westin Resort is now conferring with its managers, Starwood Hotels and Resorts Worldwide, and its owners, Sociedade de Turismo e Desenvolvimento Insular (part of Stanley Ho Hung Sun’s business empire) about several options for a revamp. Mr Winkler is hoping a plan can be unveiled soon.

“WITH MY EXPERIENCE OF OPENING HOTELS, I THINK WE CAN DO A VERY GOOD JOB BRINGING THIS PROPERTY BACK TO THE LEVEL THAT THE MACAU MARKET HAS SEEN RECENTLY,” SAYS WESTIN RESORT’S NEW GENERAL MANAGER, STEPHAN WINKLER

Hospitality

The renovated hotel will concentrate more on health and wellness, he says. The Westin Resort brand’s attributes, coupled with the hotel’s location and the fact that all its rooms overlook the ocean and have a terrace is a “unique selling proposition, which distinguishes us greatly from the downtown bigger casinos hotels,” Mr Winkler says.

This sporting life Another important attraction is the hotel’s proximity to the Macau Golf and Country Club, and the two businesses send customers each other’s way. “Golf is important when we think about offering tailor-made solutions for our customers,” says Mr Winkler. Although golf in Macau is no longer automatically associated with the Westin Resort, now that Cotai has Caesars Golf, Mr Winkler believes that the Coloane course will remain a greater draw because of its mature landscape and distinctive layout. Sport and the associated lifestyle can also help the Westin Resort grab a bigger slice of the growing meetings, incentives, conferences and exhibitions (MICE) market, he says. MICE business accounted for around 20 percent of room occupancy last year. Mr Winkler believes he can increase this percentage, even though the hotel ballroom can accommodate only about 200 people. “The capacity is not too big, but there is enough space to further expand,” he says. “This is an option we are looking at right now”. He also expects to improve the food. The hotel now has one award-winning Chinese restaurant, Kwun Hoi Heen. The new boss wants to build on this and

Aftershock T

he earthquake in Japan last month and the ensuing tsunami and nuclear accident are expected to hamper the Westin Resort Macau’s performance this year. One week after the quake, around 250 room nights were cancelled, of which 190 were bookings from Japan. Last year the Westin Resort had about 1,200 room nights booked by Japanese travellers. General manager Stephan Winkler says this year’s target is to reach a 62 percent occupancy rate. He says the hotel had “a good February” and that March was “shaping up very nicely”. APRIL 2011

bring other Starwood food and beverage concepts to town. “The world of food is extremely important” in the creation of a different atmosphere and a world-class destination, he says. Starwood’s international portfolio includes branded restaurants and other outlets offering food ranging in style from Asian to Western, as well as a nightclub concept called “Qba”. “We can look into this library of concepts and introduce them here in Macau,” says Mr Winkler.

Striking a balance Mr Winkler believes Westin Resort patrons are different from most visitors to Macau. “Guests that come to Westin have made a very clear and specific choice,” he says, referring to the absence of casinos in the hotel or its vicinity. “They deliberately choose to come to Westin. They don’t just arrive at the ferry terminal and make a choice there.” The Westin Resort tells its patrons that it is a pure resort hotel without “the stress” associated with hotels downtown, Mr Winkler says. It is different because it is on Coloane, near the sea, hiking trails and the golf course. Mr Winkler says Macau needs to strike a balance between gambling and lifestyle. The Westin Resort prides itself on not having queues to check in or check out. It has only 208 rooms or suites, meaning each guest can be treated individually and not as part of a large group, he says. “Not everybody coming to Macau looks for the glitz, the hustle and bustle of the casinos – especially families – and some MICE business looks for a quieter, contained, environment where everybody is more focused.” One of the problems the local hospitality industry has been facing is high staff turnover. Mr Winkler believes that with the right measures and its specialised training programmes, the Westin Resort will be able to retain its employees. Starwood is international, so staff have “tremendous opportunities” to move elsewhere in the group, he says. The Westin Resort is also working with the Institute for Tourism Studies to improve the training and grooming of prospective employees.

Hotelier to the world

erman native Stephan Winkler, was born in 1962, and became general manager of the Westin Resort Macau in January this year. He has been in the hospitality industry since 1982, starting his career at Munichâ&#x20AC;&#x2122;s Hotel Vier Jahreszeiten Kempinski. Prior to coming to Macau, he was entrusted with the opening of the Westin Pune Koregaon Park, from 2008 to 2011, which marked the entry of the Westin brand into the Indian market. Mr Winkler has worked in France, Indonesia, Egypt, Hong Kong, Thailand and India. Before entering the hotel industry, Mr Winkler studied languages. He is fluent in German, English, French, Arabic and Bahasa Indonesia. APRIL 2011

Hospitality

Changing rooms A government campaign against unlicensed accommodation enters a new phase ore than 100 suspected illegal inns have been shut down since the new law against unlicensed accommodation was enacted last August. The government team in charge of enforcing the law to close down illegal, cheap, no-frills accommodation is now preparing to take the crusade in a new direction by launching an information campaign. In the first six months of the cam-

Rooms vacant A

bout 641,000 people checked into Macauâ&#x20AC;&#x2122;s hotels and guesthouses in January, 3.5 percent fewer than a year before. Most were from the mainland, about 57 percent, with Hong Kong contributing about 17 percent. The average occupancy rate of hotels and guesthouses stood at 80.3 percent, which was 1.3 percentage points fewer than a year before. People who stayed in hotels and guesthouses accounted for 63.7 percent of all tourists in January.

APRIL 2011

paign, the team raided 855 suspected establishments, pursued day-to-day inquiries and by mid-March had closed down 116 establishments. A total of 21 alleged operators of suspected illegal inns have been detained, as well as 19 alleged management staff, 14 alleged touts and 11 occupants who are accused of obstructing officials. Inquiries have been launched into around 500 occupants, with 29 accused of overstaying their visas and another 21 people who are thought to be illegal immigrants. The government has fined nine operators MOP200,000 each and there are cases still under investigation. Once the premises are closed down, staff from the Macau Government Tourist Office check periodically to ensure premises remain shuttered and the utilities remain cut off. Even so, the government admits illegal inns are far from being eradicated. The Secretary for Social Affairs

and Culture, Cheong U, says keeping unlicensed accommodation in check is a never-ending task. Referring to the figures for the six months since the law came into force, Mr Cheong said close communication with resident associations and building committees was essential to the success of the campaign. The government estimated last year that there were 200 to 300 suspected illegal inns in Macau, most around the International Centre complex and in the buildings behind the Holiday Inn in the ZAPE district. To help reduce demand for unlicensed accommodation, the government has changed its attitude to budget hostels. After years of turning up its nose at the idea that Macau needed low-cost accommodation options, Government Tourist Office director JoĂŁo Manuel Costa Antunes recently said officials were considering allowing smaller buildings and lots in the cityâ&#x20AC;&#x2122;s older districts to be used as budget hotels.

Full-course menu The Institute for Tourism Studies is offering Macau’s first degree course in culinary arts management

BY EMANUEL GRAÇA

s the hospitality industry develops, it is becoming harder and harder for the city’s restaurants to find one essential ingredient; qualified chefs. To reduce the pressure in the kitchen, the Institute for Tourism Studies (IFT) is offering Macau’s first bachelor’s degree in culinary arts management. The purpose of the four-year programme, starting in August, is to develop food and beverage professionals that enhance the culinary experience of visitors, making the city more attractive as a holiday destination. The course will include classes in gastronomy, nutrition and food preparation. Students will also study management, leadership and marketing. The programme includes a sixmonth internship. “This programme prepares students not only at the [culinary] skills level but it will also help them to mature in the management aspects, so that they understand the operations,” IFT president Fanny Vong told Macau Business. “It is not only about food. It’s packaging, marketing, promoting and recreating the whole culinary experience, which is part of the holistic tourism experience.”

The executive assistant manager of the institute’s food and beverage department, David Wong, says: “When you are a chef, you cannot be just good at cooking. You must be good at organisation, management, public relations – the whole deal.”

Career smorgasbord Although the institute already offers short courses and professional training in the culinary field, Ms Vong says there is a growing need for qualified kitchen staff. “The professional standards the chefs and cooks are required to have these days are increasingly more demanding,” she says. “The new hotels and resorts in town are of a very large scale, very international. They bring in international expertise and management and naturally they demand higher qualifications from their professionals.” The initial response from prospective students has been positive. The first course will have about 25 students but the institute received applications from seven times that number. From Mr Wong’s perspective, the interest shown is encouraging, because

people working in service industries in Asia feel they are still somewhat looked down upon. “In Europe, especially in countries like France, being a chef is more than a career. Everyone there wants to be a chef. In Asia, people still think being a waiter or a chef is not a prestigious job,” he says. Even so, working as a chef in Macau can be rewarding, Mr Wong says. A top chef can earn more than MOP100,000 (US$12,500) a month. A starting salary is about MOP10,000. And becoming a chef is not the only career path for graduates of the culinary arts management programme, Ms Vong stresses. They can also work as food and beverage managers, instructors in culinary arts schools, food critics or writers, or culinary consultants, among other roles. The employment rate for institute alumni is about 91 percent, according to the latest figures, with two-thirds employed in the tourism and hospitality industry. The degree course in culinary arts management promises to be hands-on, an ethos reflected in the institute’s decision to renovate its teaching kitchen. APRIL 2011

Hospitality

Time for a facelift Grand Lapa to go under major renovation

rand Lapa hotel will go under a major renovation project, according to Vincent Studer, executive assistant manager – rooms division of the property. Speaking at Grand Lapa’s media spring dinner, Mr Studer said the first phase of the project will include a “multi-million-dollar renovation” of the Tung Yee Heen restaurant, which closed on March 28, to return with a new

Crack down on travel abuses

The mainland’s National Tourism Administration has ordered tourismadministrative departments at all levels to redouble their efforts to rein in the practice of “forced shopping” and other abuses. The announcement follows disputes between mainland tourists and tour guides in Hong Kong and Macau during the past Spring Festival holiday. The administration plans to publicize the names of, and if appropriate, punish, travel agencies found to be forcing tourists to shop or to be engaging in similar abusive practices.

New hotel to be built in NAPE

A new four-star hotel will be built in NAPE, by Companhia de Fomento Predial Great Sky. The government’s approval was announced last month. The complex will also include a residential area. This is the latest project presented by Great Sky for the plot, which, in the initial land concession contract, signed in 1992 between the company and the government, was destined for residential and commerce purposes. The new hotel is to build in the next four years.

APRIL 2011

look in the summer. “The Tung Yee Heen refurbishment is the first phase of our major renovation project, during which the hotel will operate as usual with uninterrupted services and minimal disturbances,” Mr Studer said. Grand Lapa is part of Sociedade de Turismo e Diversões de Macau and is managed by the Mandarin Oriental group.

More tourists

Total visitor arrivals for February 2011 increased by 5.2 percent year-on-year to 2.16 million, according to information from the Statistics and Census Service. Same-day visitors (1.18 million) accounted for 54.6 percent of total visitor arrivals. Analyzed by place of residence, visitors from the mainland rose by 5.1 percent year-on-year to 1.2 million (55.6 percent of total visitor arrivals), mostly coming from the Guangdong (618,000), Fujian (48,200) and Zhejiang provinces (45,300). Visitors from Hong Kong (657,000), South Korea (39,300) and Japan (32,100) increased by 7.3 percent, 42.5 percent and 13.3 percent respectively, while those from Taiwan, (86,300) decreased by 13.8 percent.

THE TRAVEL WRITER MEET CHUNG WAH CHOW, CO-AUTHOR OF THE HONG KONG & MACAU LONELY PLANET GUIDE

BEAUTY GETAWAYS CHECK OUT THE LATEST SPA UNWINDING OFFERINGS IN TOWN

LOCAL ALTERNATIVES OPTIONS FOR A RETREAT WITHOUT LEAVING THE CITY

THE NEARBY PARADISE OUR SELECTIONS FOR AN ASIAN TOUR

BREAKDOWN BY THE NUMBERS

Who cares about numbers when on holidays? Well, let’s keep our feet on the ground, just for a minute

The minimum number of paid vacation days a worker in Macau is entitled to according to the labour law The price of a helicopter ticket between Macau and Hong Kong. The 15-minute ride is a faster way of travelling between both SARs, instead of the usual one-hour ferry trip The amount of tons of white sand that the Galaxy Macau’s deck will have on its beach. With an investment of HK$14.9 billion, the 550,000-square-metre Galaxy Macau will also include the world’s biggest rooftop wave pool The inaugural year of the Macau Grand Prix. Originally conceived as a treasure hunt around the city, it turned out to be an amateur race until 1966. For those who like motor racing, Macau has become a great place to watch some of the best young drivers show off their skill and courage The number of total visitor arrivals to Macau reported for 2010, which corresponds to an increase of 14.8 percent year-on-year

his is probably our most serious issue so far, because it draws your attention to a major issue: life is just too short to be taken too seriously. Every once in a while, everybody needs a break, an escape, be it vacations, travelling, entertainment or just plain fun. What we have done is to collect the best suggestions for those minutes, hours or days, when you’re not working and you just want to enjoy the best in life. For this month’s Essential, we interview Chung Wah Chow, one of the contributors for the Hong Kong & Macau Lonely Planet guide, as well as the China Lonely Planet guide. Born and raised in Hong Kong, she tells us all about her adventurous life. Moving on, we choose some of the best escape destinations in Asia. If you lack the time, no worries: we also offer some suggestions for when you want to escape in Macau. Let’s not spoil the fun. Just read on. Furthermore, we look at some of the best spas in town and show you the different promotions and treatments prepared for spring. These pampering escapes will boost you up and allow you to relax and travel outside your daily routine, without having to leave town. We also feature Phuket’s Paresa resort and spa, which was included in the top 10 for Best Relaxation & Spa Asia hotels at the 2011 TripAdvisor Travellers’ Choice Awards. We show you why. Finally, we hand out some recipes for the adrenalin junkies. If you are one, look at our tips on what kind of adventures you can have in Southeast Asia. If you always dreamt of swimming with sharks or doing a risky bungee jump, read on. And even though our advice is very good, you can never forget that you should not only read about escapes. Just do it.

Beach holidays in Asia

Beach holidays in Europe

They’re cost-friendly, making it relatively easy to choose a good hotel and enjoy all the desired luxuries without spending too much

They’re overall more expensive, making it more difficult to have a great and luxurious holiday for a good price

Some of Asia’s beaches combine all the necessary elements to place them among the best in the world. Paradise is just around the corner, be it in the Philippines, Thailand, Malaysia, Vietnam, India or Indonesia The water is usually warm, making it more pleasant to swim The weather at beaches in Asia is usually impacted either by monsoons or typhoons, which can sometimes spoil holidaymakers’ plans The most common Asian lodging option at the beach is a bungalow right on the sand. It looks nice and it doesn’t destroy the landscape as much as hotel towers Some of Asia’s beach destinations, such as Thailand or Malaysia, are usually considered among the top ten diving and snorkelling sites in the world, according to experts

There are good beaches in some countries, such as Italy, Spain or Portugal, but they usually do not combine all the necessary elements to be considered among the best in the world At some beaches in Europe, especially those not on the Mediterranean Sea, the water is cold. Even though it might be a hot day, this makes it more difficult for some to dive in for a swim You don’t have to worry about monsoons or typhoons. The weather is mostly sunny during summer The European options for lodging are not bungalows in the sand, but big hotels all along the beach. They’re ugly and destroy the landscape These are usually not top places for snorkelling and diving, although some areas provide clear waters and a wide variety of marine life

THE TEN COMMANDMENTS FOR LAST MINUTE HOLIDAYS If you have no particular place to go, but you’ve decided last minute to travel somewhere, search some of the most popular sites like TripAdvisor. You’ll be surprised what you can find. When searching for the best last minutes deals, don’t forget to also check the airline websites. On occasion, web-only fares and last minute deals can pop up. Consider ticket consolidators or even auction sites. Sometimes, ticket consolidators will buy big quantities of tickets and try to sell them for a profit – however, as the travel day approaches they’ll start lowering the fares in order to sell all the tickets. As for the auctions, people who cannot fly due to unforeseen circumstances may be willing to sell their tickets at one of these. Even so, using an airline representative for information is still recommended when looking for a last minute deal. Actually, the representative can release information on unadvertised fares, while, at the same time, they may be able to offer some discounts.

If you are willing to travel during unpopular hours or periods of the week, such as early morning and late evening, then you have a better chance of finding good last minute flights. Be flexible. You’ll be surprised how many empty seats at very good prices you can find at the last minute if you waive some demands. Once you establish your itinerary and mode of transport, make a checklist of all the items you need. It helps if you have a little bit of organisation in the midst of improvisation. Even if it’s an unplanned trip, pick up some common essential travel items, including beverages and food, to have with you all the time, just in case. Especially for the ladies, if your destination is a beach, don’t forget your swimsuit. Bikinis and female swimsuits are things that vary a lot in style from one place to another, particularly in Asia. Just go with the flow. It’s a last minute holiday so don’t despair if you know nothing about the place you’re travelling to. Just buy a guidebook at the airport and read it during the flight. 99

FEATURE

hailand’s Paresa resort and spa was included in the top 10 for Best Relaxation & Spa Asia hotels at the 2011 TripAdvisor Travellers’ Choice Awards, announced in February. This was based on the millions of reviews and opinions about hotels on TripAdvisor’s website and on content from across the Internet. Located on the sculptured Kamala cliff tops overlooking the spectacular azure blue waters of the Andaman Sea, Paresa resort comes as an oasis of luxury and relaxation. Although it is a secluded retreat offering complete relaxation, it is also within easy access of Kamala village and just 30 minutes from Phuket International Airport. Including 49 luxurious and elegantly appointed guest suites and villas with spectacular views across the Andaman Sea, Paresa’s accommodations combine traditional design elements with timber and natural materials, and a backdrop of magnificent Banyan trees all around. Rooms at Paresa resort include super king size beds in white linens, and feather pillows and duvets, while exterior verandas are made all the more enticing and relaxing with daybeds or sun lounges. It’s a true piece of paradise, not that far away.

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A bedroom for a king

BIG SPENDER

osting as much as US$5,000 (HK$40,000) per night, the 26th floor Peninsula Suite at the Hong Kong Peninsula Hotel is among the most expensive hotel rooms in the world. Since many of the visitors to the suite are diplomats and heads of state, both the CIA and MI5 were consulted on the design to ensure maximum security. The room has direct access to the hotelâ&#x20AC;&#x2122;s heliport, to ensure quick getaways, and a security officer stands guard at the door around the clock. Those who are fortunate enough to stay in this suite, also have access to a 24-hour butler as well as a Roll-Royce, just in case. The fantastic suite includes one master bedroom, but can be transformed into a sevenbedroom arrangement. Modern and double-height ceilings use marble and limestone as the preferred natural materials. With stunning views over Victoria Harbour, the suite also includes a fitness room, private study, dining room and kitchen as well as a terrace. This luxurious room filled with secrets is prepared to meet the needs of all types of guests. 101

INTERVIEW

“WHEN I AM HOME, I FEEL MY FEET GETTING ITCHY” Chung Wah Chow, one of the contributors for the Lonely Planet Hong Kong & Macau guide and the Lonely Planet China guide, believes the most important requirement for being a tourism writer is a love of travelling. In an exclusive interview, she explains how escaping has become her career

By Luciana Leitão

ow did the opportunity to become a writer for Lonely Planet arise? Chung Wah Chow - Lonely Planet was looking for a Hong Kong-based writer who was a Cantonese native speaker and able to write in English. That’s why they approached me. Also, I was, and still am, a traveller and a writer. My background was essential to becoming a travel writer.

Did you travel a lot, even before starting to write for Lonely Planet? Yes, I travelled from Europe to China, and spent half a year in North and Central America before I started writing guides.

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Do you think that’s an important requirement for doing this job? The most important thing is that you love travelling. Of all the places you’ve travelled to, which places did you like the most? Turkey and Xinjiang. Turkic people and languages are simply fabulous. They are two places located at two ends of the Silk Road. And the Silk Road is always my favourite route. You can see how cultures influence each other along the road and these two places embrace the essence of East and West.

What kind of things did you used to write before working for Lonely Planet, when you were travelling? I wrote travel literature, and about history and culture-related issues. So far, which cities have you written about? Macau, Guangdong, Guangxi and Xinjiang. Which ones did you enjoy the most? Macau and Xinjiang in China are the two places I enjoyed the most. You can see the ethnic diversity in these two places. They’re part of China but they don’t look the same as the rest of China. While Macau has the Portuguese influence, Xinjiang has a flavour of Central Asia. The exotic taste of these two places is very fascinating to me.

“Macau and Xinjiang in China are the two places I enjoyed the most. You can see the ethnic diversity in these two places. They’re part of China but they don’t look the same as the rest of China”

What do you love about writing on Macau? It was not until I was commissioned to write about Macau that I finally got a chance to have an in-depth study of this former Portuguese enclave. I simply love its history and hybrid identity. It certainly is one of the most valuable experiences. When you are writing for the Lonely Planet guides, how do you decide what to include? It’s impossible to try everything; otherwise it would take you several years to sleep in all the hotels in Macau! Usually it’s travellers and our readers that give us tips on what to include, apart from our own research. Of course, insider information is very valuable. I have a lot of friends in Macau and they all gave me very useful info [when writing the Macau guide]. After I collect all the info I scale down those suitable to our readers and check those sites. I try some of them, but not all. I especially try those never mentioned in the guidebooks before. What things do you have to be particularly alert to? Places (especially restaurants and bars) come and go fast. I need to triple check if they still exist before I submit my manuscript. Do you think it’s important to be a local in order to write a travel guide? A local can uncover some hidden gems in a city. That’s the advantage. But he or she also has to bear in mind the needs of a traveller because they can be quite different from those of a local.

What kind of feedback do you get from readers of Lonely Planet? Usually our readers give us more recommendations on places to go and eat. Sometimes they tell us what their most enjoyable experience was. I imagine that, to do this kind of work, you have to spend a lot of months travelling... I was on the road for ten months last year. Isn’t it very tiresome always travelling? Sometimes yes. But when I am home, I feel my feet getting itchy. What do you think is the key for the success of Lonely Planet? As to what made Lonely Planet a big success, I think one of the keys is independent research. It really makes it stand out. When we are doing our research on the road, we are not allowed to take freebies from hotels or restaurants. Our independence makes travellers trust us.

THE TRAVELLER B

orn and raised in Hong Kong, Chung Wah Chow started her adventurous life by joining Greenpeace as well as several other green nongovernmental organisations. After years of never-ending environmental battles, she travelled around the Mayan ruins of Mexico, and the Muslim regions of the Middle East, having become fascinated by the historic Turkic languages.

Returning home with the sensation that there is nothing more beautiful than the Silk Road, Chung Wah Chow soon had the invitation to write for the Lonely Planet Hong Kong & Macau City Guide as well as the Lonely Planet China edition. She has also spent years studying translation, having published works in several publications in Hong Kong and Taiwan.

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Where to stay

ASIAN ESCAPES Living in Macau, usually your escapes are within this region. So here are a few of the best hotels in Asia selected by The Leading Hotels of the World association

The Sherwood TAIPEI

The newly refurbished accommodation area is already available and guests of The Sherwood, in Taipei, are now able to enjoy renovated rooms and suites, with flat screen televisions and broadband wireless Internet access. Particularly suitable for businessmen, this hotel features several restaurants. Business luncheons are served at the Toscana Italian Restaurant, while VIP rooms and superbly created Cantonese set menus are served at Yi Yuan Chinese Restaurant. Also featuring a spa specialising in body treatments, lymphatic-drainage facials and Swiss foot reflexology, this hotel has an indoor swimming pool, sauna and technical-gym equipped fitness centre. Finally, the newly renovated executive club with full meeting facilities, Bloomberg news, and broadband and wireless Internet access, allows businessmen to be fully informed in maximum comfort. Address: 111 Min Sheng East Road, Sect. 3, Taipei, Taiwan Tel: (+886) 2 2718 1188 Fax: (+886) 2 2713 0707

The Shilla SEOUL

Blending South Koreaâ&#x20AC;&#x2122;s rich cultural heritage with luxurious guest facilities, The Shilla is one of the most stylish options in Seoul. The Shilla, with its distinctive Yeong Bin Gwan, a traditional Korean style banquet annex that was formerly the State Guest House, is also close to the main shopping and business areas. With several restaurants, The Shilla features different styles of cuisine. The rooftop Continental is renowned for its gourmet European cuisine, while Palsun serves Chinese cuisine and Ariake has an exquisite Japanese menu. Finally, Parkview is known for its popular international dishes. For all guests, The Shilla also offers a fitness club with a wide range of equipment, an indoor and outdoor swimming pool, an indoor golf range, check-up clinic, sauna and massage service. Furthermore, The Guerlain Spa provides the exclusive Guerlain method of facial and body massage. Address: 202 Jangchung-dong 2-ga, Jung-gu, 100-856, Seoul, Korea Tel: (+82) 2 2233 3131 Fax: (+82) 2 2233 5073

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Hullet House HONG KONG

It’s a magnificent celebration of Hong Kong’s “East meets West” heritage. Settled in a colonial building built in 1881, Hullet House is one of the best places to stay in the neighbouring region. There are ten individually designed suites, each with its own terrace and modern amenities such as free Wi-Fi, rain-head showers and surround sound entertainment systems. Guests can choose to stay in the elegantly decorated Chinese Imperial Suite with hand-painted Qing dynasty murals, or for a more modern feel, the vibrant pop-art suite. Furthermore, Hullett House includes five different styles of

restaurants. St. George serves contemporary French cuisine, while Loong Toh Yuen is the Cantonese restaurant and The Parlour is a glamorous lounge that serves international dishes. Stables Grill is the casual dining place, while Mariners’ Rest serves beers on tap and British gastro pub fare with a modern edge. Located in the heart of Tsim Sha Tsui just a few minutes from the Star Ferry and other visitor attractions, Hullett House is also within easy reach of Canton Road, Hong Kong’s Fifth Avenue. Address: 2A Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong Tel:(+852) 3988 0000 Fax: (+852) 2368 2325

Okura Garden Shanghai Towers SHANGHAI

Located in the city centre’s most prestigious shopping and business district, Okura Garden Shanghai Towers combines contemporary design with the elegance of the historical 1926’s “French Club” building. The perfect setting for meetings, conferences, or banquets, Okura hotel has elegantly decorated guest rooms, and also features an indoor pool, gymnasium, sauna, outdoor tennis courts, massage, jacuzzi, beauty parlour and a barbershop. Okura Garden Shanghai Towers also has several restaurants, such as the Bai-Yu-Lan, for traditional Cantonese cuisine, the Continental Room, that offers a variety of European fare, as well as the Japanese restaurant Yamazato and the Rose Coffee Shop, for snacks and tea time chats. Address: 58 Maoming Nan Lu, Shanghai 200020, China Tel: (+86) 21 6415 1234 Fax: (+86) 21 6472 8877

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The adventures

ASIAN ESCAPES Here are some suggestions in this region for those adrenalin junkies that just love living on the edge

Climbing Mt Kinabalu in Malaysia

Mount Kinabalu (Malay: Gunung Kinabalu) is a prominent mountain in Malaysia, considered the 20th highest in the world. Most climbers take two days to ascend and descend Mt Kinabalu, usually stopping at Laban Rata (3,270m) or a nearby hut overnight, before rising early next morning. The mountain and its surroundings are among the most important biological sites in the world, with over 4,500 species of plants and 326 species of birds. The summit is 4,095m.

Bungee jumping in Macau

This is the best jump that you can have in Asia if not the best in the world. If not for any other reason, it is simply because it is the highest in the world, at 233 metres. On the edge of the Macau Tower, you can feel the thrill of the dare, but isn’t that the whole point?

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Racing in the Trailwalker in Hong Kong

The most beautiful sections of Hong Kong are worth walking at any time but many choose the Trailwalker to do so. It is a race along the Maclehose Trail, going through some of the toughest trails in the neighbouring region. The race is a team event with four members per squad, with its origins in a British Army training exercise thrown open to all in 1986. The winners typically finish in less than 13 hours. This year’s race takes place from November 18 to 20.

Hiking the Annapurna Circuit in Nepal

The 186-mile (299-kilometre) Annapurna Circuit is considered the best hike in the world. It gets you up close to some of the highest mountains in the Himalayas and for decades it has been the classic example of a long-distance, high-altitude trail, crossing varied terrain and vegetation zones. Within the trails’ loop lies one of the world’s highest massifs, with Annapurna I (at 8,091m the highest of its five peaks) the tenth tallest mountain in the world.

Kiting in Boracay

It is not just a trendy beach spot vacation. Boracay also happens to benefit from some tidy breezes that make it one of the best places for Philippine kiters. Bulabog Beach, far less well-known, has a wide, waistdeep lagoon, a perfect set-up to build confidence in those just starting to take wing.

Cycling Lhasa to Kathmandu

These are some of the most amazing landscapes on Earth and you can do them on a bike. You’ll pass by Tibetan settlements, nomadic herdsmen and mountain peaks, giving you a sense of the cultural Tibetan wealth. It’s an inspiring journey from Lhasa to Kathmandu, travelling through steep and difficult paths.

Diving at Green Island, Taiwan

If you’re looking for the dive of your life, those who’ve tried it say this is the one. Go to Green Island, in Taiwan, and for 30 minutes underwater enjoy the thrill of looking at hammerhead sharks that, from January to March, are found off the southern tip of the island. Given the depth of the dive (30-37m) and the strength of the currents, this is an advanced dive.

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PAMPERING ESCAPES

Spring getaways Now and then, your body and soul need some stress relief. Here are the offerings of some local spas for this season

New energies

The Spa at Wynn Encore introduces Renew, a rejuvenating spa treatment designed just for spring, which includes an energizing body scrub, a lymphatic massage, vitality facial as well as additional heat experiences. Using pure and natural products from ila (Sanskrit for “earth”), this two and a half hour spa journey begins in the luxury of one’s very own private spa suite. The experience then continues with an energizing body scrub using Himalayan salt crystals restoring the body’s natural energy. Guests will then receive a cleansing lymphatic massage with Wynn’s custom-blend massage oil, finishing the treatment with a vitality facial to hydrate the skin. Where: Wynn Encore Price: MOP1,800 When: March 15 – June 15

The renewal

It’s the season of renewal until April 30. Grand Hyatt Macau is offering an indulgent spring spa getaway retreat that includes an overnight stay in a grand suite king and a signature massage for two. Trained therapists at Grand Hyatt’s Isala Spa incorporate jade stone therapy as well as deep tissue and foot massage to allow an unforgettable escape. You can also enjoy Isala’s whirlpools, steam rooms, freeze showers and relaxation lounges, overlooking private landscaped gardens. Finish your escape with a luxurious overnight stay in a 64-square metre grand suite king, featuring separate living and sleeping areas divided by a sliding door. Private dining and cocktails at the multi-functional raised table, as well as relaxation in the spacious marble bathroom and deep-soaking tub are just some of the features you can enjoy. A great escape! Where: Grand Hyatt Macau Price: HK$2,500 When: From Monday to Thursday, until April 30

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Time reversal

The tested and proven Time Reversal products from the Somme Institute, a result-driven nourishing treatment used for special facial treatments, are now available at The Spa at Mandarin Oriental. Appropriate for all skin types, the 80-minute Time Reversal Facial helps to reduce the appearance of fine lines, repairs sun damage, evens out discoloration and is effective in treating moderate to severe acne conditions, dramatically improving skin tone and texture. The Spa at Mandarin Oriental is a modern haven that uses internationally acclaimed products, among them those created by the renowned Somme Institute. Using molecular dispersion technology or MDT5, these products allow five highly engineered essential vitamins, A, B3, B5, C and E, to penetrate the inner layers of the skin in their active forms. Where: Mandarin Oriental Macau Price: MOP1,360 When: From Monday to Friday

The kiss of lavender and Pink Himalayan salt

For April, Grand Lapa is offering a special price for the lavender and pink Himalayan salt glow (30 minutes) as well as the pink Himalayan salt bath (30 minutes) treatments. Lavender and Himalayan salt are known for their antiseptic and healing effects on the skin and are the perfect beginning for any massage treatment. The Himalayan salt is the purest of all salts and the only one that contains 84 minerals essential to the human body. The lavender and pink Himalayan salt glow is a relaxing body scrub targeted at improving skin condition and promoting pain relief. The 30-minute pink Himalayan salt bath soak is an effective treatment to help restore the natural balance of the body through the natural exchange of minerals and toxins between the body and the water. Where: Grand Lapa Price: Weekdays MOP250, Weekends MOP290 When: In April

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Local getaways

ESCAPES IN MACAU If you can’t go anywhere else, then escape in Macau. Here are our suggestions

The VIP hotel

The lion’s roar

As the tallest building in Taipa, Altira Hotel (former Crown Macau) combines style and comfort in an elegant and spacious environment. With 216 spacious guest rooms, of which 24 are VIP suites and eight are elegant villas, Altira Hotel offers spectacular panoramic views of the Macau peninsula, featuring world-class restaurants as well as chic bars, an outdoor garden podium and a luxurious day spa.

MGM Macau is a 35-story hotel tower with 600 beautifully appointed rooms, suites and villas. The rooms are exquisitely decorated, with a touch of Europe in its different areas. With a convertible convention area with 14,455-square-feet of meeting space, world-class spa, swimming pool facilities and a variety of restaurants catering to international tastes and influences, this is also a good option for those staying in Macau.

Looking at the beach The most special feature of the Westin Resort, in Macau, is the location. At the far end of Hac Sa beach, it’s the perfect getaway, offering quiet seclusion. With 150 green acres and surrounded by the South China Sea, you’ll immediately feel yourself unwinding in one of the 208 guest rooms and suites, with private balconies or terraces all with stunning views. Apart from the luxurious bedrooms, the resort also offers 18 holes of golf in a natural setting, an outdoor and indoor pool, a recreation centre, as well as several fine dining restaurants. From the top of The Westin Resort, Macau looks impressively different.

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SEX AND ESCAPING

S The red hotel Wynn Macau features 1,009 elegantly furnished rooms and suites, combined with elegant fine dining restaurants, bars and lounges, as well as two spas and an exuberant swimming pool. With its design and decor thought down to the finest detail, Wynn Macau – which now also has its sister property, Encore, with 414 suites, two restaurants and a spa, as its neighbour – invites guests to stay in ultimate luxury.

Rocking in style Designed with Rock ‘n’ Roll in mind, Hard Rock Hotel Macau at City of Dreams makes every guest feel like a true rock star. Located on the Cotai Strip, Hard Rock Hotel showcases a definite musical edge to entertain guests’ dreams of a Rock ‘n’ Roll lifestyle. Part of City of Dreams, the hotel also offers several amenities such as an outdoor sand pool, which makes you feel as if you were at an MTV party, as well as a spa and several restaurants. The 322 rooms and suites are adorned with elegant memorabilia that will take you on a journey through rock history.

ometimes, amidst the busiest hours of the day, the most important things in life are left behind. So here’s an idea to fight this forced amnesia: a sex-escapade, right in the heart of Macau. Is it really possible? Every now and then love needs a little push and things need to be heated up under the bed sheets. So, if your workload is unbearable and you have no time to breath, it’s a sign that you need a day off. No more than that, right here, in the territory. There are plenty of options to escape from the tediousness of daily rituals. If you want to spice up your love life, just take your partner to Coloane. Yes, there is a place in Macau where you can hear the birds sing, where you and your loved one can really talk without bumping into thousands of people. Go and explore the green hills of Macau’s most reclusive island, ending the perfect evening with a torrid night at the Westin Resort. It might not be the newest of hotels, nor have the latest technology at your disposal, but the priceless sea view, the exquisite giant bedrooms and the cosy balconies, allow you to forget about the troubles of daily life and enjoy some moments of passion. Guaranteed, you’ll be a new person the following day and will have extra energy to return to those piles of paperwork left on hold. If green and fresh air is really not your thing (is it possible?), then you have other options too. You can go for a massage at one of the several high-end spas in town and pamper yourself and your partner. At the end of the session, just book a room at any of the city’s trendy hotels, where you can enjoy a hot night, without ever realising you’re just metres from the office. Of course, the best possible option for improving the intimacy of your love life is always a vacation away, but if you really can’t do it, consider these options. It just takes one day off to add an extra dose of guaranteed excitement to your love life, forcing you to remember that life is not just about work. Let’s love in Macau.

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

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The Esplanade, Wynn Macau

Shoppes at Four Seasons

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The Encore, Wynn Macau Cartier Chanel Piaget

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Fashion

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

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

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

MICE

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The skills gap The convention and exhibition industry has the benefit of world-class infrastructure and the drawbacks of poor language skills, an industry expert says BY LUCIANA LEITÃO

acau’s convention and exhibition industry is growing but more training is required in languages, according to the regional meeting of the International Association of Professional Congress Organisers (IAPCO) held at the Venetian Macao last month. The association’s president, Philippe Fournier, says Macau has great potential but the industry is growing at a slower pace than expected. He blames a “lack of qualifications” and the “language barrier” but says with training and time, the obstacles will disappear and the industry will grow.

Easier visas T

he central government is poised to ease visa restrictions for mainland businessmen travelling to Macau for MICE events, Economic Services Bureau director Sou Tim Peng told reporters. Beijing has approved a total of 40 MICE events taking place in Macau this year for which visa application processing will be made easier, he said.

“The service is fantastic, the space is incredible and the destination is very easy to reach. Everything is very easy to access and the accommodations are great,” he says. Macau is still a relative newcomer to the business and compared to more mature markets such as Europe or the United States, it has a long way to go, he adds. The third regional IAPCO meeting in Macau in three years, the three-day event was a platform for educating and training destination operators on how to attract meetings, incentives, conferences and exhibitions – known by the acronym MICE. The first two days of the seminar covered organisation of an international event, and the final day focused on destination promotion and risk management. Attendance at this year’s event fell to 35 participants with most participants coming from Macau and Southeast Asia. “Maybe it has to do with the world situation,” says Mr Fournier. There were no

Japanese participants this year. Media consultant Alberto Bettencourt was satisfied with the event’s experience but says there should be more initiatives for the industry. “There should be continuous training in this field. The information is too much to be given out in only a three-day seminar.” He says the key to a stronger MICE industry in Macau should begin with stepping up the training of professionals and he would like to see the government invest more in education. The Venetian’s exhibition manager João Kuan says Macau’s MICE industry is in the middle stage of its development. “In the past, we only focused on the casino field and now we need to diversify. It needs five or 10 years to develop,” he says. Taiwan External Trade Development Council representative Mickey Chen said: “I came here to learn how to plan conventions and congresses.” According to her, the experience was enriching, particularly because of the exchange of ideas. APRIL 2011

114 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT

Conscious leadership TODAY’S LEADERS URGENTLY NEED A NEW STYLE OF LEADERSHIP any of us were educated according to the principle that answers are more important than questions. Someone always knew better than us and we had to learn from him or her. Things have changed. Now, in cultivating leadership, the teachers often know less than the students; so they do not consider themselves teachers, but coaches in the art of learning more about oneself and what is relevant to one’s own development. This “conscious leadership” approach makes asking questions the key to learning. The fundamental principle is that prospective leaders ask questions of themselves and answer them themselves; they have the courage to learn from their own experience. In recent times companies have had to accustom themselves to coping with circumstances that change at breakneck speed. Social and cultural trends are transforming the way humans lead productive lives. A revolution is in progress. In the words of American author Ken Wilber, “the human being is evolving towards higher levels of consciousness that allow us to consider being, not only having.” The knowledge worker, an important asset to any organisation nowadays, has concerns very different from those of workers of the preceding era. Today there is a new view of the relationship between the individual and the company. The new generation’s philosophy of life gives them a different approach to professional development. The balance between work and personal life is a priority.

Strategic imperatives

Leaders struggle to cope with such changes and must alter their practices, models and values. These challenges require a new form of leadership, a new view of human beings. The retention of talent, a sustainable business, a new culture based on core values, new rules and procedures, and a new relationship with human capital are the strategic imperatives of this century. In this new scenario, leaders must understand the implications of having aligned the spirit, creativity and human ingenuity of team members with their business strategy. That can be achieved by creating a new corporate culture using a conscious leadership style. Every era brings new paradigms and models that lead to changes in behaviour. With a new era, these models are reviewed, and generate other models for behaviour by creating a new culture. This is the era of knowledge, and we have left behind the industrial-era models. But it is important to realise that while the industrial era is behind us, the behaviour that went with this bygone era is still common. While we have taken a big leap forward in the way we treat human beings within organisations, if we look deeply, we can see that some kinds of behaviour persist. We can boast that we no longer “commoditise” human beings as we did in the industrial era, when an individual was regarded as a cog in the machine, a commodity. It is clear that human capital is increasingly becoming the most important asset for companies. But we are taking only the first steps towards a new consciousness of this. Completely putting aside the paradigm of the industrial era APRIL 2011

is no easy task; it requires a new view of the human being. The classic patterns of thought that have dominated recent decades understand the human being from the intellectual, physical and emotional dimensions. Perhaps this is not enough.

Incomplete paradigm

The Newtonian model of science that dominated thinking for so long only conceives of what exists. This model does little to help us understand something as intangible and formless as the human spirit. Only recently, in the West, have we begun to fathom the spiritual dimension. That is why most of our behaviour is meant to nurture us physically, mentally and sometimes emotionally. However, it costs us a lot to mature as spiritual beings, with a more powerful essence and consciousness of our own intellect. In the words of best-selling author Stephen Covey in his book “The 8th Habit”: “Ultimately there is only one reason, very simple and general, that so many people are dissatisfied with their work and that most organisations are unable to harness the talent, ingenuity and creativity of [their] staff ... The reason is an incomplete paradigm of who we are, our fundamental view of human nature. The fundamental reality is that human beings ... have four dimensions: body, mind, heart and spirit.”

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degree of consciousness, in which the core values and the achievements of organisational goals coexist within a new culture. This new culture demands a leap from merely effective leadership to inspirational leadership, leaving aside the petty, exclusive and selective game of the ego to achieve creative and inclusive leadership. This means approaching leadership from the inside out, with leaders developing first their own self-leadership, and only then leading individuals, teams and organisations. The conscious leader should include in his programme, training to develop interpersonal, ethical, spiritual and emotional skills. In today’s world, it is important that we lead our lives with dignity, consistency, ethics, commitment, discipline and love. So we can only be good leaders of others if we are good leaders of ourselves. The traditional paradigm of leadership is about leading others. Today, leadership requires other skills and competencies such as self-awareness, personal vision, inspiration, purpose and passion. All these are important for improving the performance and effectiveness of individuals in organisations. Today, to lead others, or having a leader, is not enough. Today, one of the keys to personal effectiveness and greatness is self-leadership. This involves knowing yourself, knowing who you are, how you can contribute, what talents you have and where you want to go. Personal leadership can be considered a way of being or thinking, a way of showing your interpretation of the world around you and your interaction with it. It has nothing to do with learning and knowing about others; it has to do with a deep knowledge of your nature and your capacities.

Expanded consciousness

The new challenge for us is to transcend the traditional, mechanical, hard-thinking model and explore new human dimensions. Understanding human existence in all its dimensions is one of the tasks of all leaders. Today, people want their leaders to focus not only on the achievement of objectives; we look for leaders who know how to deliver in every other aspect of life. The leaders of the future will be those who can develop new capabilities by integrating the stock of old knowledge with the new demands. The new leaders must forge a way of thinking and of relating to others from a new perspective – social, moral, emotional and spiritual. They will acquire this new wealth of skills and capabilities in the course of their own human development. The new leaders will have an inclusive and generous way of thinking. Their new capabilities will be based on a new scale of values to be anchored more in the ability “to be” rather than the ability “to have”.

Inspirational approach

Leading in the 21st century does not mean losing focus of achieving organisational goals, productivity and effectiveness. It involves being able to go beyond that and attain a higher

Thus, the conscious leader sees the world as an opportunity to contribute, using their gifts and talents. They are able to reach their goals through their passion for what they do. Their starting points are simple basic questions: How can I contribute? What can I add here? What do I have to learn to be a better human being and increase my effectiveness? Expanded consciousness, within the framework of organisations and management, affects the attitude and behaviour of leaders, presenting a new perspective that allows them to lead effectively, according to a new scale of values. Today, more than ever, organisations need inspirational leadership based on values such as transparency, integrity, honesty, and the ability to create and to connect with, cooperate with and develop others. Today, more than ever, a leader must know how to lead by example. Human relations based on this new perspective are one of the values that 21st century organisations must have to exploit creative, innovative and intelligent human capital. Successful organisations of the future will be those that can capitalise on the spirit, imagination and intelligence of people in a way that no traditional authoritarian organisation could ever achieve. It is important to understand that to access the genius and talent of people and to use them in the service of the organisation, the organisation must have leaders that arouse and encourage this attitude. Otherwise people will continue to work only for a pay cheque. APRIL 2011

Date: Event:

April Date: Event:

30 th March – 1st April

YNow - International Youth Leadership Summit

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:

31st March – 2nd April

Venue: Organiser: Tel: Fax: Website: E-mail:

The Venetian Macao IPIM | DSPA (853) 8798-9675 (853) 2872-7123 www.macaomiecf.com miecf@koelnmesse.com.hk

Date: Event: Venue: Organiser: Address:

10 th – 12th

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

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

APAC Investments Summit 2011

The Venetian Macao marcusevanskl CP21, Suite 2101, Central Plaza 34 Jalan Sultan Ismail 50250 Kuala Lumpur, Malaysia (603) 2723 6600 (603) 2723 6700 www.apacinvestmentssummit.com webenquiries@marcusevanscy.com 13th – 14th

World Gambling Briefing

The Hilton, malta Clarion Gaming Earls Court Exhibition Centre London SW5 9TA, UK (44) 0 207 370 8594 www.worldgamblingbriefing.com chris.clarke@clariongaming.com

Tel: Fax: Website: E-mail:

Delta Inter Chamber Event (DICE)

Venue: Sofitel at Ponte 16, Macau 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 Date: Event: Venue: Organiser: Address: Tel: Website: E-mail: Date: Event:

17th – 19 th

GIGSE

TBC, San Francisco, California Clarion Gaming Earls Court Exhibition Centre London SW5 9TA, UK (44) 0 20 7370 8579 www.gigse.com yeemay.huang@clariongaming.com 18th – 20 th

International Hotel Investment Forum (IHIF) Asia Pacific

Venue: The Venetian Macao Organiser: Questex Media Address: 371 Beach Road, #12-02/03 Keypoint, Singapore 199597 Tel: (852) 2589 1360 Website: www.ihif-asiapacific.com E-mail: jchung@questexasia.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 June

May Date: Event: Venue: Organiser: Address:

13th

4th – 7th

GTI Asia Taipei Expo

Taipei World Trade Center, Taiwan Haw Ji Co., Ltd. 2F, No. 17, PaoChing St. SongShan Dist., Taipei City 10585, Taiwan (886) 2 27607407~10 (886) 2 2742-0522 http://www.gtiexpo.com.tw/taipeien/ gametime@taiwanslot.com.tw

Date: Event: Venue:

6th – 7th

Asia Business Technology Forum 2011

Park Royal Hotel, Jalan Sultan Ismail 50250 Kuala Lumpur, Malaysia Organiser: Comfori International Address: KL Business Centre, Level 2 Menara KH, Jalan Sultan Ismail 50200 Kuala Lumpur, Malaysia Tel: 603 2141 0342 Fax: 603 2141 3727 Website: www.comfori.com E-mail: hueyying.leong@comfori.com

Date: Event: Venue: Organiser: Address:

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

7th – 9 th

G2E Asia

The Venetian Macao Reed Exhibitions | AGA 39/F., Hopewell Center, 123 Queen’s Road East, Wanchai Hong Kong (852) 2965 1633 (852) 2824 0246 www.g2easia.com wendy.fong@reedexpo.com.hk 7th – 9 th

Russian Gaming Week

Crocus Expo, Moscow, Russia 8а, Vernadskogo prospect Moscow, 119311, Russia (7) 499 550 08 96 (7) 499 550 08 97 www.rgweek.com info@smile-expo.com

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

Tel: Fax: Website: E-mail:

8th – 9 th

BetMarkets

Vienna, Austria, TBC Clarion Gaming Earls Court Exhibition Centre London SW5 9TA, UK (44) 0 20 7370 8579 www.bet-markets.com yeemay.huang@clariongaming.com 22nd – 23rd

SAGSE Gaming Panama 2009

ATLAPA Convention Center, Panama City Monografie S. A. Av. Alvear 1883 Loc. 21 (C1129AAA) Cdad. Aut. de Buenos Aires Argentina (54) 11 4805 4623 (54) 11 4805 4791 www.sagsepanama.com info@monografie.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

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Technology

Business speak The release of Chinese-character Internet addresses is likely to benefit e-commerce hinese speakers will soon find it much easier to access ‘.mo’ web pages with the territory’s top-level domain gearing up to be able to register addresses in Chinese characters. Macau’s 3,000-registered ‘.mo’ domains can currently use only Latin letters but the Internet Corporation for Assigned Names and Numbers, the international organisation that oversees domain names, approved the use of Chinese characters mid-last year. The mainland and Hong Kong have already begun implementing the change and Macau is not far behind, with the first Chinese-character Internet addresses expected to be rolled out within one year. The innovation comes as management of the city’s unique two-letter domain switches to privately held HNET Asia Ltd. HNET took over the responsibility for registration and administration of the .mo-domain from the University of Macau last month. The university had been in-charge of the task since 1992. The government signed a three-year contract with HNET for about MOP12.8 million (US$1.6 million). The public tender for the contract included telecommunications companies CTM, China Telecom and a consortium of Malaysian company Qinetics Solutions and Companhia de Ers Soluções.

E-commerce drive The option to award the contract of Macau’s top-level domain names to a private company follows an international APRIL 2011

trend to develop e-commerce and electronic transactions, the Bureau of Telecommunications Regulation said. Country code top-level domains or ccTLD’s, such as .mo, .uk and .jp, correspond to a country, territory, or geographic location. HNET is a joint venture between HN Group, formerly Nolasco, a local diversified business group, and the DotAsia Organisation, a regional not-for-profit organisation from Hong Kong with the mission to promote the development of the Internet.

DotAsia said Macau’s recent growth as a tourist and gaming destination had translated into “growing traffic to the Macau Internet domain for tourist information, restaurants, and hotels, which in turn lead to strong growth in e-commerce, online ad spending and much more”. DotAsia chief executive officer Edmon Chung hopes the introduction of Chinese characters in web domains will further boost demand. The company is currently establishing policies for the use of traditional and simplified

Registered .mo domain names .com.mo .edu.mo .gov.mo .org.mo .net.mo .mo Total

Dec 1998

Dec 2002

Dec 2006

Dec 2009

44 11 25 8 1 2 91

510 56 75 101 5 3 750

1,352 74 111 255 13 116 1,921

1,949 82 146 368 9 264 2,818

characters and registration procedures, besides tackling some technical issues. He predicts Chinesecharacter domains will be very important for the economy as the majority of the companies and products in Macau have Chinese names and use Chinese as their working language. They also mainly target Chinese speaking clients and consumers. Since Internet users usually type keywords in their own languages when searching websites in search engines, getting a Chinese web address would increase its visibility for Chinese searches. Names will be released in stages, with priority given to government bodies, companies and organisations. Although the domain name registry operator has changed, the fee to register an ‘.mo’ domain will be fixed at MOP200 at least until next February.

119 BENJAMIN J. SOVACOOL PROFESSOR AT THE LEE KUAN YEW SCHOOL OF PUBLIC POLICY, NATIONAL UNIVERSITY OF SINGAPORE

The dirt on nuclear power ADVOCATES OF NUCLEAR ENERGY HAVE MADE CONSIDERABLE POLITICAL HEADWAY AROUND THE WORLD IN RECENT YEARS, TOUTING IT AS A SAFE, CLEAN, AND RELIABLE ALTERNATIVE TO FOSSIL FUELS. BUT THE HISTORICAL RECORD CLEARLY SHOWS OTHERWISE apan’s nuclear crisis is a nightmare, but it is not an anomaly. In fact, it is only the latest in a long line of nuclear accidents involving meltdowns, explosions, fires, and loss of coolant – accidents that have occurred during both normal operation and emergency conditions, such as droughts and earthquakes. Nuclear safety demands clarity about terms. The Nuclear Regulatory Commission in the United States generally separates unplanned nuclear “events” into two classes, “incidents” and “accidents.” Incidents are unforeseen events and technical failures that occur during normal plant operation and result in no off-site releases of radiation or severe damage to equipment. Accidents refer to either off-site releases of radiation or severe damage to plant equipment. The International Nuclear and Radiological Event Scale uses a seven-level ranking scheme to rate the significance of nuclear and radiological events: levels 1-3 are “incidents,” and 4-7 are “accidents,” with a “Level 7 Major Accident” consisting of “a major release of radioactive material with widespread health and environmental effects requiring implementation of planned and extended countermeasures.” Under these classifications, the number of nuclear accidents, even including the meltdowns at Fukushima Daiichi and Fukushima Daini, is low. But if one redefines an accident to include incidents that either resulted in the loss of human life or more than US$50,000 (MOP400,000) in property damage, a very different picture emerges. At least 99 nuclear accidents meeting this definition, totalling more than US$20.5 billion in damages, occurred worldwide from 1952 to 2009 – or more than one incident and US$330 million in damage every year, on average, for the past three decades. And, of course, this average does not include the Fukushima catastrophe.

A fatal energy source

Indeed, when compared to other energy sources, nuclear power ranks higher than oil, coal, and natural gas systems in terms of fatalities, second only to hydroelectric dams. There have been 57 accidents since the Chernobyl disaster in 1986. While only a few involved fatalities, those that did collectively killed more people than have died in commercial US airline accidents since 1982. Another index of nuclear-power accidents – this one including costs beyond death and property damage, such as injured or irradiated workers and malfunctions that did not result in shutdowns or leaks – documented 956 incidents from 1942 to 2007. And yet another documented more than 30,000 mishaps at US nuclear-power plants alone, many with the potential to have caused serious meltdowns, between the 1979 accident at Three Mile Island in Pennsylvania and 2009. Mistakes are not limited to reactor sites. Accidents at the Savannah River reprocessing plant, in the United States, released ten times as much radioiodine as the accident at Three Mile Island, and a fire at the Gulf United facility in New York in 1972 scattered an undisclosed amount of plutonium, forcing the plant to shut down permanently. At the Mayak Industrial Reprocessing Complex in Russia’s southern Urals, a storage tank holding nitrate acetate salts

exploded in 1957, releasing a massive amount of radioactive material over 20,000 square kilometres, forcing the evacuation of 272,000 people. In September 1994, an explosion at Indonesia’s Serpong research reactor was triggered by the ignition of methane gas that had seeped from a storage room and exploded when a worker lit a cigarette. Accidents have also occurred when nuclear reactors are shut down for refuelling or to move spent nuclear fuel into storage. In 1999, operators loading spent fuel into dry-storage at the Trojan Reactor in Oregon, in the United States, found that the protective zinc-carbon coating had started to produce hydrogen, which caused a small explosion.

Many risks

Unfortunately, on-site accidents at nuclear reactors and fuel facilities are not the only cause of concern. The August 2003 blackout in the north-eastern United States revealed that more than a dozen nuclear reactors in the US and Canada were not properly maintaining backup diesel generators. In Ontario during the blackout, reactors designed to unlink from the grid automatically and remain in standby mode instead went into full shutdown, with only two of twelve reactors behaving as expected. As environmental lawyers Richard Webster and Julie LeMense argued in 2008, “the nuclear industry ... is like the financial industry was prior to the crisis” that erupted that year. “[T]here are many risks that are not being properly managed or regulated.” This state of affairs is worrying, to say the least, given the severity of harm that a single serious accident can cause. The meltdown of a 500-megawatt reactor located 30 miles (48 kilometres) from a city would cause the immediate death of an estimated 45,000 people, injure roughly another 70,000, and cause US$17 billion in property damage. A successful attack or accident at the Indian Point power plant near New York City, apparently part of Al Qaeda’s original plan for September 11, 2001, would have resulted in 43,700 immediate fatalities and 518,000 cancer deaths, with cleanup costs reaching $2 trillion. To put a serious accident in context, according to data from my forthcoming book “Contesting the Future of Nuclear Power”, if 10 million people were exposed to radiation from a complete nuclear meltdown (the containment structures fail completely, exposing the inner reactor core to air), about 100,000 would die from acute radiation sickness within six weeks. About 50,000 would experience acute breathlessness, and 240,000 would develop acute hypothyroidism. About 350,000 males would be temporarily sterile, 100,000 women would stop menstruating, and 100,000 children would be born with cognitive defi ciencies. There would be thousands of spontaneous abortions and more than 300,000 later cancers. Advocates of nuclear energy have made considerable political headway around the world in recent years, touting it as a safe, clean, and reliable alternative to fossil fuels. But the historical record clearly shows otherwise. Perhaps the unfolding tragedy in Japan will finally be enough to stop the nuclear renaissance from materializing. APRIL 2011

120

APRIL 2011

Advertising

And the LongXi goes to... Macau will host the first LongXi festival, an extended version of the LongXi advertising awards BY ALEX ALEXANDRA XANDRA AN LAGES

121

o you speak Chinese? If so, in August you will have the opportunity to see some of the best Chinese-language ads right here in Macau, not only from the mainland, but from all around the world. If you do not speak Chinese, don’t worry. There will be English translations provided. The LongXi International Chinese Language Advertising Creative Awards organisation announced last month that Macau will host the 2011 LongXi Awards. But the real news is that this year, organisers Tomaz Mok, Jimmy Lam and Peter Soh – all-high profile professionals in the advertising sector – have decided to go beyond just an awards ceremony and do something bigger: an advertising festival focusing on both traditional and new media, called the LongXi Festival of Minds. “We wanted to do a festival similar to the famous Cannes Lions International Festival of Creativity,” Mr Mok, who served three times as a jury member at the French festival, told Macau Business. “However, our target is different. We are targeting the Chinese-speaking advertising professionals, as well as foreigners who are interested in knowing more about Chinese advertising,” he says. The event will take place from August 19 to 22, according to a tentative schedule. The venue has yet to be confirmed, but the organisers are aiming to use the convention centre at the Macau Science Centre.

Cannes do attitude

Jimmy Lam, Tomaz Mok and Peter Soh

The organisation expects the festival to bring around 500 delegates to the city, half from the mainland and the rest from Hong Kong, Taiwan, Japan, South Korea, Singapore, Malaysia and Australia. APRIL 2011

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Advertising

The organisers picked Macau to hold the first LongXi festival because it is a tourist destination and has everything needed to pull off such an event successfully. “During the festival, Macau can provide the facilities, food and beverage, and good entertainment,” Mr Soh points out. Macau’s historical background was also important for the choice. “Macau is historically the place where East meets West, and our festival has the same feature. Macau is the perfect place to meet,” Mr Mok says. He emphasises advertising is the best way to understand the stunning economic growth of China. “What I observed while I was in Cannes is that people are always interested in any emergent market. So they are eager to APRIL 2011

know how advertising is done in this part of the world.” For foreign advertisers eyeing the Chinese market, the LongXi festival can provide some insight into how ads work in China, Mr Mok says. “They want to expand their business to China and they want to know how to communicate. What is the tolerance of the target consumer? Can they absorb drama? How humorous can ads be? What are the sensitivity issues? What is the similarity with the rest of the world?” The festival will include seminars on advertising and communication; networking sessions; and the screening and exhibition of award-winning TV commercials and other forms of advertising. “We will subtitle the ads, in order for foreigners to understand them. Some-

times they may not fully understand, because of the culture [differences], but at least they can read them,” Mr Mok says. Also part of the festival is the final of the LongXi Nova Awards. First started in 2008, this is a competition for teams of writers and art directors aged 28 and below. The finalists will have to race to complete a creative project in just 48 hours, based on a briefing by one of the festival’s sponsors.

Shifting balance The highlight of the event will be the LongXi Awards ceremony. The prizes are the only cross-market Chinese-language advertising accolades included in two annual global creative rankings – the GUNN Report and the Big WON. The LongXi Awards were first

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handed out in 1998 and cover various media. Beijing, Shanghai, Hong Kong, Singapore and Kuala Lumpur, among other cities, have hosted the event. On average, the LongXi Awards receive around 1,000 entries per year. The organisers have noted that the balance of the applications has been changing over the past decade. “Entries from traditional media are decreasing now that there are new media, from which entries are increasing,” Mr Lam says. Entries from the mainland are leading the way. “China is growing. When we started, the markets from which we received more entries were Hong Kong, then Taiwan, Singapore and the mainland. Today it is exactly the reverse,” Mr Lam says.

Thinking inside the box I

n a prosperous place like Macau, with a booming economy and visitors flocking into town every day, businessmen do not see a real need to invest in advertising to improve sales, says Tomaz Mok, one of the founders of the LongXi Awards. “Macau is a small city and its communication channels are affected and overwhelmed by neighbouring cities like Hong Kong. They [local residents] receive lots of information [from neighbouring cities] and most of the products they are using are more or less the same, as well as the lifestyle. There is really no point to tailor-make regional advertising for this limited population,” comments Mr Mok, who was born in Macau. However, he believes that some retailers could make a difference if they bet on original and bold advertising to capture new consumers. Mr Mok says advertisements made in Macau show little creativity. “They are quite basic. They just do it in a very straightforward way, put the message inside a box, and that’s it.” A lack of skilled professionals is not a problem, he considers. “There are TV and radio stations in Macau, graphic designers and photographers. I think there are enough capable people and talent.” APRIL 2011

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Arts & Culture

TRUE TO THE

THIS YEAR’S MACAO ARTS FESTIVAL IN MAY BRINGS SOME QUALITY

Eighth Floor and a Half

INTERNATIONAL TALENT TO THE CITY BUT IT’S THE EMPHASIS ON

ROOTS

The Ten Brothers

LOCAL ARTS THAT MAKES IT SOMETHING SPECIAL

he month of May has held a special significance in Macau’s cultural calendar for more than two decades. This year is no different. Now in its 22nd edition, the Macao Arts Festival will bring more of the world’s best performances to the territory from April 29 to May 28. The 29 performances from nine different countries and regions span a number of different cultural and artistic genres but always have a large serving of home-grown flavour, with 14 performances from artists with a strong connection to Macau. The theme of “Enjoy Life through Arts” resonates through the line-up of artists with its traditional emphasis on Chinese and more specifically Cantonese art forms. There are the outreach sessions with the artists, including some family friendly sessions, heavily discounted tickets, free sessions, and the rare chance to soak up the arts in one of Macau’s splendid World Heritage-listed venues.

Traditional talent Featuring around 90 shows with acts from Portugal, Spain, Britain, France, Israel and Argentina, it is the clear show of support for home-grown talent that festival-goers will remember this year. This year’s festival hints at the rich traditions of Chinese storytelling and folk arts. Cantonese opera features with a large-scale production of De Ling and the Empress Dowager Ci Xi by Art of Cantonese Opera, a Hong Kong company on May 24. APRIL 2011

Ti-tó-tis – Dance and Music for Babies

The version of this masterpiece was adapted by renowned director Law Kar-Ying and first presented to the public last year. The stellar reviews and star-studded playbill, including Liza Wang, means this production is eagerly awaited. The Macao General Association of Cantonese Opera and Music presents Cantonese Opera in Concert at the Alegria Cinema on April 30 and May 1. The performance features selections from the classic repertoire performed by an all-star cast. Music makes a substantial contribution to the programme, beginning on May 7 with a concert by the Macao Conservatory School of Music. Conducted by Francis Kan, the Macao Orchestra’s assistant conductor, Melodies of Youth 2011 features performances by local rising classical guitar star Chan Kai Ieng, alongside teachers and students from the conservatory. A legendary interpretation of the literary classic, Dream of the Red Chamber by Wang Liping, is promised by

125 the Macao Chinese Orchestra on May 8. The orchestra joins forces with the China Broadcasting Chinese Orchestra and special guest Wu Bixia. From the classic to the avant-garde, the spotlight falls on the Macao Orchestra and some of the mainland’s most famous contemporary composers with a programme of symphonic pieces in Meet the Composers – Premieres of Newly Commissioned Works. The performance on May 14 will showcase the latest trends in classical music from Ye Xiaogang, Bright Sheng and Lam Bun-Ching and Doming Lam, two celebrated composers from Macau.

For the family This year’s festival features a number of performances designed for the whole family. Macau’s Little Mountain Arts Association presents The Ten Brothers in Dom Pedro V Theatre on April 30 and May 1. This is an interpretation of the mythical fairy tale that has been enjoyed for centuries. Each brother has a particular supernatural strength and pronounced human weakness. Another treat for the younger ones is Kallima, the Gluttonous C aterpillar from local group Black Sand Theatre playing at Lou Kau Mansion. The performance is a vivid lesson in natural science, incorporating music, puppetry and human performance. Eighth Floor and a Half, a puppetry performance by the Guangdong Province Puppet Art Theatre Group on May 5 has garnered enormous public praise and won numerous prizes. Dubbed “the Chinese version of The Lion King,” the show is a green fairy tale, a story about the Earth, nature and a tribute to humanity. Perhaps the most unique family performance of them all comes from Portugal’s Passos e Compassos. Ti-tó-tis – Dance and Music for Babies is a full, interactive show for parents and babies to interact with music and explore dance. The 45-minute performance in the Dom Pedro V Theatre Lobby integrates lighting, sound, sets and images to help establish cultural habits for the entire family.

overseas groups and performers. The breadth and spread of the performances ensures echoes of both tradition and modernity. Through the length of the Festival, the city’s Old Court Building has a free exhibition, 2011 Macao Annual Art Exhibition. The exhibition presents 78 works in a variety of genres including traditional Chinese painting, calligraphy, seal-engraving, photography, sculpture, poster design, video and installation. A second free exhibition, A Glimpse at French Contemporary Painting, runs through the festival and into August, everyday between 10am and 7pm. The show presents contemporary works by eight artists, dedicated to figurative and abstract painting. On weekend evenings on May 7 and 8, 21 and 22, the Mandarin’s House will host the “Festival Corner”. The tranquil environment of the World Heritage-listed mansion will give residents a chance to meet festival artists, one on one, after free, live performances. This new innovation gives the festival its own meeting point and creates a club for festival attendees. By presenting any festival ticket, audiences can enjoy light refreshments at the “Festival Corner” on a first-come, first-served basis.

Reach out While the 22nd edition of the festival has gained a family flavour, it has also retained a selection of free events, pre and post-event talks and workshops. Nightly between May 6 and 10, the Iao Hon Garden is home to the Outdoor Performing Arts Showcase. The free performances will feature artists from the various generations and traditions of Macau, as well as

Tickets, please Tickets for all performances are on sale now at all Kong Seng Ticketing outlets, online and by phone booking. Prices are steeply discounted, including a 40 percent reduction for tickets to at least four performances, discounts for buying in bulk, and there are also concession prices for students, senior citizens and supporters of the arts. For telephone bookings, please call the 24-hour festival hotline 2855 5555 in Macau, 2380 5083 in Hong Kong and 139 2691 1111 in the mainland. Online bookings are available at www.macauticket.com. For more information, visit www.icm.gov.mo/fam.

De Ling and the Empress Dowager Ci Xi APRIL 2011

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

What a girl wants espite the fact that Christina Aguilera popularized the song “What a Girl Wants”, written by Shelly Peiken and Guy Roche, and that director Dennie Gordon went on to make a movie in 2003 with the same title, if you are given two seconds to answer the question, you will probably say that what a girl wants is to find her prince charming; or, if you have a more practical approach to life, you will simply answer diamonds! Curiously enough, until the late 19th century, diamonds didn’t have the attractiveness that they seem to have nowadays. However, around that time, someone started to perceive diamonds as rare and valuable stones representing signs of prestige. Then, advertising campaigns, songs and other marketing strategies made them “a girl’s best friend” as they are beautiful and precious stones that symbolize eternity. So, a diamond offering can show a girl that her prince charming can provide for her. (Maybe it is because they are so expensive that men prefer to have dogs as their “best friends”). Moreover, diamonds also play the role of an “insurance policy” for the owners, with a slight difference: it is much easier and appealing to take them for a walk than a dog – no need to clean them after. In one word, diamonds and dogs both represent security. And all human beings need security in their lives. But what else do we need?

The important things Going back to the original question, what do girls (and also boys) really want from life? According to a worldwide survey (not exclusive to ladies), people want balance, simplicity, success and effectiveness. When we talk about balance, we are referring to spending an optimal amount of time on each activity or role we play in life. Whether it is work, family, school, friends or any other thing, there is always what feels like the “right” amount of time to allocate to each task. Simplicity, as strange as it seems, is seen as the opposite of technology. Technology makes things go faster and faster, and this brings frenzy! Popular hi-tech brands are always flooding the market with high-end gadgets, tempting people with the latest smart-phone, tablet or laptop as soon as they are introduced. Is this a good thing? Not really! With something new and expensive, you feel that you need to use it more often. So, you will spend a huge amount of time understanding how it works and figuring out how you can maximize its capabilities in order to justify the financial outlay - even if you really don’t need all the features offered by the new gizmo.

SHUTTLE SPACE Reolian, the new public bus company set to start operating in August, says it has been having a hard time hiring drivers. It even asked the government to allow it to import some from the mainland temporarily while it trains locals, but got a loud “no”. No wonder Reolian finds it hard to get staff. Competition for labour in Macau is fierce in any sector, but even more so when you are fighting against the big boys – the casinos. According to official figures, in January there were roughly three coaches for each public bus. Most coaches are shuttles serving casinos. Galaxy Macau will be adding 70 new shuttles to the casino fleet next month. Frozen Spy has an idea. Why not just add some additional stops on the casino shuttle routes and have them work as public transport, with the gaming operators earning an extra buck? Actually, it is not an original idea. There are many people who already use the free services as public transport. The great advantage in repurposing the coaches is they are more comfortable than public buses and their drivers do not seem to be in training for the Macau Grand Prix.

Praise is good Success is another thing that people crave. Therefore, recognition plays a huge role in such achievements. So, consider giving plaques or cards recognizing the qualities of your loved ones or colleagues. In some environments, such action will have a greater impact than a raise in salary. Finally, according to the same survey, people also want effectiveness. So, are you busy running around but getting very little done? You probably require a rupture from your daily routine; some time management tools just might do the trick. People need to be able to use their time carefully and get the idea that a particular activity is worthy of their time. Otherwise, they will feel frustrated. So, here are this month’s tips: 1. Re-think your time management strategy, based on what you actually want to achieve; 2. Learn to say “No”, as it will give you more time to spend on the things you want to do; 3. Renew, re-use and recycle before you buy something new; 4. Buy simple “stuff” that fits the purpose intended and not high-end technology that you need to spend a huge amount of time to work with, and that you may not really need; 5. Praise whatever and whoever you believe deserves your compliments; 6. Use your time wisely. If you take a moment to compartmentalize your life into the following three categories: i) things you have control over, ii) things you have influence over and iii) things you don’t have control over, you are already working on this month’s number one tip. Do not spend one minute on things you cannot control. If you believe in these tips and practice them wisely, they will have a hugely positive impact on your life.

APRIL 2011

PRICEY MOVEMENTS Everyone in Macau is worried about inflation. So, it makes all the sense in the world for the Consumer Council to keep a close eye on the prices of essential goods. And that is exactly what it is doing. The council recently conducted a survey of prices of tissue and toilet paper, looking at 11 samples sold in 25 different retail outlets. “Tissue and toilet paper are essential to consumers’ daily lives but their prices tended to fluctuate during the past few months,” it said. Frozen Spy will think twice next time it needs to go to the bathroom.

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THE RIGHT STUFF

PAY UP, SHUT UP

Macau’s traffic is a mess. But how could it be otherwise, since there are almost no police out on the roads controlling it? Instead, the police are normally too busy giving parking tickets, even when the parking meters belong to a private company. Welcome to Macau. But, wait, isn’t that a van load of police officers coming from the direction of the Sands Macao, making an illegal turn, then stopping the traffic and almost mounting the pavement? There’s nothing quite like setting a good example.

As it announced last month that US regulators were probing its relationship with Macau’s top officials, Las Vegas Sands also discreetly revealed it had already paid the RMB10.8 million (MOP13.2 million) penalty imposed by the mainland’s State Administration of Foreign Exchange on one of its whollyowned enterprises on the other side of the border. “The penalty has been paid and this matter has been closed,” the company said. To Frozen Spy, this “pay and shut up” behaviour comes as a surprise. Las Vegas Sands is usually keen on appealing decisions that go against it. What is most interesting is that the company has never elaborated on why it was fined in the first place. The State Administration of Foreign Exchange regulates foreign currency exchange transactions and other business dealings in the mainland. Las Vegas Sands’ wholly-owned enterprises there were established to engage in non-gaming marketing activities and “to create goodwill in China and Macau for the company’s operations in Macau”. Anyone care to connect the dots?

INFLATION? WHAT INFLATION? Chief Executive Fernando Chui Sai On must reshuffle the team of people briefing him. Or, at least, he could take a few minutes every day to read the newspapers. On March 3, as Mr Chui left to Beijing for the plenary session of the National People’s Congress, he assured reporters that his government always paid close attention to the livelihood of the people. He said it would introduce a series of relief measures should the annual inflation rate as measured during the last 12 months rise above 3 percent. But wait a second. Hadn’t that happened already? The average of the year-on-year increases in the composite consumer price index in each of the 12 months ended in January was 3.2 percent. And the Statistics and Census Service announced as much on February 21 – 10 days before Mr Chui’s comments.

ETERNAL OPTIMIST Frozen Spy loves an optimist. And, indeed, Deng Jun, the chairman of the Macau International Airport Company (CAM) seems to be one. Although passenger numbers at the airport dropped by 4 percent last year, Mr Deng is still happy with the result. Recently, while showing the facilities to a Zhuhai delegation, he stressed that last year Macau airport had “successfully transformed from a transfer airport to a destination airport,” according to a CAM press release. This is because 93 percent of the airport’s 4.07 million passengers last year were destination visitors, he explained. Frozen Spy hates to be a spoiler, but if Macau received 25 million tourists in 2010 and only 6 percent entered the city through the airport, which has lost passenger numbers for three years in a row, it is hardly a good result. Maybe things will improve this year. Probably not. In January, passenger volume dropped 16 percent year-on-year. Frozen Spy hopes Mr Deng still sees the glass half full.

APRIL 2011

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April 2011

index

7 Luck Casino

www.7luck.com

Aristocrat

Page 23

www.aristocratgaming.com

Aruze Gaming

Page 9

www.aruze-gaming.com

Bally Technologies

Page 19

www.ballytech.com

BMW

Page 1

www.bmw.com.mo

BNU

Page 43

www.bnu.com.mo

Fidelidade Mundial Seguros

Page 2

www.fidelidademundial.pt

Galaxy Entertainment

Page 21

www.galaxyentertainment.com

Macau Daily Times

Page 120

www.macaudailytimes.com.mo

Macau Post Office

Page 75

www.macaupost.gov.mo

Melco Crown Entertainment

Page IFC

www.melco-crown.com

Melco Crown Entertainment

Page 25

www.melco-crown.com

Melco Crown Entertainment

Page IBC

www.melco-crown.com

MGM Macau

Page 3

www.mgmmacau.com

MGTO

Page 4

www.macautourism.gov.mo

Mortonâ&#x20AC;&#x2122;s The Steakhouse

Page 39

www.mortons.com

One Oasis

Pages 66-67

www.oneoasismacau.com

Our Dental Clinic

Page 81

www.ooioc.com

PokerStars Macau

Page 7

www.pokerstarsmacau.com

Sands China

Page 5

www.sandschinaltd.com

Shuffle Master

Page 12

www.shufflemaster.com

SJM

Page 42

www.sjmholdings.com

Star City Hotel & Casino

Page 15

www.starcity.com.au

UNLV

Page 40

www.unlv.edu.sg

APRIL 20112011 JANUARY NOVEMBER 2010