MB 87 | July 2011 by Macau Business

JULY 2011

Economy & Finance 24 Work in progress Several of the preferential policies for companies operating on Hengqin Island have yet to be announced

Property 30 Market watch New special stamp duty brings down number of deals, but not prices

Transport 36 First gear The general manager of new public bus operator Reolian has an optimist outlook

Gaming 40 Billions race Gross gaming revenue shot up 50-plus percent in June but a record-breaking run came to an end 42 Stock watch Macau gaming stocks were a mixed bag last month 45 Grand gesture Finding meaning in the first public visit by a high-ranking mainland official to several casinos

JULY 2011

47 Crown’s gamble Melco Crown acquires a majority stake in Studio City project

48 Let’s party Pool parties are the latest trend in the gaming industry 52 Back in the ring City of Dreams brings back martial arts tournaments 56 Doing the laundry Report refers to casinos as a site for money laundering for corrupt mainland officials 58 Game on Wuhan okays regular horseracing

Special 59 G2E Asia Record numbers at Asia’s leading gaming industry trade show

Tourism 84 Getting real Tourist Office shouldn’t play down gaming when promoting Macau, experts say 90 Double first Hotel Okura’s general manager wants to grow the local hospitality market 94 Grooming leaders Hotels endorse training fund for workers

JULY 2011

Education 95 TIS in loco parentis Macau’s first boarding school to open in August

Essential 97 Fine dining Your guide to indulgence

Charity 114 Winged mercy International charity Global Flying Hospitals makes Macau its base in East Asia

Arts & Culture 118 Ending on an emotional note Barry Douglas to close Macao Orchestra concert season 120 Theatre remixed The surround-sound world of cinema collides with live theatre at the Cultural Centre

JULY 2011

Entertainment 122 It’s mingling time Fourth edition of the Delta Inter Chamber Event was another success 124 Rocking the ballroom British Business Association puts on its dancing shoes for annual ball

Opinion 8 From the publisher’s desk Paulo A. Azevedo 11 Editorial Emanuel Graça 29 Unlucky thirteen Keith Morrison 33 Impact crater José I. Duarte 83 Deception by the boatload Brahma Chellaney 93 Taking responsibility Gustavo Cavaliere 113 The ASEAN heart of Asia Surin Pitsuwan 126 A post-crisis world of risk Michael Spence

JULY 2011

Limited responsibilities THE 2011 MACAU BUSINESS CHARITY GOLF TOURNAMENT AND GALA DINNER will take place later this year. It will be the fifth anniversary of this tremendous effort by several companies who have supported an initiative to assist charity. So far, more than HK$2 million has been raised to help those disadvantaged and in distress. This is a significant feat for an event organised by private companies without any official support whatsoever. To apply for government support the event would need to find a kind of strange partnership with an association, something that occurs frequently but that we refuse to do. It is easy to create such an association. There are plenty of them in Macau, hundreds, most of them doing nothing, except when they get these kinds of partnerships, strange partnerships, in order to get cash from the public coffers. Count us out. From talking to friends and colleagues that have organised similar events in the name of corporate social responsibility over the years, a few conclusions emerge. If we momentarily exclude the casino operators, Macau’s big businesses contribute little or nothing to corporate social responsibility activities.

JULY 2011

Those who contribute the most are medium-sized companies in the so-called non-traditional sectors and many are backed by international capital. Several of the territory’s traditional businesses, from the real estate tycoons to financial institutions such as the Bank of China and ICBC, still believe that it is none of their business to contribute to the development of a city that welcomed them and that helps make their operations so profitable. These are powerful companies that no one in their right mind would dare point the finger at. Instead, the critics look elsewhere, like towards some companies that are defenceless against social pressure – namely companies that are not backed by Chinese capital. It is time to realise that, besides the gaming operators, there are just a handful of Chinese companies – and even fewer companies owned by Macau residents – supporting events aimed at improving the welfare of those in need. Besides a few events by the Women’s Association of Macau and the politically correct Charity March for a Million organised by the Macau Daily News newspaper, that has become a

It is time to realise that, besides the gaming operators, there are just a handful of Chinese companies – and even fewer companies owned by Macau residents – supporting events aimed at improving the welfare of those in need

walk for much more than just MOP1 million, there have been few advances. The prevailing mentality is that social responsibility is something inherent to outside investors.

A Portuguese illness During a casual conversation over coffee and under sunny Lisbon skies, an architect friend that has lived for many years in Macau told me he thought it was amazing how there is not a single mention of Macau in Portugal’s media. It is an old complaint that has been going on for decades or, dare I say, centuries. In Macau, we know what we are talking about when we mention the distance that separates us from Lisbon. During the Portuguese administration, Lisbon took little notice of its territory. So, why should it act differently now? The more incredulous argue that everyone but Portugal is exploring the mainland market. Despite the small size of the country and the mentality of many of its officials, Portugal is one of the few nations that enjoy a natural safe haven in China. It is the ace up its sleeve. Indeed, Macau could act on behalf of Portuguese interests, the way it has been doing for so many others. Unfortunately, all it takes is to go to Portugal to realise that the Portuguese are loathe to help themselves.

The country is in recession, with a strong likelihood it will follow the bad example set by Greece. The most frequent questions on the streets there are: what will they do to my salary, will I be able to continue paying my loans, are my savings at risk and will Portugal be forced to leave the euro? The Portuguese continue to calmly enjoy a countless number of public holidays and fight to keep their social rights intact, when they should be thinking about renewing their obligations. Unlike the northern European countries, well prepared in advance to bear the costs of a social state, their southern counterparts demand the perks without thinking how they might afford them. With no middle ground between what you owe and what you are entitled to, and with a natural inclination for abuses by bad governance, there can only be one result: to face years of debt and be lectured by a troika composed of the International Monetary Fund, the European Union and the European Central Bank. Through all of this, Macau should keep the best of its Portuguese inheritance: its healthy balance between creeds and races. It should also lose the worst part of it: a trend for officials to be unaccountable and for some in business to use ‘guanxi’ as a technique to thrive.

JULY 2011

VOL.1 Nº87

Editorial Council Paulo A. Azevedo, Albano Martins, Duncan Davidson, Herman He Founder and Publisher Paulo A. Azevedo pazevedo@macaubusiness.com

Editor-in-Chief Emanuel Graça emanuel.graca@macaubusiness.com

Executive Director Business Development Luis Pereira

jid@macaubusiness.com

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

Hong Kong Bureau Michael Hoare (Chief), Anil Stephen

Advertising Xu Yu, Irene

pereiraluis@macaubusiness.com

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

Property Editor Alan Tso tsoalan@yahoo.com.hk

Senior Analyst José I. Duarte

michael.hoare@macaubusiness.com

irene@bizintellingenceonline.com

Europe Bureau Joyce Pina (Chief)

Advertising Agents Bina Gupta

jpina@macaubusiness.com

Paula Joyce

Special Correspondent Muhammad Cohen info@muhammadcohen.com

Beijing Correspondent Maria João Belchior maria_belchior@yahoo.com.br

Manila Correspondent Max V. de Leon maxdeleon_080975@yahoo.com

Assistant to the Publisher Weng Fung weng.fung@macaubusiness.com

Letters to the editor

editor@macaubusiness.com

Subscriptions

sub@macaubusiness.com

Macau Headquarters Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No. 679 Av. do Dr. Francisco Vieira Machado Tel: (853) 2833 1258 / 2870 5909 Fax: (853) 2833 1487 pub@macaubusiness.com JULY 2011

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

Art Directors Connie Chong, Luis Almoster design@macaubusiness.com

Photography António Falcão, António Mil-Homens, Carmo Correia, Greg Mansfield, Gonçalo Lobo Pinheiro, John Si, MSP Agency, Agencies Illustration G. Fox, Rui Rasquinho

bina@macaubusiness.com

José Reis

jreis@macaubusiness.com

Media Relations GRIFFIN Consultoria de Media Limitada Translations Stephanie Chu, PROMPT Editorial Services, Poema Language Services Ltd Agencies AFP, Lusa Exclusives Gambling Compliance, Hoje Macau, Project Syndicate Printed in Macau by Welfare Ltd Published every month in Macau. All Rights Reserved. Macau Business magazine is a media product of De Ficção - Multimedia Projects

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

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

My kingdom for a house

Do we really want to live in a place where young professionals making an average income cannot own a home without first being subsidised by the government?

THE LAW IMPOSING A NEW SPECIAL STAMP DUTY ON residential real estate transactions came into effect in the middle of last month. Deviating from standard procedure, the bill was approved by the Legislative Assembly in a single plenary meeting, following an urgent request by the government. Was such urgency really necessary? Will the duty make it easier for Macau’s equivalent of America’s ‘Joe the Plumber’ to buy a home? It seems unlikely. It is hoped that the special stamp duty will help curb short-term property speculation, since it will increase transaction costs and make real estate a less attractive proposition. A duty of 20 percent is now charged on the resale of residential property within a year of it being purchased. The duty is only 10 percent if the resale takes place between one and two years after purchase. In Hong Kong, which announced a similar measure last November, the special stamp duty makes sense. At the time there was heavy speculation, as suggested by the 32 percent surge in the number of resales within two years of purchase, in the first nine months of last year, compared with the same period in 2009. It weighed on the mass market in Hong Kong. Official figures show that in the first half of last year 84 percent of resales within 12 months of purchase, were for properties valued at less than HK$3 million (US$375,000). We do not know if the government in Macau just blindly followed Hong Kong or if there is a real need for a special stamp duty here. The secretary for transport and public works, Lau Si Io, did not provide detailed statistics to prove that speculators were impacting the market. The first set of data on property transactions that will reveal the increased duty’s effect will be available next month.

Stuck in the middle What we do know is that, just after the change was announced on April 20, the real estate market cooled. However, that may have been more of a Pavlovian short-term reaction than a sustainable effect. The main problem is that the special stamp duty, as with the other measures by the government to slow the real estate market, will have little effect on the price of property. At most, it may help slow the rise in prices, but what about those who have already been sidelined by the high price of real estate? While the government continues to focus on curbing speculation, it does little to increase the supply of homes for the middle class. This should

be an obvious way to bring prices under control, not only by easing a shortage but also by introducing real competition among developers, obliging them to pare their margins. If we look at the market for new homes, most projects in the pipeline are meant for the upper middle class or the rich, with apartments costing MOP5 million or more. Developers can set whatever prices they like, because there is still strong demand by investors here and abroad for high-end property. The government, as the only supplier of land and the sole judge of how it should be used, could and should do something to correct these imbalances. In granting land to private developers its policy should favour those prepared to build homes for people to live in, rather than profit from. This would mean squaring up to the real estate lobby. As someone in the property sector once told me, dealing in real estate is really the only way for members of the local elite to tap into the economic boom and make a fast buck, since entering the casino industry is now a dream for most Macau kingpins.

Following blindly The closest the government has come to increasing the supply of housing for the middle class has been to build more economic housing, a kind of social housing available for sale at subsidised prices. A bill revising the regulations for selling this housing category is now being discussed in the Legislative Assembly. The question is whether we want a city where what divides the rich and poor is their ability to buy a home in the private market. Do we really want to live in a place where young professionals making an average income cannot own a home without first being subsidised by the government? Some will argue that this is what happens in Singapore. More than three-quarters of Singaporeans live in government-funded and managed housing estates. But Macau is not Singapore. Here, we have a long tradition of people turning to the private market when they want to buy a home, with social housing aimed only at those on low incomes. And the quality of social housing in Macau is of a lower standard than in Singapore. Correcting the imbalances in Macau’s real estate market will not be easy. But that does not mean the government should do nothing, or worse, that it should continue to copy blindly what governments elsewhere do, without making any effort to analyse and understand the peculiar dynamics of the real estate market here. JULY 2011

We Deliver Decision Makers

Helicopter

Macau Business Official BlackBerry Carrier

JULY 2011

Event Media Partners

JULY 2011

Inbox

ttention all business leaders out there: Macau Business is getting ready to start awarding the best companies in town every year. The inaugural Macau Business Awards will officially kick off soon, with a grand award ceremony scheduled to take place next year. It has been a long-time aspiration of Macau Business’ parent company, De Ficção Multimedia Projects, to host the Oscars of the business community. “We feel that it is also our responsibility to go a step further from our niche and support the sustainable growth of Macau,” says founder Paulo A. Azevedo. Macau Business was a pioneer when it launched the “Macau Quality

of Life Report” in 2006, well before the government decided to develop its own quality of life studies. It led the way again when it introduced the Annual Macau Business Charity Golf Tournament and Gala Dinner, now in its fifth year. Mr Azevedo says that while Macau is developing at a galloping pace, entrepreneurs and companies who have contributed responsibly, upholding the best industry practices and standards, should be celebrated. “It is not only the bad news that makes the press. Sharing the success stories is also important,” he says. The Macau Business Awards strive to celebrate the spirit of entrepreneur-

ship and promote corporate social responsibility, while recognising and honouring outstanding contributions within the business community. “We can only hope that the business community will support this independent project with the same enthusiasm with which they run their operations,” Mr Azevedo says. The black-tie awards ceremony is to take place next year. The De Ficção team promises it will be a night to remember.

Prizes for all The Macau Business Awards have been divided into three main groups: gaming, corporate and individual contributions.

SIMPLY THE BEST

STARTING NEXT YEAR, MACAU BUSINESS WILL RECOGNISE THE BEST BUSINESSES IN TOWN. THE FIRST MACAU BUSINESS AWARDS ARE ON THE WAY, WITH MORE DETAILS TO BE UNVEILED SOON

JULY 2011

Each of the trio has several categories. The full list of categories will be unveiled soon. As Macau Business executive director Luis Pereira explains, “gaming had to have a space of its own” owing to its significance to the economy. To engage the public, a special prize, the Reader’s Award, has been specially devised. Macau Business has collected suggestions from a number of economists and scholars in developing the awards. “We have spent significant resources over time in this project to ensure that we will produce a high-profile, highlevel event,” Mr Pereira says. As for support, Mr Pereira feels the

Macau business community has been encouraged to “gradually but steadily” back other corporate social responsibility and community-oriented projects. “It has been an uphill battle but we have been successful in previous initiatives. Macau has now reached enough critical mass to support this kind of event.” In the inaugural year, nominations for the Macau Business Awards will be put forward by an organising committee. Each judge will be asked to choose a maximum of three nominees. A prevoting round will select a group of five finalists in each category. The voting process is safe and secure, as well as independent, so that no judge will know how their peers are

voting. The final results will be known only at the awards ceremony. Event developers are in the process of formalising the panel of judges and putting the finishing touches to the rules and regulations for the awards. Macau Business is the flagship title of publishing house De Ficção Multimedia Projects. The company is responsible for other publications such as Business Intelligence in traditional Chinese, and Essential Macau, a bimonthly, bilingual premium lifestyle magazine in simplified Chinese and English. More information on the Macau Business Awards is available by emailing awards@macaubusiness.com.

JULY 2011

Budget derails... again Light rail transit system to cost MOP11 billion, up by 47 percent over last estimation he government has revised its budget for the first phase of Macau’s future light rail transit system to MOP11 billion (US$1.4 billion). That represents a 47 percent increase from the previous 2009 budget, according to the Transportation Infrastructure Office. The amount doesn’t include the two transport interchange facilities to be built in Taipa and Barra, estimated to have a combined cost of MOP2.3 billion. The initial budget of the project, in 2007, was MOP4.2 billion.

The government explains the increase as being due to the rising currency exchange and continued optimisation and adjustments of route designs. The budget was also impacted by inflation, namely the rising costs of labour and materials, according to the Transportation Infrastructure Office. The government expects the construction of the first phase of the rail transit system to kick off later this year, with trains starting to receive passengers by early 2015. The first phase of the project will connect Macau, Taipa and Cotai and include a total of 21 stations.

Macau to sign pacts on money laundering prevention Macau’s Financial Intelligence Office is set to sign several agreements with counterparts from Asia to boost the exchange of financial intelligence. The goal is to prevent and to fight against cross-border money laundering and terrorist financing. Agreements will be signed with Singapore’s Suspicious Transaction Reporting Office, the Japan Financial Intelligence Centre and the Bank Negara Malaysia. A similar agreement will also be signed with Thailand’s Anti-Money Laundering Office.

Young people not keen on work competition: survey A survey conducted last month by the Macau New Chinese Association shows that the majority of young workers do not want competition from non-locals and are not willing to look for job opportunities outside of the SAR. According to the findings, 43 percent of the interviewees opposed importing more qualified workers to Macau. Even so, half of the respondents said they are confident enough that they can compete with them for jobs. More than half of the respondents (57 percent) also said they are not considering working outside of Macau, including on Hengqin Island. Finally, almost two thirds (64 percent) said they “feel pressure of competition” in their work or study environment. The survey interviewed 829 residents with an age range between 18 and 45 years. JULY 2011

Boosting co-operation with Fujian Macau and Fujian have decided to start holding regular high-level official meetings to boost bilateral co-operation. Macau will also establish a liaison office in Fujian. These were the major outcomes of chief executive Fernando Chui Sai On’s last month three-day trip to Fujian. Mr Chui told reporters that an official meeting to seek ways to better work out the implementation of such co-operation will soon be held. Regarding co-operation on tourism, Mr Chui said that using Macau as the trading service platform, Macau and Fujian would jointly promote its tourism attractions to Portuguese-speaking countries.

JULY 2011

No cheap rides anymore Ferry prices go up by 11 percent tarting this month, four ferry operators have increased prices by an average of 11 percent on routes to Hong Kong and Shenzhen. The four operators are Hong Kong Macao Hydrofoil Company, Far East Hydrofoil, Shun Tak-China Travel Ship Management and New World First Ferry (Macau). Macau identity card holders will enjoy a MOP15 discount on economy seats on the routes to Hong Kong Island and Kowloon, the most frequently used ones according to the government. Currently, Macau identity card holders enjoy a MOP10 discount on those routes.

In late March, the four ferry operators had requested fare adjustments, proposing increases of between 10 and 25 percent. Fares for ferries have remained unchanged for the past

seven years. Ferry operators mentioned rising fuel prices and increasing operational costs as being the reasons for the requested increases.

Govt to manage Outer Harbour Ferry Terminal

Created consultative logistics council

The government is set to regain control of the Outer Harbour Ferry Terminal after the current concession contract with Sociedade de Turismo e Diversões de Macau (STDM) expires on December 20. The news was announced last month by the director of the Maritime Administration, Susana Wong Soi Man. The government “has decided to not renew the concession contract after it expires,” she said. Ms Wong added the government is planning to implement changes in the retail and advertisement areas of the terminal once it regains control of the infrastructure.

The government has announced the creation of a consultative Logistics Development Council to help it draft new policies and strategies to develop this sector. The commission will be headed by the secretary for transport and public works and will include representatives from several government bureaus, as well as up to 22 representatives from the logistics sector and related areas.

Delta Bridge’s artificial island to be ready in 2012 The artificial island for the Hong Kong–Zhuhai–Macau Bridge should be ready by the end of next year, according to the Infrastructure Development Office. Currently, 50 percent of the land reclamation works have already been done. The island, of more than 200 hectares, is estimated to cost RMB2.3 billion (MOP2.86 billion), with Macau paying around one third. The reclamation works, under the coordination of the Zhuhai government, started in December 2009. The Hong Kong–Zhuhai–Macau Bridge is scheduled to open in 2016.

JULY 2011

Airport losses narrow Macau International Airport Company Limited (CAM) made a net loss of MOP93.7 million (US$12 million) in 2010. That compares with a net loss of MOP158 million the previous year. In 2010, CAM’s total turnover was MOP582 million, up by 8.1 percent year-on-year. The operating profit (earnings before interest, taxes, depreciation and amortisation) rose 33.8 percent to MOP156.5 million. By the end of 2010, there were 15 airlines operating 25 destinations to Macau, which recorded passenger traffic of 4.08 million and cargo volume of 52,000 tons and 37,000 aircraft movements.

Air Macau gets new chairman

Everything OK

Air Macau has announced that Zheng Yan is the company’s new chairman of the board of directors. Mr Zheng has already been the president of the company’s executive committee since 2008, a position he will maintain. He replaces Zhao Xiao, who is serving Air China Limited, Air Macau’s majority shareholder, as vice president.

No wrong doing by Tai Fung bank on compulsory squaring of FX contracts, says regulator

Fiscal reserve only in 2012

he monetary authority has concluded that there was no wrongdoing by Tai Fung bank in a case of compulsory squaring of open positions under margined FX contracts. A total of 882 bank customers had complained to the monetary authority. “The bank involved squared the open positions in accordance with the related provisions of the margined FX transaction contracts executed between the bank and its clients,” the authority said. According to prior reports, the compulsory position squaring was conducted on March 17, when the market exhibited tumultuous fluctuations arising from the strong earthquake and subsequent nuclear leakage in Japan.

The new fiscal reserve fund will only be enacted in early 2012, according to the latest government revised bill. The Legislative Assembly has been discussing the law proposal for more than seven months already. According to the government, a total of MOP152.9 billion will initially be allocated to the new fund (including the creation of a new foreign exchange reserve).

JULY 2011

Not good US criticises new rules for imported labour he latest US State Department’s Trafficking in Persons Report continues to put Macau at tier 2, meaning the SAR doesn’t meet all minimum standards for the elimination of human trafficking. “However, it is making significant efforts to do so,” notes the document, published last month.

The report also highlights Macau’s new rules for imported labour, which bar migrant workers who have been fired or who quit their job before the end of their employment contract, from obtaining another work permit for six months and impose fines on workers who overstay. This, added to “the lack of a minimum wage for foreign workers in do-

mestic service, could create vulnerabilities for migrant labour in Macau to forced labour,” the report says. “In light of these consequences for leaving employers, male and female migrant workers may feel pressure to work for undesirable employers to avoid deportation or fines.” The report calls on Macau to “take steps to reduce the vulnerability of migrant workers to forced labour by re-examining immigration laws that increase this vulnerability.” As in previous years, the Trafficking in Persons Report says Macau “is primarily a destination and, to a much lesser extent, a source territory for women and children subjected to sex trafficking.” Victims originate primarily from the mainland, but also from Mongolia, Vietnam, Russia, and Southeast Asia, the report says. “Many trafficking victims fall prey to false advertisements for jobs in casinos and other legitimate employment in Macau, but upon arrival, are forced into prostitution.” The report mentions that Chinese, Russian, and Thai criminal syndicates “are believed to sometimes be involved in recruiting women for Macau’s commercial sex industry.”

Macau Cable TV announces profit for the first time Macau Cable TV posted a profit for the first time since it started operations, in July 2000. The company announced a MOP3.5 million profit. In 2009, the company posted a loss of MOP1.5 million. Even so, in its annual report, Macau Cable TV stresses its bottom line continues to be impacted by the local unlicensed satellite public antenna service providers, which provide TV signals for Asian, American and European content without license or authorisation from the respective copyright owners.

Liberalisation of telecom market “a must”: govt

Work-related deaths double

The secretary for transport and public works, Lau Si Io, said last month that the liberalisation of Macau’s telecommunication market “is considered a must”. According to Mr Lau, this is “a promising way to bring in new technologies and service innovations to people at an affordable price.” He added that 2012 “will be a year of significance, as the telecommunication market will be fully liberalized in Macau.”

A total of 5,644 workers became victims of work-related accidents in Macau last year, a decrease of 4.5 percent over 2009. The number of victims who died doubled to 12 and four victims lost their long-term working abilities, according to the figures released by the Labour Affairs Bureau. Of the work related accident victims, 28.2 percent worked in the service industry, 26.6 percent were non-skilled workers and 18.7 percent were clerks.

JULY 2011

Unemployment rate the lowest since handover The opening of Galaxy Macau helped lower the unemployment rate for MarchMay 2011 to 2.6 percent, down by 0.1 percentage points from the previous period (February-April 2011). This is the lowest figure since the handover of Macau to China, in December 1999. The number of unemployed decreased slightly by 100 from the previous period to 8,800, with 6.3 percent being fresh labour force entrants searching for their first job. The employed population was 328,000, up by about 3,300 over the previous period.

Photo: Carmo Correia

Imported workers keep growing The number of imported workers continues to increase month-on-month. In May, the total number of non-resident workers in Macau stood at 84,000, up by 1.6 percent in comparison with the previous month, according to data from the local authorities. In September 2008, Macau had a total of 104,000 imported workers, but after then the number continued to fall month-to-month until it rose back again for the first time in June 2010.

Gaming tax revenue increases

Deposits go up

In the first five months of 2011, Macauâ&#x20AC;&#x2122;s total public revenue has risen by 46.4 percent in comparison with the same period from last year, to a total of MOP41.65 billion (US$5.2 billion), according to the Financial Services Bureau. This increment was due to a noticeable increase in the revenue from direct taxes on gaming, up by 46.2 percent, to MOP35.17 billion. Total public expenditure was MOP12.19 billion, an increase of 69.9 percent in comparison with the same period from last year. A fiscal surplus of MOP29.46 billion was recorded in the first five months of 2011, up by 38.4 percent year-on-year.

Total deposits with the banking sector grew 3.3 percent month-on-month in April to MOP372.4 billion (US$46.6 billion). Meanwhile, domestic loans to the private sector increased 4.3 percent on a monthly basis to MOP145.9 billion. On the other hand, external loans contracted 1.2 percent to MOP146.3 billion. The loan-to-deposit ratio was 78.4 percent, down 1.4 percentage points from the previous month.

Consumers paying more The Composite Consumer Price Index (CPI) for May increased by 5.19 percent year-on-year, according to the Statistics and Census Service. The increase was attributable to higher charges for meals bought away from home and rising gasoline prices, the bureau said. The Composite CPI is Macauâ&#x20AC;&#x2122;s main indicator for inflation. For the 12 months ended May 2011, the average Composite CPI increased by 4.09 percent. The Composite CPI for May increased by 0.66 percent month-to-month.

JULY 2011

Economy & Finance

Photo: António Falcão

Work in progress Macau is already pouring money into developing Hengqin Island together with the Guangdong authorities but there is still much to be defined ome businessmen might feel that investing MOP600 million in an industrial park without having secured a single tenant may seem bold. But that is what the Macau government is doing with the Chinese traditional medicine industrial park on neighbouring Hengqin Island, being co-developed with the authorities in the province of Guangdong. So far no private company has made a commitment to set up in the park, where construction began in April, says the director-general of the Administrative Committee of Hengqin New Area, Niu Jing. “We are finishing the planning job and after that the investment prospect-

JULY 2011

ing will start,” Mr Liu explained. “Some enquiries and questions have already been made by companies and institutions,” he added. Mr Niu was speaking during the fourth Delta Inter-Chamber Event (DICE), which took a look at urban planning in the Pearl River Delta. Organised by Macau Business and Delta Bridges publications, the event was held at Sofitel Macau at Ponte 16. Besides Mr Niu, among the invited speakers were Rui Leão, vice-president of the Architects Association of Macau, and Sunny Liu, managing director of EcoTech Environmental. (Read more in Entertainment.) One of the reasons that potential

investors are taking it slow may be that details of several of the preferential policies for companies operating on Hengqin have yet to be announced. For instance, it is still not clear what the status of a Macau company setting up manufacturing premises on Hengqin would be, and whether it would be able to say its products are “Made in Macau”, since it would be operating on mainland soil. Questions to the office of the secretary for economy and finance on this matter were not answered, but an official said a sales effort was being planned. “In regards to your questions about Hengqin Island development, please be informed that the Macao Trade and Investment Promotion Institute will launch

will then be responsible for supervising the development of the industrial park, which will cover 5 sq km.

Sunset vista

Niu Jing

a promotional programme and officially introduce the details about the arrangements, provided that the State Council of the People’s Republic of China approves the policies for Hengqin Island,” a spokesperson told Macau Business.

What a relief Mr Niu plays down misgivings about the development of Hengqin. He says it will help Macau diversify its economy and “relieve pressure” on the congested SAR. “We are building a massive construction and that is the reason why all the companies involved are very big companies,” he noted. The big projects already under way include the new campus of the University of Macau and the Chimelong Ocean Kingdom theme park. Small and medium enterprises in

Macau have urged the government to help them grab a piece of the action on Hengqin. “There are many opportunities to come,” is Mr Niu’s assurance to SMEs. To this end, his committee is negotiating with the Macau government and Macau-based companies, he says. One step towards getting SMEs involved is the establishment of Macau Investment and Development Ltd, a company created last month to coordinate Macau investment in the industrial park on Hengqin, to be developed in cooperation with the Guangdong authorities. The traditional Chinese medicine industrial park will be part of this complex. The company, with initial registered capital of MOP400 million, will sign a joint venture agreement with a corresponding company in Guangdong. Both

Mr Niu says plans are being drawn up to make Hengqin readily accessible. “After the construction of the Jinhai Bridge, reaching Hengqin will take only 15 minutes from Macau airport and eight minutes from Zhuhai airport.” The 106-sq-km island, just west of Macau, is the mainland’s third special economic area, after Binhai New Area in Tianjin and Pudong New Area in Shanghai. It is 200 metres from Macau by boat. The development project will include industrial, office, residential and tourism areas. The goals are ambitious: to increase the population of 5,000 to 120,000 by 2015 and to 280,000 by 2020, when it is meant to have gross domestic product per capita of RMB200,000 (MOP248,000). To achieve that kind of growth, the investment required is colossal. This year alone, RMB10 billion is expected to be invested in Hengqin, according to the Guangdong authorities. Mr Niu says growth will not be pursued at the cost of the environment. Just less than one-third of the island is to be heavily developed, according to the present plan.

JULY 2011

Economic Trends by José I. Duarte

Inflation

GRAPH 1 - Cumulative price changes in each of the Consumer Price Index components between January 2004 and May 2010 Price growth

(%)

Composite Consumer Price Index

70 60 50 40

GRAPH 1

30 20 10 0 -10

There have been plenty of concerns expressed about rising inflation. In this analysis, Macau Business focuses on the behaviour of its main components. We look at the period since 2004, when the first casino outside of Stanley Ho Hung Sun’s empire opened in Macau.

Food and beverages

Housing and fuels

Health

Misc goods Clothing and and services footwear

Alcoholic beverages and tabacco

Transport

Recreation and culture

Household goods and furnishings

Education Communication

-20 -30

GRAPH 2 - Growth in the Consumer Price Index components, indexed to 2004 prices Food and beverages Health

(2004=100)

Housing and fuels

Clothing and footwear Communication

Transport

Education

160

140

120

100

Based on monthly data from the Composite Consumer Price Index between January 2004 and the most recent figures in May 2010, the cumulative average price increase has been just over 30 percent. That equates to an average annual change of about 2.6 percent. Overall, that is not a worrying statistic. However, for most of last year and this year, the consumer price index has risen steadily. The graph shows the goods and services that rose above the average; food and beverages, and housing and fuels are the two biggest increases. Spending here represents a big share of the basket of goods and services the government monitors, and are expenses that affect low-income earners the most. Add health and clothing costs to the food and housing categories and almost two-thirds of the basket’s value is represented. In the same period, two groups of expenditure saw their prices decline: education, a sector heavily influenced by government subsidies, and communication, where the effects of competition and technological change have been a driving force behind declining prices worldwide. GRAPH 2

80 2004

2005

2006

2007

2008

2010

2009

GRAPH 3 - Price index growth for major Composite Consumer Price Index components from January 2004 to May 2011 Food and beverages

GRAPH 3

Housing and fuels

Clothing and footwear

Health

(January 2004=100)

180

160 140

120

100

80 Jan

Jan

2004

2005

2006

2007

2008

2009

2010

2011

JULY 2011

Using data for the yearly average for the calendar years in our sample, Graph 2 displays the change within some major goods and services categories over time. A similar pattern to the first as mentioned on Graph 1 emerges. Note, in particular, that the cost of food, clothing and health accelerated after 2007. In the same year, education costs began a decline. Based on the monthly data for the major components of the Composite Consumer Price Index, Graph 3 illustrates a big jump in health costs beginning in 2008. They have since settled but continue on an upwards growth path. There has also been a sustained acceleration of food and clothing costs in the second half of the period. Clothing costs, in particular, are showing a strong seasonality in their upward climb. Bucking the trend is housing, which includes fuels, complicating the analysis. It has over time increased much faster at the beginning and stabilised more recently. There are some long-term trends here that justify concern.

Income

GRAPH 4 - Indices for prices and earnings indices between 2004 and 2010 Composite Consumer Price Index

(2004=100)

GDP per capita

Median employment earnings

250

200

Prices must be considered alongside changes to earnings. There are two easily available indicators: median employment earnings and Gross Domestic Product per capita. Neither measure alone is ideal for this purpose but both provide a reasonable indication of how employment earnings and, more generally, people’s incomes are changing. GRAPH 4

150

100 2004

2005

2006

2007

2008

2009

2010

This graph shows that both median employment earnings and GDP per capita have risen much faster than inflation. Between 2004 and 2010, prices went up by 31 percent, median earnings rose by almost 75 percent and per capita GDP more then doubled. These figures mean that median labour earnings and average income rose, in real terms, by one third and three quarters. These are outstanding values, by any standard. GRAPH 5

GRAPH 5 - Median employment earnings growth for selected sectors between 2004 and 2010 (%)

Sector

Overall earnings

Composite Consumer Price Index

120 100 80 60 40

If we look into the evolution of earnings by economic sector it is clear all sectors saw earnings growth above the rate of inflation, with the notable – and somewhat shocking –exception of workers in health, social welfare and domestic sectors. Real earnings increased almost across the board, with the greatest increases in manufacturing and construction. So, the domestic sector aside, the major beneficiaries of income growth, in relative terms, appear to have been sectors that most employ the least qualified workers.

20 GRAPH 6

0 Ma

act nu f

al e

ur in

g Co

n , re tate

nst

ting

r uc

tion

n usi db

ess Re

act cre

iviti

al tion

and

gam

ing

d Tra Ho

nd ls a

res

tau

ra n

Fin

Tra

nsp

anc

s or t,

e Edu

t o ra

cat

and

ion

com

nic

atio

lic a Pub

inis

t ra t

ion

Util

itie

e om

stic

alth

rke

s and

oci

al w

elfa

GRAPH 6 - Median employment earnings growth by occupation between 2004 and 2010 Occupation

(%)

Overall median employment earnings

Looking at earnings growth by occupation, a similar pattern emerges. Every category has, on average, benefited from a real increase in earnings. What these figures tell us is that people have enjoyed real income rises that are, in some cases, very significant. In other words, never before have so many been so wealthy. If that is truly the case, the figures raise interesting questions and pose complex challenges to government policy in labour, social benefits and housing.

Composite Consumer Price Index

100 90 80 70 60 50 40 30 20 10 0 C ra

ftsm

Sen

ior

offi

cia

nd ls a

nag

ers

Cle

r ks Sem

i-sk

illed

h Tec

nic

ian

Ski Ser

lled

vice

al ds

rs rke Pro

s fes

ion

als

skil

led

JULY 2011

Economic Trends by JosĂŠ I. Duarte

Output and expenditure (*) 2010 GDP current (in MOP)

217,324

million

Consumption (in MOP)

17,496 27,727 17,496 - 42,676 164,086 207,194

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

31.4 9.8 - 13.6 9.3 21.5 54.2 26.2

Latest

Notes

% var

60,995 13,896 5,636 3,369

million

-12,397 50,490 56,498

million

million million million

million million

28.9 26.2

-21.3 -3.3 60.0 100.0 21.5

Q1 Q1 Q1 Q1

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

2010

% var

34,721 million 243,247 million 130,677 million 237,627 million 104.25 base - 2008 0.50 %

13.4 14.6 29.2 14.6 2.81 --

% var

Notes

33,831 million 256,991 million 140,101 million 259,696 million 108.74 base - 2008 0.50 %

7.6 19.0 33 18.9 4.88 --

March

Latest

% var

Notes

Latest

March March March April May

2010 Population Labour force Median wage rate (in MOP) Unemployment

552,200 330,900 9,000

% var

3.0 %

-1.9 0.5 4.7 - 0.1

2010

% var

556,800 334,000 9,600 2.7 %

0.8 3.4 6.7 - 0.3

Q1 Q1 Q1 March, var

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

Major sectors

Started

m2 m2 tons million million

- 19.8 - 9.6 - 22.6 117.0 113.0

Latest

9,112 418,732 21,419 1,092 19,244

m2 m2 tons million million

% var

Notes

-93.1 29.9 -2.3 286.5 221.4

April

% var

Notes

April April April April

Gaming 2010 Gross revenue (in MOP) Casinos Tables Machines

189,588 33 4,791 14,050

million

% var

Latest

57.0 2 0.4 2.2

20,620 33 4,853 7,704

million

44.2 0 1.3 -1.9

April Q1, var, ytd Q1, ytd Q1, ytd

Tourism 2010

24,965,000 Average expenditure (in MOP) 1,812 Average stay 0.90 Hotel rooms 20,091 Occupation rate 79.8 % Average hotel stay 1.54 nights Visitors

% var

15.0 0.3 - 0.2 4.3 8.43 0.04

Latest

2,338,000 1516 0.90 days 20,129 81.4 % 1.45 nights

% var

Notes

April 10.7 Q1 7.0 Q1, var -- days March 5.1 March, var 3.55 March, var - 0.01

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

2010New base: 2008) (*) Important note: Values for 2009 revised. The methodology and reference period for the real GDP calculation hasAPRIL changed. (**) Important note: The infl ation base period has changed ( New base: April 2008 to March 2009 = 100) JULY JUNE2011 2011 JANUARY MARCH MAY 2011

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

Population/Labour force

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

Unlucky thirteen LADY LUCK DOESN’T SEEM TO BE SMILING TOO BROADLY ON MACAU’S WORKERS

he most recent figures on Macau’s labour force for the first quarter of the year from the Statistics and Census Service tarnish the brilliance of Macau’s economic growth. While we should be cautious in inferring too much from the data, they send some clear messages. Macau’s reputation, in the artificial light of its gaming floors, as a city in which Lady Luck may smile on you, is not really borne out in the hard light of day. Many people believe 13 is an unlucky number and government data seems to confirm it. What do the government’s figures suggest? Here are my unlucky thirteen points. 1. Almost half of the territory’s workers are earning less than the median monthly income of MOP9,600 (US$1,200). 2. Apart from cultural, recreational and gambling workers, those sectors of employment with the highest percentage of the working population (wholesale and retail, hotels and restaurants, real estate and business activities; some 40 percent of the employed population) are among the poorest paid. 3. About 31,800 workers – around 10 percent of the workforce – earn less than MOP4,000 a month. 4. Some 47.2 percent of the working population are earning MOP6,000 to MOP14,999 a month. 5. The number of people earning up to MOP3,999 a month, 9.7 percent of the population, is approaching double the number earning MOP30,000 or more a month, 5.8 percent of the population. 6. The number of people in the lowest income category earning up to MOP3,499 a month, at 27,500, is over 20 times higher than the 1,300 people in the highest income category earning MOP80,000 or more a month. 7. A worker stands a 91 percent chance of earning less than MOP30,000 a month, an 81 percent chance of earning less than MOP20,000 a month and a 49 percent chance of earning less than MOP10,000 a month. 8. A worker’s chances of earning less than MOP200 a day are around one in 4.4. 9. Among the lowest paid – a category with incomes up to MOP4,999 a month – those working 45 hours a week or more outnumber those working between 35 and 44 hours a week by seven to one. 10. Almost two-thirds of the employed population are working at least 45 hours a week. 11. Despite long working hours, incomes for the majority are very low. 12. There is a massive imbalance in the number of low-level to higher-level jobs, with 17.6 percent in the top occupations (legislators, senior officials of government and associations, directors and company managers, professionals, technicians and associate professionals) and 32.2 percent in the lowest-level jobs (craftsmen and similar

workers, plant and machine operators, drivers and assemblers, unskilled workers). 13. If a worker wants to earn the highest median monthly income by occupation, MOP27,000, he or she should become a legislator, senior official in a government department or association, or a company director or manager. The chances of getting such a job are about one in 20. Is Macau a boom town? Not for the workers. Is Macau a place to earn a fortune? Don’t bet on it. Macau is a gambling city but your chances of getting lucky with employment here, just as in the casinos, are stacked against you. With galloping inflation, it seems as though the fat cats can get fatter while the thin cats get even thinner. Macau needs an economics dietician.

OCCUPATIONS AND EARNINGS IN THE FIRST QUARTER OF 2011 Median monthly earnings (MOP)

Industry

Number of workers

Percentage of working population 4.3

6,000

14,100

Electricity, gas and water supply

19,000

1,400

0.4

Construction

10,000

27,600

8.5

7,800

44,600

13.7

Manufacturing

Wholesale and retail

7,000

45,500

14.0

Transport, storage and communications

10,000

15,700

4.8

Financial services

12,000

7,700

2.4

7,000

28,900

8.9

Public admin. and social security

19,000

23,200

7.1

Cultural, recreational and gambling

13,000

76,900

23.6

Hotels and restaurants

Real estate and business activities

Source: Statistics and Census Service employment survey for Q1 2011

EARNINGS AND HOURS WORKED IN THE FIRST QUARTER OF 2011 Number of workers logging 35-44 hours a week

Number of workers

Percentage of working population

Up to 3,499

27,500

8.4

2,200

3,500-3,999

4,300

1.3

300

3,100

4,000-4,999

19,500

6.0

1,900

15,000

5,000-5,999

23,100

7.1

2,200

17,800

6,000-7,999

50,000

15.4

6,400

38,100

8,000-9,999

34,700

10.7

7,100

22,600

10,000-14,999

68,600

21.1

15,100

44,200

15,000-19,999

35,500

10.9

10,100

20,200

20,000-29,999

32,900

10.1

13,200

14,000

30,000-79,999

17,200

5.4

7,100

80,000 or more

1,300

0.4

400

314,600

96.8

66,000

196,800

Earnings (MOP)

Total

Number of workers logging 45 hours or more a week 14,300

Source: Statistics and Census Service employment survey for Q1 2011

JULY 2011

Property | Market Watch

Cooler day in hell The new stamp duty leads to a sharp fall in residential property transactions but prices hold firm he effects are being felt already. As expected by many analysts, the new special stamp duty on residential real estate transactions has caused the number of deals to fall sharply but prices show no signs of moving downward. A 20-percent special stamp duty will now be levied on homes sold within a year of their original purchase since June 14. The duty falls to 10 percent if the sale takes place between one and two years after purchase. The law says that the duty should be revised in mid2013, taking into account changes in the real estate situation.

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

Year

Month

Year

Month

2010

January

2010

January

2011

Number of Transactions 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 February 788 March 2,225 April 3,485

February March April May June July August September October November December 2011

January February March April

* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty paid during the reporting month.

JULY 2011

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 1,918 7,704 19,244

Source: DSEC

Residential units sold as per record of stamp duty*

“Generally speaking, property owners still have confidence in Macau’s economy and therefore they did not substantially reduce selling prices,” says Ricacorp executive director Jane Liu

JULY 2011

Property | Market Watch

Average transaction value of residential properties as per record of stamp duty Value (MOP thousand) 6,000

Total number of buyers in residential transactions in the first four months of 2011:

10,653

5,000 4,000

Proportion of buyers

3,000

17%

2,000

Source: DSEC

1,000 0

Non-Residents

83% Residents

Jan

Feb

Mar

Apr

May

Jun Jul 2010

Aug Sep

Oct

Nov

Dec

Jan

Feb Mar 2011

Apr

* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty paid during the reporting month.

60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

Total value of residential transactions in the first four months of 2011:

MOP

32,658

Proportion of buyers

33% 67%

Non-Residents

Residents

Jan

Feb

Mar

Apr

May

Jun Jul 2010

Aug Sep

Oct

Nov

Dec

Jan

Feb Mar 2011

Apr

* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty bill issued during the reporting month. 3. Some residential units may not be included in the data made available by the Financial Services Bureau for privacy reasons.

After four strong months, the property market has been flat since late April, when the new duty was announced, says Ricacorp executive director Jane Liu. “Generally speaking, property owners still have confidence in Macau’s economy and therefore they did not substantially reduce selling prices.” The latest official data still does not hint at any drop in the number of deals. In April, 3,485 homes were sold, 58 percent more than a year before, according to the Statistics and Census Service. Together they fetched MOP19.2 billion (US$2.4 million), 211 percent more than in April 2010. The number of transactions in the primary market reached 2,544, about 129 percent more than a year before, with a value of MOP17.4 billion, about 265 percent more. Sales of homes in the Green Island, SoHo Residences and One Oasis bumped up the numbers. The Financial Services Bureau says the average price per square metre of resJULY 2011

idential space was MOP50,512 in April, 28 percent more than a year before and 4 percent more than in March.

May showers However, Ms Liu says that in May property transaction volumes were “nearly 80 percent” lower than in May 2010. Official figures will be made public early this month. Ms Liu says the government caught the market by surprise when it took the unusual step of asking the Legislative Assembly to approve the new duty using an emergency procedure. “Thus, the turnover is believed to have plunged again” in June, she says. The duty should be “comparatively more significant for short-term speculators, despite currently a number of financiallyempowered speculators being able to hold properties for two years before selling them out”, Ms Liu says. “In contrast, the policy has little impact on long-term investors, and property prices will still rise.”

Source: DSEC

Source: Financial Services Bureau

Average transaction price of residential units per square metre

Gregory Ku, the managing director of Jones Lang LaSalle Macau, agrees. In an opinion article in the South China Morning Post last month, Mr Ku said the duty would have little effect on prices, in part because holding costs are low in Macau owing to low interest rates. This makes investors more willing to hold on to their properties, hoping for further capital gains as the economy grows and the transport infrastructure improves. Mr Ku said demand for homes in Macau comes mainly from residents. He said owner-occupiers and long-term investors were expected to continue to be the driving force in the market. ”And given the limited supply of properties anticipated in the months to come, home prices are expected to continue to hold firm – with good potential for the longer term.” The government says this will change in the coming years, as more than 35,000 new flats are to be built by 2015, of which 22,500 will be public housing.

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

Impact crater A TAIPA HIGH-RISE PROJECT HAS GOT THE PUBLIC AND THE GOVERNMENT TALKING ABOUT THE NEED FOR ENVIRONMENTAL IMPACT ASSESSMENTS. IT’S A DEBATE THAT IS 20 YEARS LATE nvironmental issues have been at the top of the political agenda lately. The discussion was opened up by a developer’s plan to erect a couple of high-rise buildings near Taipa Pequena hill as part of the Lisboa Gardens complex. There were strong concerns expressed by many people. As a result, the topic was raised at the Legislative Assembly. We should welcome the questions about the effect this project will have on the environment and the challenge to the government to make its position clear. There are several dimensions to this issue: urban planning, governance and the environment, to name the most obvious. Let us focus for the moment on the environmental aspect. Some of the statements made by the government about this aspect are slightly surprising and even somewhat puzzling. We have been told several things at various times since the issue erupted: that the appropriate government bureau had followed the project to prevent it having any negative impact; that the developer had not provided all the ‘complementary’ information requested; that the government would ask the company to abide by the environmental rules; and that the government would consult the public about the need for environmental impact assessment reports on construction activities. As so often happens, the exact meaning of some of these statements was not clear. But a few comments are justified.

Surprise, surprise

First, one can avoid further delays by skipping the public consultation on how environmental impact assessments should be conducted. I am fairly confident that most Macau residents accept that big projects are likely to have a significant environmental impact and should be subject to some form of assessment. This is a common requirement elsewhere. There is a lot of technical literature on the subject, there is abundant accumulated experience and there are internationally accepted codes of good practice. The Environmental Protection Bureau, on its own website, has a whole section on how to carry out an environmental impact assessment. Second, environmental impact assessments are already a legal requirement in Macau. This may sound surprising, but yes, the territory has an environmental policy framework law – and it is 20 years old.

That law clearly states that public and private “plans, projects, works and actions that have the potential to impact the environment, the health and the quality of life of the population (…) must include an environmental impact assessment”. Moreover, “approval of the environmental impact assessment is an essential condition for the final licensing.” Of course, one can argue that flesh was never put on the bones of this requirement in the form of subsidiary legislation – in other words, regulations for its application. This omission is certainly not due to lack of time or need. Had the political will been present, this shortcoming could have easily been put right. As we have seen, there are wellestablished standards on these matters.

Monitoring the monitors

The debate about the Lisboa Gardens project raises further questions. First, there are many other projects in the city, either recently concluded or in progress, that plausibly have significant effects on the environment. Has the government been monitoring them too, and ensuring that they have no negative impact? Assuming the answer is “yes”, it would be appropriate to let the public know which requirements the developers – in some cases, the government itself – had to meet in carrying out the environmental impact assessments. And what corrections or changes were made to the projects to avert any negative impact. Second, in the case of the Lisboa Gardens development, what was the complementary information requested by the government from the developer? Media reports mention that the environmental impact assessment was required to cover the area within a radius of 500 metres of the construction site. If this was so, has this requirement been applied to all the big construction projects in Macau over the last few years? And, if it was, should not the environmental impact assessment reports be made public, for the sake of transparency? Last but not least, I can only commend the questioning of the government by our legislators, and their concern about these matters. It is their duty to monitor the government. That task should mean at least two things: that legislators ensure that whenever a law approved by the Legislative Assembly needs subsidiary legislation, the legislation comes into effect reasonably soon after; and that the government enforces – and itself abides by – the existing laws. JULY 2011

3434

Property | Market Watch

Notable residential property transactions - 16/05 to 15/06, 2011 District

Property

Unit

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

One Grantai One Grantai One Grantai One Central One Central One Central One Central Jardim Brilhantismo One Central Lake View Mansion The Residencia Macau Ocean Gardens One Oasis Cotai South La Baie Du Noble Nova City Supreme Flower City Kings Ville One Central Lake View Tower Nova City One Central Supreme Flower City One Central The Bayview Kings Ville Nova City Villa de Mer The Praia The Praia The Praia Nova City The Bayview Green Island One Oasis Cotai South The Pacifica Garden Edf. I Keng Toi Kings Ville The Praia The Bayview The Bayview La Cite

Block 1, M/F, unit B Block 6, M/F, unit X Block 5, M/F, unit T Block 5, H/F, unit A Block 5, H/F, unit A Block 4, M/F, unit A Block 2, H/F, unit A M/F, unit C Block 1, H/F, unit F L/F, unit B Block 2, H/F, unit B Begonia Court, M/F, unit B Block 6, M/F, unit D M/F, unit M (with car park) Block 7, L/F, unit D L/F, unit C M/F, unit H Block 7, H/F, unit E H/F, unit A Block 11, H/F, unit C Block 7, H/F, unit C H/F, unit G Block 7, M/F, unit C Block 3, H/F, unit B Block 2, M/F, unit E Block 11, H/F, unit B Block 1, H/F, unit F Block 1, H/F, unit C Block 1, M/F, unit F Block 3, H/F, unit N Block 15, L/F, unit E Block 1, H/F, unit A Block 3, H/F, unit P M/F, unit E Block 1, H/F, unit A M/F, unit F Block 3, H/F, unit E Block 3, H/F, unit N Block 1, H/F, unit D Block 3, L/F, unit F Block 5, M/F, unit D

Source: Ricacorp & Midland

Floor area (sq. ft)

Sale price (HK$)

Price per sq.ft. (HK$)

5,351 3,041 3,025 2,318 2,318 2,326 2,269 1,724 1,815 3,400 2,439 2,637 1,676 2,095 2,505 2,060 2,100 1,292 1,511 1,975 1,176 2,060 1,176 1,603 1,901 1,983 1,459 1,558 1,571 1,558 1,628 1,582 1,596 1,246 1,657 1,800 1,422 1,558 1,582 1,582 1,709

43,500,000 18,246,000 18,150,000 17,500,000 17,500,000 16,747,200 15,890,000 15,232,000 13,975,500 13,000,000 10,280,000 9,380,000 9,345,000 8,900,000 8,800,000 8,500,000 8,500,000 8,030,000 7,800,000 7,580,000 7,380,000 7,200,000 6,950,000 6,700,000 6,380,000 6,380,000 6,300,000 6,300,000 6,280,000 6,150,000 6,090,000 5,980,000 5,950,000 5,880,000 5,800,000 5,800,000 5,600,000 5,600,000 5,600,000 5,550,000 5,550,000

8,129 6,000 6,000 7,550 7,550 7,200 7,003 8,835 7,700 3,824 4,215 3,557 5,576 4,248 3,513 4,126 4,048 6,215 5,162 3,838 6,276 3,495 5,910 4,180 3,356 3,217 4,318 4,044 3,997 3,947 3,741 3,780 3,728 4,719 3,500 3,222 3,938 3,594 3,540 3,508 3,248

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

Notable residential property rentals - 16/05 to 15/06, 2011 District

Property

Unit

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

One Central One Central Lâ&#x20AC;&#x2122;Arc One Central One Central The Residencia Macau Nova City Nova City Nova City Edf. Kam Yuen Nova City Pearl On The Lough Nova City Supreme Flower City Nova City Nova City Nova City Macau Ginza Plaza Kings Ville Kings Ville One Central The Pacifica Garden Nova City Nova City Nova City The Praia Nova City The Praia The Bayview La Cite Nova City

Block 2, H/F, unit A Block 3, M/F, unit B H/F, unit F Block 5, H/F, unit B Block 4, H/F, unit B Block 1, H/F, unit C Block 7, H/F, unit D Block 11, M/F, unit A Block 7, M/F, unit D L/F, unit L Block 9, L/F, unit C Block 1, M/F, unit D Block 13, M/F, unit D H/F, unit J Block 15, L/F, unit D Block 15, L/F, unit D Block 13, L/F, unit E L/F, unit C Block 1, L/F, unit C Block 2, M/F, unit E Block 1, H/F, unit D H/F, unit K Block 16, L/F, unit F Block 4, M/F, unit B Block 10, L/F, unit B Block 1, M/F, unit D Block 13, L/F, unit F Block 1, H/F, unit C Block 5, H/F, unit D Block 5, H/F, unit C Block 13, H/F, unit F

Source: Ricacorp & Midland

Floor area (sq. ft) 2,269 3,006 2,261 2,332 2,585 1,570 2,503 2,505 2,505 1,700 1,973 2,055 1,576 2,060 1,556 1,556 1,634 1,757 1,422 1,901 654 1,216 1,309 1,314 1,318 1,558 1,336 1,558 1,603 1,626 1,326

Rent price (HK$) 45,000 42,000 30,000 30,000 30,000 20,000 18,000 18,000 18,000 17,000 15,000 15,000 14,000 14,000 13,000 13,000 13,000 13,000 12,000 12,000 11,000 11,000 11,000 11,000 11,000 11,000 10,000 10,000 10,000 10,000 9,800

Price per sq.ft. (HK$) 19.83 13.97 13.27 12.86 11.61 12.74 7.19 7.19 7.19 10.00 7.60 7.30 8.88 6.80 8.35 8.35 7.96 7.40 8.44 6.31 16.82 9.05 8.40 8.37 8.35 7.06 7.49 6.42 6.24 6.15 7.39

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

JULY 2011

Subscription Form Please return to: Macau Business Block C, Floor 9, Flat H, Edif. Ind. Nam Fong No. 679 Av. Dr. Francisco Vieira Machado, Macau TEL (853) 2833 1258 FAX (853) 2833 1487 EMAIL sub@macaubusiness.com

Yes, I wish to subscribe to Macau Business and save up to 30% for 12 issues

Yes, I wish to subscribe to Macau Business and save up to 40% for 24 issues

(Please tick below for your region)

One year (12 Issues)

Macau Hong Kong China Australia USA Europe Asia

Original Price

Discounted Price

MOP 420 HKD 560 RMB 480 USD 140 USD 140 USD 134 USD 128

MOP 300 HKD 390 (MOP 400) RMB 340 (MOP 340) USD 98 (MOP 780) USD 98 (MOP 780) USD 94 (MOP 750) USD 90 (MOP 720)

I would like to receive ___ copies per month

Total

Two year (24 Issues)

Macau Hong Kong China Australia USA Europe Asia

Original Price

MOP 840 HKD 1,120 RMB 960 USD 280 USD 280 USD 268 USD 252

I would like to receive ___ copies per month

Discounted Price

MOP 500 HKD 670 (MOP 690) RMB 580 (MOP 580) USD 168 (MOP 1,340) USD 168 (MOP 1,340) USD 160 (MOP 1,280) USD 150 (MOP 1,200) Total

COMING SOON For more information visit macaubusiness.com or write to award@macaubusiness.com JULY 2011

Photo: Carmo Correia

First gear Public bus operator Reolian hits the road next month and although the company faces speed bumps, general manager Cedric Rigaud has an optimistic outlook BY SARA FARR

he engines have been warming up at Reolian for a couple of months already as the new public bus operator prepares to start operating on August 1. You can already see the company’s green buses around town on training runs. General manager Cedric Rigaud is sure the bus operator will “show its capability to improve the service level” from

day one. He says Reolian will “deliver better services in quicker time” than established bus operators Macau Urban Transportation (Transmac) and Macau Collective Transportation (TCM). If it can do so, it will be a double achievement for Reolian, a joint venture between France’s Veolia Transport RATP and Macau’s H. Nolasco Group. The company has endured a bumpy ride

In the driver’s seat C

edric Rigaud has worked with French multinational Veolia Environnement for more than 10 years, starting as a specialist in waste management. Before that he worked as an environmental consultant in the motor industry. Veolia Transport, a subsidiary of Veolia Environnement, created a 50-50 joint venture with RATP Développement in 2009 to bid for urban transport contracts in Asia. The resulting company was Veolia Transport RATP, one of two shareholders in Reolian. Mr Rigaud says his background meant that joining Reolian “made sense for me”. “It made me dream at the time,” he says. “It still makes me dream.” He has been in Asia for two years. Before becoming Reolian’s general manager in Macau, Mr Rigaud was in charge of the business development of bus services S.F. in Shanghai.

since it first bid to run bus services, in November 2009. First, Reolian was deprived by the government of almost one third of the routes it was initially granted, instead being given to TCM. This was the Transport Bureau’s solution to the problem of a series of TCM lawsuits contesting its exclusion from the public bus service tender. TCM had allegedly delivered its bid four minutes late. More recently, Reolian attracted media attention when it said it was having difficulty in hiring enough bus drivers. “Macau is facing a shortage of labour, not since Reolian arrived, but of course it got worse with the booming of the economy,” Mr Rigaud says. Public bus operators must compete for drivers not only against each other, but also against tour operators and casinos, which boast huge shuttle fleets. There are 2.5 coaches for each public bus in Macau. Many of the drivers are middle-aged and do not fancy quitting their jobs to move to a new set-up.

Truckloads of trainees “So we wanted to find solutions at the time and one of the solutions was to put more effort into training,” says Mr Rigaud. The idea was for the Labour Affairs Bureau to devise special training programmes so that holders of licences to drive a truck could get licences to drive JULY 2011

Transport

a bus. “The target was for middle-aged people to change to another industry.” The first training programme opened in November but was not a success. It proved difficult to attract young drivers or women because bus driving is typically viewed as a hard job requiring long, inflexible hours. The government and Reolian eventually agreed that more effort would be put into training. A revamped programme was announced in May admitting not only truck drivers but also car drivers that have held their licences for at least three years, who were able to apply to get a licence to drive buses with capacity for up to 25 passengers. “From September 2010 til May we made progress and that’s what pleases me,” Mr Rigaud says. “Of course it will not resolve the issue we have now, that is to have 400 drivers by August 1, but thanks to this programme we will have more people joining in three or four months.” Reolian’s operations are not at stake. By the end of last month, as many as 300 drivers were on the books, enough to ensure the company can handle its routes from day one. “We are not too far behind,” Mr Rigaud says. Of the company’s drivers, most came from Transmac and TCM. A handful came from shuttle bus companies and other small operators.

The carve-up When Reolian first made its bid, Mr Rigaud says the company did so with a commitment to quality service. “We knew we were facing tough competition from two already existing bus companies, so to enter [the market] we knew we had to be aggressive,” he says.

JULY 2011

Sky eye eases hiccups on the ground A

t its head office in NAPE, Reolian has set up an operations control centre, where technicians monitor the movement of its fleet using GPS sensors. The company’s general manager, Cedric Rigaud, says the operator can anticipate a bus becoming full or being delayed and act accordingly. “With one of our partners in the mainland, we developed our own software that we have fully customised for Macau,” says Mr Rigaud. He explains more features will be added to the system as part of the company’s emergency plan, enabling it to respond quickly during a typhoon, accident or traffic jam. “We are capable, now, of anticipating all the delays and we should have enough resources to respond before they occur,” he says. The solution is typically to deploy extra buses. While that does not help passengers S.F. that are already onboard, it will help the next traveller waiting at the bus stop.

39 The company submitted the lowest bids for all five groups of routes up for grabs. Eventually it won three, with the other two going to Transmac. When the government decided to settle the legal battle with TCM by giving it one group of 13 routes, Reolian found it had 26 routes out of 60. The three operators will get around MOP4.7 billion (US$588 million) from the government over the course of the next seven years to run their services. MOP1.64 billion will go to Reolian. Transmac, serving 21 routes, will get MOP2.33 billion, while TCM will get MOP811 million. The money collected from bus fares will be handed to the government. Reolian says it has borne more costs than it had forecast, thanks to a rise in the price of fuel and the need to pay higher salaries to attract drivers. “All these figures are adding a little bit of pressure,” Mr Rigaud admits. Reolian is investing MOP200 million over the next seven years. “As for return on investment, we can expect a figure of at least 8 percent after the seven years,” Mr Rigaud says.

IN FIGURES REOLIAN WILL HAVE: • 26 routes or 43 percent of the network • 245 new buses • about 550 employees, including 400 drivers • to cover 16 million km every year

Reolian’s vision is not yet reality but Mr Rigaud is optimistic that it will be made real. With the economy booming, the increase in demand and the eventual advent of the light rail transit system, Mr Rigaud is confident that Reolian can play its part and develop the public transport network. “Even if it can be frustrating some days, that’s part of life and it’s part of business. We need to understand opportunities and we need to understand how it works here,” Mr Rigaud says. “If I weren’t optimistic I wouldn’t be here.”

Hard to park A 2,000 square metre plot in Pac On will be Reolian’s maintenance centre. The yard is fitted with “advanced” equipment. Mr Rigaud is quick to add that while it is not advanced by European standards, it is advanced enough for Macau. “It’ll give us the chance to have better vehicles and better management of vehicles and be more on top of frequency maintenance. If you want to improve the quality of services more, you have to make sure you have less problems on the roads,” he says. The workshop space will also be used to park some of the buses but the area is not big enough to accommodate the full fleet of 245 new buses Reolian bought from the mainland. With the lack of parking space in Macau, the company will have to settle for parking at bus stations. “We can see today that some buses park on the streets and that’s something we’d like to avoid,” Mr Rigaud says, adding that it would be safer and easier if the company had a piece of land for parking. He says the government will make a decision in due course but he does not know what the government has in mind. JULY 2011

Gaming | Billions Race

Growth spurt

Gross gaming revenue shot up 52 percent last month but a record-breaking run ended asinos in Macau posted a 52.4 percent year-on-year increase in gross gaming revenue last month, recording a figure of MOP20.79 billion (US$2.6 billion). Total casino gross gaming revenue for the first half of the year was up 44.6 percent year-on-year to MOP124.13 billion. It was the first time in 2011 that the year-on-year change in gross gaming revenue exceeded 50 percent, according to data from the Gaming Inspection and Coordination Bureau. Last month saw the end of a recordbreaking run for monthly gross gaming revenue. June’s figure was more than MOP3.5 billion behind the latest record set in May. Even so, it was the second best month ever for the gaming industry.

Preliminary information compiled by Portuguese news agency Lusa reveals Stanley Ho Hung Sun’s Sociedade de Jogos de Macau (SJM) continued to lead the market last month, enjoying a 29 percent market share, but it was the first time this year the company’s share dropped below 30 percentage points. SJM was followed by Sands China, with a June market share just less than 16 percent. Unsurprisingly, the biggest winner last month was Galaxy Entertainment Group, which opened the massive Galaxy Macau resort in Cotai on May 15. From an April share of 9 percent, Galaxy now commands a market share of a little over 15 percent. Wynn Macau is ranked fourth, also with a 15-percent market share, followed by Melco Crown

Gaming Results: Gross Revenue

with 14-percent market share. MGM Macau was stable with its share hovering below 11 percent. Such strong results have already prompted Morgan Stanley to revise gaming revenue growth estimates for Macau casinos in 2011 from 30 percent to 38 percent and next year’s growth from 10 percent to 13 percent. In a note to investors released in the middle of last month, analysts Praveen K. Choudhary and Calvin Ho said that “in the first five months of 2011, gross gaming revenue in Macau recorded 43 percent year-on-year growth. That, along with abundant liquidity and new supply (Galaxy Macau) should drive further upside to consensus earnings estimates”.

In Million MOP (1HKD:1.03MOP)

26,000

24,306

24,000 22,000

18,869

20,000 18,000 16,000 14,000

16,310 13,642

18,883

18,571

Dec 2010

Jan 2011

19,863

20,087

20,507

Feb 2011

Mar 2011

Apr 2011

20,792

17,354 15,773

15,302

Aug 2010

Sep 2010

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

Jun 2010

Jul 2010 JULY 2011

Oct 2010

Nov 2010

May 2011

Jun 2011

Gaming Results: Market Share Per Operator 2010

2011

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun*

SJM

30%

32%

29%

30%

32%

31%

30%

31%

34%

30%

34%

29%

Sands China

22%

19%

20%

19%

15%

17%

18%

16%

17%

15%

16%

Galaxy

10%

12%

13%

12%

10%

11%

13%

15%

Wynn

17%

15%

14%

12%

14%

17%

14%

15%

14%

17%

13%

15%

MPEL

13%

15%

17%

14%

15%

14%

17%

14%

MGM

10%

11%

12%

11%

12%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Jan 2011

Feb 2011

Mar 2011

Apr 2011

May 2011

Jun 2011 * * estimated

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

JULY 2011

Gaming | Stock Watch

Following the general trend in Asian markets, most gaming operatorsâ&#x20AC;&#x2122; stocks headed downward in June BY RAY CHAN

JULY 2011

All shall have cash V

IP room gaming promoter Asia Entertainment & Resources Ltd (AERL) announced last month the institution of a regular semi-annual cash dividend of 10 U.S. cents per outstanding ordinary share. The first payment will be offered after the release of the company’s second-quarter results. The NASDAQ-listed company also announced a share buy-back programme. AERL closed its operations at MGM Macau by “ mutual agreement” on June 15. “The MGM VIP room is on a win/loss sharing remuneration method, and accounts for only a small percentage of AERL’s total monthly rolling chips turnover,” AERL said in a press release. “The closure will eliminate the risk to the earnings volatility associated with the win/loss sharing compensation model, and will enable the company to better allocate resources – both human and cage capital – to its three fixed-rate-commission VIP rooms.” With the closure of its MGM Macau room, AERL now operates at StarWorld, Galaxy Macau and the Venetian Macao.

Name

Share price performance (HK$/US$) 52-week high 52-week low

SJM Holdings Ltd.

19.4

6.1

Change (%)

6/24/2011

Month-to-date Year-to-date

17.3

-8.8

40.2

Galaxy Entertainment Group

18.3

3.8

15.7

-10.2

78.4

Wynn Macau Ltd.

28.4

11.5

23.4

-14.2

34.2

Sands China Ltd.

23.5

10.8

19.0

-5.6

11.4

Melco Crown Entertainment

12.1

3.6

11.1

-0.7

75.2

Melco International Develop.

8.0

2.9

7.3

1.4

64.2

Amax Holdings Ltd

0.2

0.1

-7.1

-12.0

0.9

0.3

0.5

-12.9

66.2

24,988.6

19,777.8

22,172.0

-6.4

-3.7

Las Vegas Sands Corp.

55.5

20.7

39.6

-4.8

-13.9

MGM Resorts International

16.9

8.9

12.5

-17.4

-16.2

151.7

67.8

132.9

-9.3

27.9

2.4

1.0

1.9

-3.5

-12.3

Success Universe Group Ltd Hang Seng Index

Wynn Resorts Ltd. Genting Singapore PLC Penn National Gaming Inc. Dow Jones Indus. Avg. S&P 500 Index

40.5

22.3

39.6

-2.3

12.5

12,876.0

9,614.3

12,050.0

-4.1

4.1

1,370.6

1,010.9

1,283.5

-4.6

2.1

JULY 2011

Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

Jun 2010

SJM Holdings Ltd. Sands China Ltd.

Jan 2010

Feb 2010

Mar 2010

Apr 2010

May 2010

Las Vegas Sands Corp. Penn National Gaming Inc.

JULY 2011

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Jan 2011

Galaxy Entertainment Group Ltd. Melco International Development

Jun 2010

Jul 2010

Aug 2010

Sep 2010

Oct 2010

Nov 2010

Dec 2010

Wynn Resorts Ltd. Melco Crown Entertainment-ADR

Feb 2011

Mar 2011

Apr 2011

May 2011

Jun 2011

May 2011

Jun 2011

Wynn Macau Ltd. Hang Seng Index

Jan 2011

Feb 2011

Mar 2011

Apr 2011

MGM Resorts International S&P 500 Index

Gaming

Grand gesture The public visit to Macau’s hotel-casinos by director of the Macau Affairs Office of the State Council made history and sent a message BY EMANUEL GRAÇA

n Beijing-style politics, a gesture often speaks louder than words. That is why analysts say the unexpected visits by a high-ranking mainland official to several hotel-casinos in Macau, believed to be the first of their kind, were anything but spontaneous. Last month, while in Macau on a three-day working trip, the director of the Hong Kong and Macau Affairs Office of the State Council, Wang Guangya, visited the Grand Lisboa and Galaxy Macau hotel-casinos. He also had dinner at MGM Macau. He did not visit any of the casinos’ gaming floors. The visits were unusual, as normally Beijing officials opt to stay away from casinos during their official trips to Macau – at least, publicly. Mr Wang

is not, it seems, a punter. “I don’t know how to gamble, nor do I have money,” he told reporters. However, he added: “We all know that the central government backs Macau to become an international entertainment and leisure centre. Then it would not only consist of gambling but also events, culture and other industries. I hope that Macau will have an all-round development.” His visits to casinos took place a few days after Morgan Stanley released a research note saying investors were “increasingly concerned about tightening measures” in the mainland that might hurt the VIP gaming business. Among these measures are curbs on growth in lending, higher reserve requirements for

banks and higher interest rates. Besides this, the fast growth of Macau’s gross gaming revenue in the first half of this year – more than 40 percent – has given rise to conjecture about whether the central government will introduce new restrictions on visas for mainland visitors, similar to those imposed in 2008, when the industry was also expanding rapidly. However, at that time there were reports of money laundering (see report in this section), Beijing was concerned about the rise of problem gambling and also about whether the profits were being sucked up by US gaming operators.

Best behaviour “In this cycle, we have not heard of any widespread measure. However, there JULY 2011

Gaming

has been further delay in getting business visas to Macau, which were used by junkets earlier to enter Macau,” Morgan Stanley said in its note, written by analysts Praveen K. Choudhary and Calvin Ho. University of Macau gaming expert Ricardo Siu says it is hard to see a direct relationship between Mr Wang’s visits to casinos and Beijing’s visa policy in the coming months or year. “As long as the market behaves well by itself (e.g. pays attention to improving its transparency over time, doesn’t repeat the problems as presented in 2008 etcetera), a surge in its gross gaming revenue is not necessarily a consideration for Beijing to tighten the

Last month, Wang Guangya visited the Grand Lisboa and Galaxy Macau hotel-casinos. He also had dinner at MGM Macau. He did not visit any of the casinos’ gaming floors

visa policy,” Mr Siu says. He thinks Mr Wang’s visits confirm the importance of casino gaming to the local economy and that Beijing has learned to accept this. “I believe that, through Mr Wang’s visit, the development of Macau’s casino resort-based economy and its continuous progress [toward becoming] a world tourism and leisure centre in the Pearl River Delta, are further confirmed and supported by the central government. In addition, it also showed that [the need for] casino gaming as a modern industry for the success of the Macau economy is an inevitable fact.”

In his right mind The head of Union Gaming Group’s Macau subsidiary, Grant Govertsen, says the importance of gaming to the economy “has always been of keen interest” to Beijing. “As the gaming industry in Macau has grown significantly, with a corresponding increase in tax revenues, Macau continues to be entirely self-sustained. This self-sustenance, I suspect, is quite important to China,” Mr Govertsen says. “Further, I believe that Beijing should be proud of what has been accomplished in Macau, which quickly became the number one global gaming market.” Mr Govertsen considers it possible that Mr Wang’s visit is a sign that Beijing is not thinking about making it more difficult for mainlanders to visit Macau in the short run. “Although certain camps believe that the astronomical growth might result in some mechanism being employed to slow growth, I do not believe this will be the case,” he says. Gaming law expert Jorge Godinho remarks that Mr Wang’s visits were “unusual”. In his blog Mr Godinho says: “In light of the highly meticulous, well planned, detailed and scripted manner of operation of Chinese diplomats and government officials, no one in their right mind could consider this to be an accident.” Mr Godinho admits it is hard to say exactly what signals Mr Wang intended to send. But he argues: “More broadly, the fact that Mr Wang actually visited some casinos, a rare or even remarkable step by itself, is clearly a sign of support to the Macau gaming industry.”

JULY 2011

Crown’s gamble Melco Crown acquires a majority stake in the stalled Macau Studio City project but there’s no word from the government if the property includes a casino

he stalled, shuttered construction works on Macau Studio City in Cotai are set to resume after gaming operator Melco Crown acquired a majority stake in the project. What is unclear however, is what form the property will take. Melco Crown announced last month the signing of an agreement to acquire a 60-percent share in the development for US$260 million (MOP2.1 billion), which had previously belonged to Hong Kong-listed eSun Holdings Limited and Singapore government-linked developer CapitalLand. Melco Crown and New Cotai Holdings, LLC will now jointly develop the property. The latter is an entity controlled by funds managed by Silver Point Capital, L.P. and Oaktree Capital Management, who received US$100 million from Melco Crown as part of the deal. The announcement sees the resolution of a long-running, bitter dispute among the project’s first set of partners that had played out in Hong Kong’s courtrooms. The original partnership began to fall apart after being unable to secure financing, with relations deteriorating from 2008 onwards. The delays led to intervention by the Macau government last year. Local authorities demanded an explanation for why was the project had stalled. Officials threatened to take back the land if there was no breakthrough.

Bigger footprint Lawrence Ho, Melco Crown’s co-chairman and chief executive officer says the project’s location is a “tremendous competitive advantage, adjacent to the Lotus Bridge and a key stop” on the planned light rail system. “The proposed acquisition of a majority stake in the Studio City project provides a unique opportunity for Melco Crown to meaningfully increase its footprint in Macau and generate incremental value for shareholders,” Mr Ho announced.

The big question is whether gaming will be allowed at the site. Mr Ho says Studio City will open with 300 to 400 gambling tables and 1,200 slot machines, pending government approval. And that may present a problem. The original contract issued by the government and inked in 2001 said the property should include film production facilities, offices, restaurants and even housing, but no gaming area was authorised. In 2007, the developers submitted modifications to their land grant that would include a casino. They also submitted a request to increase the developable gross floor area of the site to about 560,000 square metres. Melco Crown was offered a deal to operate the gaming floors. The Macau government has never made public a revised land grant for Studio City, namely whether casino facilities were approved. When pushed on the issue, secretary for transport and public works Lau Si Io has kept quiet, although he has stressed that the development of film production facilities must be a major component of the project. Mr Ho doesn’t seem worried about the government approval of the revised plans for the site. “We wouldn’t have done this [deal] without the Macau government’s blessing,” he says. Melco Crown expects Studio City to cost another US$1.7 billion to complete. The property will have about 2,000 hotel rooms, 18,500 square metres of retail space and entertainment, according to Mr Ho. The new, tentative deadline for the opening is the first half of 2015. Initially, 2009 was the target. How the final Studio City turns out will be much different from the 2007 version, which included 1,900 hotel rooms, a Playboy mansion, a huge shopping mall managed by US retail giant Taubman and a 4,000-seat arena. The delays have since scared off Playboy and Taubman. JULY 2011

Gaming

LETâ&#x20AC;&#x2122;S PARTY! Pool parties are making a splash in the casino-hotel industry, with operators bringing in world-class DJs, samba groups, TV crews and themed celebrations. The goal is to lure the young and trendy from Macau and beyond BY ALEXANDRA LAGES

JULY 2011

49 ick and his friends got lost inside Venetian Macao while trying to find their way to the pool. They were there to attend a Hed Kandi-theme party, Hed Kandi being a music label that regularly partners with Sands China to throw such events. It was the third pool party that Nick, from Hong Kong, was going to in Macau. “There are no pool parties in Hong Kong,” he told Macau Business, while trying to read the directions. Miss Park is a South Korean living in Shenzhen, who also came to Macau especially for the Hed Kandi party. “Two friends of mine decided to throw their birthday bash at the pool party,” she explained, heading straight to the venue. Pool parties are increasingly hot in Macau and they are attracting a new crowd, with many of the partygoers coming from elsewhere. They are expatriates living in Hong Kong or tourists, like Tom, who is from England. “I’m in Hong Kong for holidays and a friend of mine told me this party will be amazing,” he said, clutching a map of the Venetian. Going in the opposite direction were three young women from Hong Kong, walking out of the venue with a disappointed look on their faces. “We are trying to get in, but we don’t have tickets,” one says. Tickets were sold out long ago, they were told. “Yes, we know but, still, we were trying to convince the front-door security to let us get in for free,” another said.

Drinking and dancing Young, trendy and sexy people flocked to the Venetian’s pool as the music started playing. Girls wore makeup just as if they had been attending an ordinary party, but instead of evening dresses and high heels they were clad in beachwear. From 4 pm until late, they drank by the pool – sometimes in the pool – saw some world-class DJs spinning music, dance and partied. More and more hotel-casinos in Macau are following the Las Vegas example and taking advantage of their pools to host this kind of event. Pool parties are profitable, operators say, and are a good way to attract different, younger patrons. Gamblers are not the main target. Pool parties and other outdoor events are meant to offer a different range of thrills, totally apart from the casino floor. MGM Macau was the first establishment to throw a series of Las Vegas-style pool parties in Macau, in the summer of 2008, shortly after it opened its doors. “We initially thought of the idea of a pool party as there was nothing like it in Macau at the time,” says a spokesperson for MGM Macau. “We have a unique venue, as our pool overlooks Taipa and has a beautiful view of the sea. The idea of the pool party was also an opportunity for us to expose our hotel to local and visiting guests.” Each party had a different theme, in order to “open to a variety of guests”. There was a Czech Republic-theme party with Czech food and a DJ from Prague, a Halloween party, a grand prix-theme party and so on. “Apart from the profitability, we are interested in offering the people of Macau something in addition to a gambling experience,” the spokesperson says.

Beautiful bodies

The Venetian Macao

Other players soon followed MGM’s lead. The Venetian Macao held its first pool event in April 2009, a post-concert party with American singer John Legend. “We wanted to introduce nonhotel guests to our elegant pool area,” says Alice Ma, one of the JULY 2011

Gaming

“Pool parties provide an additional experience for visitors to Macau, and that is always good for the issue of entertainment diversity. I think they only have limited spillover effect on gaming revenue,” gaming expert Desmond Lam says Venetian’s entertainment team. “At the time we saw a lack of unique and exciting parties in the region.” In July 2009, the Venetian brought in Hed Kandi to throw its first pool party in Macau. “It was a smash success. We’ve planned at least three this year and we are looking to increase the amount of events around the pool,” says Ms Ma. “This sort of outdoor fun has universal appeal. Anyone who enjoys letting loose, having wet fun, seeing beautiful boys and girls in sexy outfits will love these parties.” On the other side of the road in Cotai, City of Dreams is also betting heavily on pool parties. After a successful Halloween pool party last year, Melco Crown decided to create a branded pool party series for 2011 that will span the summer months, a spokesperson says. The series includes world-class DJs and music channel MTV as media partner. “It has always been City of Dreams’ vision to provide the most varied and interesting range of entertainment experiences for our guests, and this is yet another event that helps us enrich their stay here,” the spokesperson says.

Pooping punters Pools are among the main features of Galaxy Macau. It boasts the world’s largest skytop wave pool, covering 4,000 square metres. However, pool parties are not in the pipeline for now. “Given the high demand already for the pool facilities, we don’t have a great need right now to promote the grand resort deck and its adjacent areas as party venues,” a Galaxy Macau spokesperson says. “We are thinking, of course, of planning large public parties in the future. However, at the moment the grand resort deck is made available only to hotel guests.” JULY 2011

City of Dreams

Even though some of the pool partygoers also gamble, Desmond Lam Chee Shiong, an expert on Chinese gambling psychology at the University of Macau, says these events are not meant to appeal to traditional hardcore gamblers. “It provides an additional experience for visitors to Macau, and that is always good for the issue of entertainment diversity. I think they only have limited spillover effect on gaming revenue,” Mr Lam says. “These parties target the younger generation and I don’t think they will be effective in attracting new gamblers. In Las Vegas, day, night and pool clubbing are now very popular too. These attract a different crowd of people who don’t gamble.” Pool parties started in Las Vegas as long ago as 2004. Nowadays, there are several designated venues for pool parties and the market is big enough for different segments to be targeted. In Macau, the interest among mainland visitors in pool parties is growing, the Venetian’s Ms Ma says. “From a big-picture perspective, we believe Macau will come to be seen as a worldclass destination for partying, just like Las Vegas and Ibiza. Pool parties are a key to developing this image.” The thinking is similar at City of Dreams. “With more generations of affluent young adult Chinese willing to spend travel time and dollars for a truly fun-filled hangout escape with friends,” its spokesperson says, “pool parties are definitely an ultimate social gathering choice. These pool parties provide an unusual and excellent party experience for them.” The University of Macau’s Mr Lam is less sanguine. He believes the attraction of such events to mainland visitors is limited. “Such parties will be more effective as corporate incentive events for companies,” he says. “This may be used to support the meetings and conventions industry and tourism initiatives.”

JULY 2011

Gaming

Back in the ring

Mixed martial arts is a hot combat sport that has suffered setbacks in Macau but City of Dreams is trying to tap the market and increase non-gaming revenue BY KIM LYON

fter a shaky start, mixed martial arts or MMA, is back in town this month with Melco Crown’s City of Dreams hosting the Legend 5 Fighting Championship on July 16. Outside the ring, odds are being quoted on whether MMA can give the city’s casinos an edge in non-gaming revenue, following in the footsteps of Las Vegas. After all, MMA is one of the fastest-growing sports in the world, having already drawn live audiences of up to 60,000 to events in the United States and Japan. Jonathan Galaviz, an independent gaming and leisure industry strategist,

JULY 2011

says “it is worth noting that the largest MMA organisation, the UFC [Ultimate Fighting Championship], is headquartered in Las Vegas and owned by Las Vegas-based interests.” There the similarities end. Mr Galaviz believes a sophisticated strategy for MMA is necessary if the sport is to take off in Macau. “It’s hard to say whether Asian consumers will eventually be willing to pay to see live MMA events in the way people do in the United States.” MMA has created a huge fan base in the United States through pay-per-view broadcasts of fights – something that is

familiar to and accepted by Americans but uncommon in Asia. Those fans then fill up the seats at live events. Unlike Las Vegas, where boxing and casinos went hand in hand long before MMA arrived, Macau is a newcomer to hosting combat sport events. One of the first tournaments after gaming liberalisation was what Galaxy Entertainment Group described as “the very first international muay thai contest” in Macau, at the Macau Dome, in 2006.

Fury evaporates Shortly after, the city started hosting more combat sport events, although

only infrequently. The first big MMA tournament was in 2009, when the Venetian Macao hosted an event featuring some notable international fighters such as Brazilian António Braga Neto and Dutch-Surinamese Rodney Glunder. Momentum seemed to be building. Shortly after, City of Dreams hosted Macau’s first MMA cage fight, “Fury: Clash of the Titans”, in May last year. Suddenly, things went south. First, last October, “Fury 2: Armageddon”, an MMA event scheduled to be held at City of Dreams, was cancelled with only a few days’ warning. As the fighters were arriving, allegations flew that the promoter had swindled nearly HK$13 million (US$1.6 million). With their hotel rooms cancelled, fighters were left with nowhere to stay, stranded either in Macau or Hong Kong with no paid return flights. Less than three months later, a new MMA event, “Mayhem in Macao”, booked to take place at the Venetian Macao last January, was cancelled by the promoter who blamed low ticket sales. Now City of Dreams is betting it

can take MMA to the big time in Macau, partnering with the Legend Fighting Championship, Hong Kong’s first professional MMA competition. The resort will hold a series of four events over the next 12 months in a bid to diversify its entertainment landscape.

Young bucks Melco Crown’s director for public relations and projects, Charles Ngai, explains the importance of the tournaments. “With the rapidly growing interest in MMA, we feel that fight sports events such as the Legend Fighting Championship will have a ready audience in this part of the world who are looking for entertainment with a difference.” Mr Ngai says the partnership with the Legend Fighting Championship is meant to appeal to Hong Kong’s established MMA fan base. “We are confident that a large portion of this loyal fan base will follow the tournament migration to Macau, which is just a short boatride away.” Chris Pollak, co-founder of the Legend Fighting Championship, says

his organisation is thrilled to bring four world-class MMA events to Macau. “We are once again featuring champion AsiaPacific MMA athletes for what we anticipate will be our most exciting competition to date,” he says. Legend 5 and subsequent events at City of Dreams will be the first MMA fights to be broadcast internationally from Macau, to the mainland, Hong Kong, Singapore, Indonesia the United States and Canada. Whether MMA can help Macau’s casinos to increase their non-gaming revenue is debatable. Yet with MMA’s primary audience being affluent males aged between 20 and 40, it could definitely attract people more willing to spend their discretionary dollars on attractions other than gambling. Joe Poon, an associate at Standard and Poor’s, does not think gaming revenue will be knocked off its perch overnight. “While a heavy chunk of Macau’s operators’ investments in recent years have targeted leisure travellers, we believe it may take many years for their reliance on the VIP gaming customer to reduce.”

What is MMA? M

ixed martial arts, or MMA, is an inter-disciplinary fullcontact combat sport. It allows a wide variety of fighting techniques and skills from a mixture of other combat sports – including sanda, wushu, jiujitsu, muay thai, boxing and wrestling – in supervised matches under a strict set of rules designed to protect the safety of the fighter. Most professional fights last for three or five rounds of five minutes each, with a one-minute rest between each. A fighter can win the contest by knocking out his opponent or forcing him to submit, by a technical knockout or the decision of the judges, or if a doctor decides his opponent cannot continue. A fighter must wear a mouth guard, groin protector, mittens and MMA shorts. No other equipment, such as shoes, elbow pads, knee pads, shirts or athletic tape is allowed. K.L. JULY 2011

Gaming

Gambling-related crimes up More than 200 casino-related crimes reported in the first three months of 2011 n the first quarter of 2011, Macau authorities reported a total of 217 casino-related crimes, the secretary for security, Cheong Kuoc Vá announced last month. Of those, 186 took place inside casinos. Loan sharking was the most common crime detected (35 cases), followed by pick-pocketing (29).

Viva Pataca retires Stanley Ho Hung Sun’s horse Viva Pataca has retired after six years of running. On his record, the nine-year old horse has 44 starts for 13 wins, five seconds and 10 thirds and has won HK$83 million ($11 million) in prize money. Viva Pataca is Hong Kong’s greatest money earner in horse racing.

Although he didn’t provide detailed figures, Mr Cheong admitted that casino-related crimes have increased. “Gaming revenues have been very strong over the past five months, meaning that a lot of people have come to Macau to gamble. The crime derived from surrounding the casinos certainly increased proportionally,” he said.

David Green talks about gaming The British Business Association of Macau has invited gaming expert David Green to talk about the future of the city’s biggest industry at a luncheon at Mandarin Oriental, on July 27. He is managing partner of Newpage Consulting. Prior to founding Newpage, the Australian was a partner of PricewaterhouseCoopers in Macau, and later director of the firm’s gaming practice. Mr Green has advised on casino regulation in a number of geographies, including Australia, New Zealand, Singapore, Macau and Taiwan. Macau Business is a co-host of the event.

Casinos boost ad spending in Hong Kong Galaxy Macau’s opening HK$28 million advertising campaign accounted for 57 percent of hotel advertising in Hong Kong in May. It was the largest-recorded advertising campaign spending in Hong Kong for a casino hotel opening, beating the previous HK$13.12 million record established by Venetian Macao in August 2007, according to media-monitoring firm admanGo, South China Morning Post reported. That helped lift hotel advertising spending in Hong Kong to HK$49.03 million in May, up 228 percent yearon-year. Occupying the following four spots on the ranking were Macau hotel-casinos: MGM Macau (HK$11.23 million), Venetian Macao (HK$1.87 million), L’Arc (HK$1.03 million) and City of Dreams (HK$640,000). Hong Kong is the second biggest supplier of tourists to Macau, after the mainland. JULY 2011

JULY 2011

56 56

Gaming

Doing the laundry Chinese central bank’s internal report points finger at casinos BY MARTIN JOHN WILLIAMS*

three-year-old internal report by the People’s Bank of China on the theft of massive sums of public money by fleeing Chinese officials and businesspeople, refers to casinos as sites for money laundering and gambling of public funds and accuses unnamed gambling companies of assisting escapees in their crimes. A condensed version of the June 2008 report by the central bank’s Anti-Money Laundering Monitoring and Analysis Centre entitled “Research on Channels for Assets Movement Overseas by Corrupt Elements and Related Monitoring Methods” and marked “internal use, retain with care” was re-

JULY 2011

leased last month, possibly by mistake, after winning an award from the China Society for Finance and Banking. The head of the society, Zhou Xiaochuan, is also governor of the People’s Bank of China. The report has since been removed from official websites, but it remains available online at various locations. Its contents provoked an angry response in Chinese cyberspace, while Western media outlets also made headlines out of the large number of officials allegedly involved and the hundreds of billions of renminbi estimated to have been lost. Those figures - between 16,000 and 18,000 officials missing and RMB800

billion (MOP990 billion) lost since the mid-1990s - were dramatic enough, though most media outlets failed to state that the report sourced the estimates from a study by the Chinese Academy of Social Sciences. The report champions the need for enhanced monitoring capabilities, communication and intelligence-sharing between the bank’s special investigators, customs officials, prosecutors and police, as well as with financial investigation units in other countries. But the report, which was completed during a crackdown on Macau visas for mainland visitors, makes no direct reference to casinos or gambling in its

57 of voracious gambling across borders,” the report continued, citing the “classic cases” of three senior officials from Shenyang city in Liaoning province and a deputy mayor of Hangzhou in Zhejiang province. “A portion of these corrupt elements and managers of state-owned enterprises have moved cash across borders through gambling in preparation for fleeing the country, for example by exchanging funds for chips, then cashing in the chips for cash, then transferring the cash to individual overseas bank accounts,” the report said. “In so doing these ill-gotten proceeds take on the appearance overseas of lawful income,” it said. Working with individuals who act as runners between the mainland and other locations, corrupt individuals can, “with the intimate support of gambling conglomerates,” launder money outside the mainland, the report added. With the exception of a state-approved lottery duopoly, gambling is illegal in the mainland, though Beijing has allowed Macau to develop into the world’s premier casino market following the handover in 1999.

Written in the cards

five recommendations. Nor is it clear what effect, if any, the report had on visa or other policies relating to Macau and Hong Kong.

Cashing in On the influence of gambling, the report says the rapid development of the gaming industry around the world has produced a “gambling network” around China that extends from the “territory of Macau and the Philippines, Malaysia, Thailand and Myanmar to Korea and Russia and all the way to Australia, Europe and the Americas.” “In recent years many casinos have locked onto Chinese government officials and persons in charge of stateowned enterprises as important sources of custom,” the report said. “These officials and senior managers frequently use public funds to engage in gambling behaviour and hence the tendency to gamble large sums is even stronger.” “Several dozen officials and senior managers have come unstuck because

The report also identifies use of the China UnionPay interbank transaction card as a facilitator of the problem. The card was “established under the approval of the State Council and the People’s Bank of China,” according to the UnionPay website. “In September 2004, Macau formally commenced the use of UnionPay card services, with more than 200 Macaubased companies allowing tourists in the territory to use the cards to make cash payments. Cardholders could also withdraw cash from 125 ATMs,” the report said. “Presently, the card occupies a large part of the Macau market. By the end of March 2007, it could be used with 2,170 participating companies, at 2,999 points of sale and at 207 ATMs. In one quarter of 2007 the number of transactions reached 440,000 and involved MOP4.4 billion,” it said. “While the card offered ... convenience in regard to sightseeing and travelling expenses in Macau, it also provided suitable conditions for corrupt personnel to realise cross-border capital movement,” it said.

The report says a former mayor of Haimen township in Jiangsu province misappropriated RMB18 million using a UnionPay card during 48 gambling trips to Macau between July 2003 and August 2005. An unnamed woman from a company in Zhongshan, Guangdong province, is also described as having lost more than RMB950,000 in company funds using the card. Macau and Hong Kong are also listed as the two important “transfer points” for remittance of illegally obtained funds overseas.

Oops, sorry for the mistake Three years on, at the annual conference of the Association for Certified Anti-Money Laundering Specialists last month in Beijing, a senior People’s Bank of China anti-money laundering official said the bank is improving its high-volume suspicious activity report system for suspect transactions, refining anti-money laundering monitoring processes and targeting higher-risk financial institutions. Shi Yongyan, director of research for the central bank’s Anti-Money Laundering Bureau, said 13 percent of cases of misappropriation of public funds involved gambling offences. However, Hong Kong was more than three times as likely as Macau to act as a conduit for illegal transfers, he said. The sensitivity of the People’s Bank of China report was reflected not just in its removal from official websites but also in a vague clarification on the China Society for Finance and Banking website on June 16, following the media coverage, which said “some readers” had pointed out “errors” in data relating to fleeing corrupt officials and the quoted amounts of money. “Upon investigation, the source of the data was found to be false information online that had not been verified,” the clarification said, adding that media reporting on the “erroneous data” had “created a serious negative influence,” though it did not identify the data or sources in question. The authors of the report, it said, “extend to the public their sincere apologies and solemnly hope that the media and the public do not take seriously the grave untruths in the report relating to fleeing corrupt officials and amounts of money.” * EXCLUSIVE GAMBLINGCOMPLIANCE/MACAU BUSINESS JULY 2011

Gaming

Game on

Horseracing – minus betting – okayed for mainland, reversing a six-decade ban uhan will soon host a regular Saturday-afternoon horseracing programme where gambling wagers are not part of the proposition. “People can win small prizes if they correctly guess which horse will win the race but they can’t bet on horses like people do during Hong Kong horse racing,” Liu Hongqing, spokesperson of Wuhan’s Orient Lucky City horse-racing course told the China Daily, the mouthpiece of the Communist Party. “We are still at the planning stage of the competition such as inviting horse owners nationwide to join the competition. The first race will take place after August.” The move, allowing racing in the capital city of central Hubei province is a turnaround. Horseracing has been banned since 1949, although some ex-

JULY 2011

periments to reintroduce it have taken place. Police shut down a number of racecourses in an anti-gambling campaign as recently as 2000. Only Hong Kong and Macau have mature horseracing industries in China, complete with a well-established legal and policy framework for betting. In the mainland, a renewed interest in horseracing has translated into sizable investments in the construction of racing venues, supported by a fast-growing breeding industry. Beijing’s central sports administration has stressed that the governmentbacked horseracing programme in Wuhan will not allow any form of gambling. “The General Administration of Sport resolutely opposes any form of gambling behaviour relating to sports activities, and has never approved any form of betting activity in any Olympic equestrian

competition or traditional horseracing event,” the agency said on its website. According to the China Daily, the Chinese racing industry argues that legalising on-track betting could generate up to three million jobs and reduce illegal betting. It could also generate tax revenue. Managed by the Orient Lucky Horse Group, the Wuhan races will be overseen by the Chinese Equestrian Association and involve four to six races every Saturday, with fields of 10 to 12 horses in each. On major festival occasions, extra racing days will be designated. Prize money will be awarded to the owner of the horse that wins each race. The amount and the source of the prize money are under discussion. All races will be televised live in the mainland and possibly broadcast on the Internet, with printed racing guides.

p To

aw dr

11 20

As oor 2E the fl nd ct G m rou du at fro g g ro its nin ur p rs ib i be t exh s ga ow yo m e s n nu otte gam er, k rd the h ronic punt co of ect se t el ine es Re b nd Ch e a e Th ts th o Sl ow Kn

Changing fortunes Record attendance at G2E Asia 2011 aﬃrms the trade show’s importance to gambling sector

ew high-tech slot machines, sleek LCD screens and tons of new games filled the floor at last month’s G2E Asia 2011. Once again, the show brought the best products in the gaming industry to Macau, while some of the brightness minds in the sector were sharing their insights during the conference programme. According to the organisers, this edition of G2E Asia enjoyed the biggest attendance so far since the event’s inception in 2007. Reed Exhibitions and the American Gaming Association reported a 25 percent increase in the total number of visitors, with the event welcoming 5,700 industry profession-

als. These figures reflect the expansion of gaming throughout the Asian region. The exhibition featured 120 exhibitors, a similar figure to last year, from 23 countries. Of those, one quarter were first-time exhibitors. The conference programme attracted more than 700 delegates, who learned about the latest trends in Asian and global gaming from more than 55 industry experts. “There is no better way to celebrate the fift h anniversary of G2E Asia than with great participation and support from the gaming industry,” says Brian Thomas, Reed Exhibitions’ vice-

president. “This is our record year on numbers of gaming professionals who visited the event, reaffirming our positioning as the most important annual gaming industry event in the region.” One of the highlights of this year’s show was the G2E Asia Visionary Award, which recognises leaders who have made an indelible impact on the industry in Asia. The award went to Sheldon Adelson, chairman of Las Vegas Sands and Sands China, for his role in the development of Cotai and, more recently, in Singapore. Next year’s event is scheduled to take place between May 22 and 24, once again at the Venetian Macao.

JULY 2011

Game changer

Photos: Carmo Correia

EXHIBITION

G2E Asia has evolved over the past five years, as has Macau’s gaming industry. Macau Business looks into some of the products and companies that generated a buzz at this year’s event

hen Macau began hosting G2E Asia five years ago, its value was negligible. A large group of suppliers gathered for a very small group of customers. Now the show has spread its wings, serving the entire Asia-Pacific region’s gaming requirements and allowing the industry’s main suppliers to show their wares to a truly international audience. After trying simply to sell American or other foreign products in the Macau and Asian markets, suppliers have finally learned that tailoring products to the market reaps dividends – and with this in mind, one of the stars of this year’s show was JCM, which is becoming much more than just a banknote validator company. On its stand was a product concept that is likely to make its way on to almost every gaming table in Asia, if JCM can deliver the finished product.

A few years ago, JCM developed Trident, a banknote validator fitted to a card table. It was a neat idea, and one that could help casinos on the accounting side. But it is no use at all in places like Macau, where large numbers of low-denomination notes are used in table games, because it would slow the game to the point where its benefits would be far outweighed by customer dissatisfaction and loss of revenue. JCM’s solution to this problem is Project 8 (a working name). JCM has been working with German company Giesecke & Devrient to develop it. Project 8 is a note sorter attached to a gaming table. A player buys into the game by proffering notes to the dealer in the usual way. The dealer then drops the notes into the sorter, where they are held in escrow so that the dealer can tell the player the value 62

of the notes. If the player concurs with the value, the gaming chips are issued. With the cash held in escrow rather than going right into the drop box, the player has the option to call the money back if he or she disagrees with the reader’s evaluation.

Happy player, high profit Sorting the notes takes around five seconds. For 12 notes, the whole process, from the notes being proffered to the chips being issued, takes around fifteen seconds. The benefits are obvious: more play, less downtime, happier players and increased profits. JCM estimates that this could mean roughly up to an hour of extra play every day. The sorter will work with two 1,700-note cash boxes, so it will not need to be emptied too frequently. Says JCM’s Tom Nieman: “Because

of the density of table gaming here in Macau, the buy-ins are so large and the number of notes so great that there is a recurring break point in games. To process a buy-in, the notes are fanned and inspected with a wand, approved by the pit boss, collected and put into a drop box. We’ve timed this process and it can take over two minutes for 40 notes to be accepted. In that break point, no one is making any money. The player can’t play. Nobody wins.” As it stands, the prototype is too bulky to be useful but if JCM can bring its size down, it is a sure-fire winner for Asian casinos. With a presence at G2E Asia that generated a lot of positive comment, Novomatic brought a strong lineup of slot titles to go with its electronic multi-player installation based on Novoline Novo Unity II. After Novomatic’s relatively recent acquisition of Octavian assets, its fully scalable systems products and jackpots were another highlight. The latest Super-V+ Gaminator multi-game mixes were presented in two groups of Super-V+ Gaminator cabinets that were linked within the Octavian casino management system ACP (Accounting Control Progressives System) and connected to a new mystery progressive jackpot theme called ‘Wild Nights’.

Multi-tasking at play Novomatic’s Novostar SL2 slanttop was used to show a selection of CoolFire II games, this cabinet being particularly flexible as it comes in three different modular versions: Novostar SL1 with one monitor for multi-player installations; Novostar SL2 with two monitors; and Novostar SL3. The SL2 and SL3 versions feature a flip-screen feature, so the player can use either of the two main screens to play, and an extra start button in the foot rest. This was the first outing for the SL1, and it was used to great effect to show Novomatic’s electronic multiplayer installation based on the inno-

vative Novoline Novo Unity II system. The new feature of the system is the flexible interconnection of a great variety of electronic live games and slot games with a virtually unlimited number of individual player stations. This multi-game functionality allows the operator to link any chosen number of terminals to different games such as roulette, baccarat, poker, blackjack, sic bo and bingo as well as a great slot games offering – all within one installation. A noticeable change at Macau’s casinos, aside from the increasing use of slots, is the apparent acceptance of electronic automated gaming – in sic bo and roulette, for example. This is an area where Alfastreet has scored some success around the world – notably in South America and Asia – and the company is now rolling out a new product in this field. 63

It is a multi-game terminal with a twist – the twist being that the player can play two games simultaneously. For example, if the player selects roulette, he or she can choose two wheels, and just keep playing. It means downtime for the player is minimal and stimulation is maximal. Alfastreet’s Albert Radman says: “This will be placed in large numbers around Asia in the very near future. We already have an installation at Marina Bay Sands, Singapore, of 40 units, and it’s working well.” There was much more to see at G2E Asia. The show has picked up after a couple of quiet years, with a great buzz about the floor and a feeling of business being done. G2E Asia 2011 has re-established the event as one of the gaming industry’s Big Four, along with SAGSE Buenos Aires, London’s ICE and G2E Las Vegas.

EXHIBITION

Fake free

Gaming Partners International presented new RFID techniques that have the potential to stop fraud on the floor

sia has always been a healthy market for Gaming Partners International (GPI), mainly because of the business the company does selling casino chips. But last month’s presentation at G2E Asia by GPI showed how receptive the company is to its customers’ needs. One product tailored to suit Asian markets is the Chip Inventory System 2.0. It harnesses the company’s Radio Frequency Identification technology, or RFID, to accurately track the status of all enabled chips throughout a casino. It is a technology that helps casinos increase the efficiency of inventory movement, improves security and can give managers an insight into the floor’s operations. By tracking currency from the cage or vault to its proper place on the gaming floor, it allows real-time monitoring and authentication of inventory and provides fast, accurate validation of chip amounts and serial numbers. GPI’s Kirsten Clark says the new

generation of CIS is capable of being integrated with third-party table and cage applications. “Unlike prior versions, one of the key advantages of Chip Inventory System 2.0 is that we’re telling operators we just want to give them access to what they need, regardless of who they work with in back of the house. We’ll work with them and our system will work with them.”

Another new development showcased at G2E Asia was the Portable Chip Reader, created for casinos that use RFID-enabled chips, but have not integrated every table with the system. The Portable Chip Reader uses the latest Magellan Mars 24 reader with a two-dimensional antenna that can read chips en masse, or in stacks or racks. This means it can quickly identify chip stacks of up to 20 and as many as 200 in a tray. Its high-speed reading capability allows it to read up to 400 chips per second while simultaneously identifying whether the chips are authentic. Ms Clark says the portable RFID reader gives casinos the ability to extend RFID to the pit without having to invest in RFID system integration for every table. “To deploy RFID across hundreds and hundreds of tables can be a costly proposition propertywide,” she says. “Because of the portability, durability, read-speeds, this can be used with a group of tables so it’s available for authentication when needed and the chips don’t have to go back to the cage.”

JULY 2011

Photos: Carmo Correia

INTERVIEWS

Ramesh Srinivasan

Aiming for the jackpot

Bally has buﬀed up its hardware and software, ready for a raid on Macau BY EMANUEL GRAÇA

merican slot-machine manufacturer Bally Technologies Inc. is looking to strengthen its foothold in Macau, says Ramesh Srinivasan, the company’s new president and chief operating officer. He believes the recently-launched Pro Series V22/22 cabinets will help. “With the new games that we have, and if we produce more content on those cabinets, we are at a pretty good turning point to take our percentage to a much higher

level in Macau,” Mr Srinivasan told Macau Business during G2E Asia. “All the new games are based on Alpha 2, which is a much more powerful operating system. That used to be one of our weaknesses. Our Alpha 1 operating system did not compare very well with the operating systems our competitors had.” Bally says it is eyeing the new developments in Cotai. Talks are underway with Sands China about its projects on parcels five and six, due 66

to open next year, where Bally hopes to secure up to 20 percent of all slot machine orders, Cath Burns, vicepresident of Asia operations, told Reuters. There are expansion plans in other Asia-Pacific markets as well. The company received permission in April to sell machines in Australia. It is trying to establish a presence in the Ho Tram Strip development in Vietnam and in the Manila Entertainment City project

JULY 2011

INTERVIEWS

America will remain Bally’s primary market. “But it will not surprise me if in the next five years it becomes fifty-fifty.”

No distractions

led by the Philippine Amusement and Gaming Corp. “We see Asia-Pacific overall, starting from Australia all the way up to the north, as a major area of growth for us in the next three years,” says Mr Srinivasan. “Our international revenue has

grown from above 5 percent of overall revenue five years ago to about 20 to 25 percent now. And this 20 to 25 percent is of an expanded revenue base. Our total revenue is much higher now.” Even so, Mr Srinivasan believes that for the next few years, North 68

Although it wants to grow in Asia, Bally is not considering investing in electronic table games, says Mr Srinivasan. It is a new product category that has been quite successful in Singapore and is slowly making its way into Macau. Mr Srinivasan, who has worked for Bally since 2005, replaced Gavin Isaacs in April. Mr Isaacs, the former chief operating officer, left the company to join Shuffle Master Inc. as its chief executive. Mr Srinivasan previously headed Bally’s gaming systems unit. A change in leadership will not translate into big changes in company strategy. The biggest change so far is that all Bally’s units are now run in a “similar style”, he says. The company continues to buy back its shares in the absence of other companies out there that are worth buying, according to Mr Srinivasan, and it is boosting its research-anddevelopment budget. “We have more than doubled R&D in the last few years. R&D is our driver. That is what drives our growth,” says Mr Srinivasan. Some of the budget has been spent on Bally’s player-communication technology. Last month the company announced an agreement with Caesars Entertainment that will see the iVIEW Display Manager in-game player-user-interface installed at its casinos. Bally describes iVIEW as a dynamic customer-relationship marketing tool that will cross-promote everything from gaming to dining to entertainment. While some might argue alwayson advertising can distract punters, Mr Srinivasan says it is not the case. “In all the experiments done so far in casinos, it has only helped game play. It has not hurt it.”

Photos: Carmo Correia

Gavin Isaacs

Fifth element

Shuﬄe Master is looking to the online environment to expand, says new chief executive BY EMANUEL GRAÇA

huffle Master is joining rivals such as IGT in turning its attention to online and social gaming, says the company’s new chief executive officer Gavin Isaacs. The long-term goal is to create a fi ft h product segment for the American gaming supplier. “We are going to invest in it. Not only is it good as a potential revenue source, it is very good for the promotion of games and brands. It is very good to learn about clients and understand how they play. It is very good for the adaptability of titles and fi ne-tuning the games,” Mr Isaacs

told Macau Business during last month’s G2E Asia gaming exhibition. “Can you imagine if every poker game on the Internet had a Shuffle Master certified shuffler, where the algorithms were certified?” Mr Isaacs plans to use the company’s library of proprietary content to create new opportunities online. The company’s core business has been in supplying casino equipment, including shufflers, traditional and electronic table games and video slot machines. Shuffle Master has signed its first 69

online deal to license its Ultimate Texas Hold’em game to a British operator. Talks are underway with Internet casinos in Canada and Europe. It was Mr Isaacs’ first G2E Asia exhibition at the helm of Shuffle Master since his move from Bally in March, where he was chief operating officer. His major goal at Shuffle Master is to continue to see it grow. “I want every business around the world to be profitable, I want to expand globally. I want to make sure the products are the best we possibly have.”

INTERVIEWS

Shuffle Master reported record revenues of US$59.9 million (MOP479 million) for the second quarter, an improvement of 18 percent year-on-year. Revenues were buoyed by sales of its electronic gaming machines in two eastern states of Australia, Queensland and New South Wales.

Fair and square

Gavin Isaacs and Ken Jolly, vice president Asia Pacific for Shuffle Master

Shuffle Master has been at the forefront of introducing electronic table games to Macau. A recent ruling by the gaming regulator to standardise payouts for any given game, regardless of whether it is played on a live table, partial or fully electronic table, has impacted the company. The flaw was uncovered on electronic sic bo tables. Mr Issacs downplayed the issue and said the required changes to computer soft ware have already been made. The issue was nothing more than a speed bump that has not dented the company’s willingness to deploy more electronic table games in Macau. “Anywhere in the world were there is regulated gaming, you have to work with the regulators and you have to work with them in their rules. It is not that Macau is unique in that respect,” he said. Shuffle Master used G2E Asia to promote its new slot machine cabinet Equinox. Mr Isaacs says the company plans to develop more than 30 core titles for it by the end of the year. It is among the priorities for 2011. In Macau, discussions are continuing with Sands China over placing the company’s products in the gaming operator’s developments on parcels five and six in Cotai. There are also plans for a rolling expansion throughout Asia, from Singapore, where it already has a presence, to other developing markets such as the Philippines and Vietnam.

JULY 2011

INTERVIEWS

Player-led, tech-driven

Aristocrat boss Jamie Odell explains how the company has become the dominant player in Macau BY CHRISTOPHER COTTRELL

“ ’m thrilled about this part of the world,” Jamie Odell, the chief executive of Aristocrat Leisure Ltd, tells Macau Business. “There’s such a buzz about this place, there is such energy.” Macau is certainly an exciting place for Aristocrat, were the Australian provider of gaming solutions reportedly holds 55 to 60 percent of the market. “We began as a great Australian company and now we are proud to be exporting a great Australian product. For our success, like all success, first you focus on the markets that matter the most to you and try not to be everything to everyone,” Mr Odell says. In Macau, the group has recently continued to build up its market share on the back of the strong performance of its “Fa Fa Fa” and “Yellow Dragon” hyperlinks. One of Aristocrat’s most recent achievements was to secure more than 60 percent of the slot installations on the gaming floor at Galaxy Macau, which opened in mid-May. “Our Asian-themed games are successful because we tailor them with the right mathematics and links. We are very proud of our footprint here in Macau and in Singapore,” says the former head of Australian and Asia-Pacific operations at brewer Foster’s Group Ltd.

more than 2,000 staff globally, Aristocrat is licensed by more than 200 regulators, and its products and services are available in more than 90 countries. It has offices in Australia, the United States, New Zealand, Britain, South Africa, Sweden, Argentina and Japan. The company has been present in Macau since 2006. Mr Odell joined Aristocrat in 2009 and says the secret of success is to be player-led and technology-driven. “We are really developing our high-tech. The gaming industry is relying on new technology like it never has before and there is a lot of investment in it,” he explains. In 2010, Aristocrat’s investment in its future through design and development rose as a percentage of revenue to 16.0 percent, from 12.5 percent the year before.

Important force Aristocrat’s boss adds however, that good technology must walk side-by-side with great games, specifically adapted for each market. “Here in Macau, we have tailored games instead of just bringing in products made for other markets.” To help the company to beef up its product offering, Aristocrat has named Rich Schneider as its new chief product officer. He will lead all aspects of product design, portfolio management and global marketing activities. Mr Schneider, who begins his tenure on July 28, is widely regarded as an important force in the gaming industry. Most notably, he was executive vice-president of product strategy at International Game Technology (IGT) and played a vital role in conceiving what is now known as the Gaming Standards Association. “The appointment of our chief product officer is significant, and we are fortunate to have attracted someone of Rich’s calibre, and he will play a critical leadership role in the next stage of our turnaround story,” Mr Odell says. “His skill set, knowledge of the industry and years of experience will be tremendous assets.”

Over the hump The Asia-Pacific region is one of the best performing for the gaming supplier. While Aristocrat’s overall profit declined 53 percent last year, in the Asia-Pacific region the company delivered a strong performance, which improved profit by 28.6 percent. Aristocrat is in the middle of its five-year plan, to be completed by 2013, to turn around global performance and achieve sustainable profit growth. This year the company expects net profit to be 10 to 20 percent higher than in 2010, a period that represented, according to Mr Odell, “the most difficult year in our turnaround”. With more than 50 years of industry experience and 72

JULY 2011

CONFERENCE PROGRAMME

Rise of the machines Singapore shakes Asia’s machine mix, with Macau trying to catch up BY ANDREW GELLATLY*

hile Macau is still dominated by its baccarat tables, electronic table games, fresh from their successes in Singapore, are gaining ground. A combination of sophisticated slot floor analytics, and a changing visitor mix, is reshaping the gaming floors of the world’s biggest casino market. One of the most remarkable differences between Macau and Singapore has been the willingness of the City State’s players to gamble not just at the ubiquitous baccarat tables but also at their electronic facsimiles, rapid play roulette and at slot machines. Singapore’s two booming casino resorts, Marina Bay Sands and Resorts World

Sentosa, have both seen healthy levels of business from their slot machines and electronic table games, but it is a style of play that has taken time to catch on in the world’s biggest gambling market - Macau. Addressing the industry’s annual G2E Asia 2011, Ben Lee, managing partner at Macau-based IGamiX Consulting, told delegates, “Macau is skewed by the history of the VIP baccarat game - you look at other jurisdictions like Malaysia and Cambodia where the junket business is not as dominant as it is in Macau and you find a more balanced mix of machines with only some semblance of junket VIPs.” But Mr Lee pointed to Singapore’s 74

elaborate stadium-like displays around roulette and baccarat tables with hundreds of terminals and multiple simultaneous games – which are now making their way into Macau – and the almost 50/50 mix of machines and tables in the Philippines, as historical examples of a cultural preference that is becoming more widely accepted as mass market play spreads across Asia. “Prior to Singapore becoming deregulated, Genting Malaysia already had rapid roulette, rapid baccarat. When Resorts World Sentosa opened they were filling 150 buses a day from the Malaysian peninsula to get the momentum going and

“ETGs are bridging the gaps between tables and slots - you want to bring people over to slot machines, and you also pull off people who clog up the tables.” As the new machines gain a grip in Macau they are also borrowing some of the more compelling elements of the table games themselves, including trend play, according to Mr Wu. “If you look at real baccarat tables they all have trend screens. If you look at new ETGs they all show trend screens too, whether its Sic Bo or baccarat or roulette.” The increase in ETGs in Macau has posed some regulatory challenges. Recently, the local regulator ordered gaming operators to reduce payouts on their semi-automated and fully automated electronic sic bo tables to the same level as those for live sic bo tables. The ruling means payouts must be uniform for any given table game, regardless of whether it is played on a live table, partial or fully electronic table. Th is was not always the case before.

Food and play

they inadvertently created this buzz about electronic table games (ETGs) as well.”

Bridging the gaps Now, with the burgeoning market in Macau rapidly approaching a 5,500 table overall cap, from which ETGs are exempt, suppliers and operators are looking to the machines not just to swerve the limits, but to add new gaming choices to the increasingly busy mass market properties. According to Pete Wu, vice president of operations at Sands Macau, “the huge success of ETGs in Singapore drove our decision to implement more ETGs on the floor in Macau.

Catherine Burns, managing director and vice president Asia Pacific for Bally Technologies Inc., noted that inevitably the sheer volume of baccarat betting meant slots were, “getting a bit overshadowed by the US$23 billion (MOP184 billion) of revenue versus just US$1 billion of slots revenues ... but there are some companies – Wynn is a key example, as is MGM – that are seeing US$300600 per day in net machine win, and that’s a pretty outstanding result for any slot floor anywhere in the world.” Ms Burns also noted that machines are proving less intimidating for some Asian players who do not want the pressure of table game play. “Some players are very extrovert and they want to have that experience – others are very introverted and they don’t want people surrounding them – they just want to be with the machine.” The new ETGs are also being integrated into gaming floors that are far more closely aligned to what Asian players are craving. IGamiX Consulting’s Mr Lee said: “What we’re seeing now is a full circle – a return to a focus on 75

gambling and the supporting facilities that enable the customers to concentrate on the core offering which is gambling. “Galaxy Macau to me is the epitome of what the Chinese gamblers want – they are not interested in entertainment, they are not interested in shops, what they want is a very good gambling facility and everything is very accessible, and most importantly they have a wide variety of F&B outlets that are in close proximity to the gaming floor.” Consequently, as the Macau mass market shifts and grows, slot floors are being constantly redesigned by teams of specialists. Sands Macao’s Mr Wu said: “There is an incentive to add slots and in the end it is a fi nancial decision to play with the floor – you can test and control and move things around; and one thing that has changed on these floors is a focus on analytics – as these casinos have grown we’ve become more focused on analytics to optimise underutilised space. “Some of the busiest areas on our floors are the ones that are closest to the noodle shops and the bathrooms,” Mr Wu says. But one characteristic element of Macau’s market – its heavy VIP bias – is not going away completely even in the machine world, according to Mr Wu, who says that so-called high roller slots, with stakes of HK$5,000 per spin and upwards, are fast gaining in popularity. He notes that VIP slots, while taking up only 10 percent of the machine floor area at the Wynn, already provide 65 percent of machine handle. “That is an untapped market that is only just beginning to evolve,” says Mr Wu. “People get tired of the tables and they are looking for that big win. In these VIP rooms you see jackpots hitting for US$500,000, US$700,000, a million left and right.” Bally’s Ms Burns too confirms that in the small, exclusive VIP slots rooms, “life changing events are happening across the board and if you’re not pushing product towards that you are absolutely missing out.” *Exclusive Gambling Compliance/Macau Business

CONFERENCE PROGRAMME

Time’s up

A former Sands China executive says the territory’s junket rules need an overhaul BY LUCIANA LEITÃO

he regulations governing VIP gaming promoters, commonly known as junket operators, are in need of revision, says Macau lawyer Luís Mesquita de Melo, former executive vice-president, general counsel and company secretary of Sands China. The regulations came into force in 2002 but the business has evolved fast, making a revamp necessary. “Certain aspects of regulation should be changed, particularly imposing obligations of handing out more information. But I also think that it is necessary to impose a certain transparency in the way the regulator performs,” Mr Melo said on the sidelines of a session at G2E Asia called “VIP Vision: How Junkets Work Across Asia”.

Mr Melo says most rules governing gambling and junkets are the result of instructions by the Gaming Inspection and Coordination Bureau that have not been made public. “It is very important that these instructions are not only made public but also that the efforts made [by the regulator] in research, control and supervision of the different gambling aspects, including junkets, is revealed,” says Mr Melo. An expert on gaming law at the University of Macau, Jorge Godinho, agrees enforcement should be more transparent but argues there is little need to reset the legal framework because it is relatively complete. He sees the problem stemming from conjecture about junkets because so little information is made public.

A Singapore thing Things are quite different in Singapore. Junket operators who intend to do business there must first get a licence from the government’s Casino Regulatory Authority. The licensing process involves disclosing financial history, company history and signing a binding statutory declaration – among a number of hurdles. Although a junket operator in Macau must also meet certain require-

ments to get a licence to do business, “the licensing procedure adopted does not go as far” as in Singapore, Mr Melo says. Singapore’s rules are so strict that no junket operator has been licensed there yet, though there have been persistent reports of unlicensed junkets. The Casino Regulatory Authority is currently vetting more than 40 applicants to become licensed as junkets, a move which analysts believe has the potential to further energise the market and bring in many more gamblers from around the East Asian region, but the process is moving painfully slowly. Mr Melo says an effort to harmonise the Macau and Singapore systems to avoid embarrassment is long overdue. “Imagine if a junket is rejected in Singapore and, instead, is fully licensed in Macau.” In view of some junket operators already having associated companies listed on the Hong Kong Stock Exchange or the Nasdaq, and the increasing sophistication of their business, Mr Melo says the time is right to revise Macau’s rules. Ben Lee of Macau’s IGamiX Consulting says the lack of transparency is slowly changing. By opting to go public, gaming promoters are subjecting themselves to “greater scrutiny” and they now have to report suspicious transactions to the local authorities. The problem lies with the fact that junkets are difficult to regulate. “Junkets at the top layer are identified with the casino but the sub-junkets are not, and sometimes they have sub-subjunkets,” he points out.

Profiling profits

Chinese gamblers are risk takers with an extraordinary illusion of control at the table, argues one marketing expert

BY LUCIANA LEITÃO

he constant influx of Chinese punters from the mainland, Hong Kong and Taiwan offers casinos huge revenue streams. But how much do gaming operators know about the profiles of the people that create their profits? Desmond Lam Chee Shiong, associate professor of marketing at the University of Macau, says most Chinese gamblers are “hard risk takers with a high illusion of control” – characteristics that reflect traditional beliefs. “Superstition is one of the means they use to [try to] control the outcome,” Mr Lam said on the sidelines of a session called “The Chinese Consumer: How to Appeal to the Regional

Giant”, at G2E Asia, where he was one of the speakers. Numerology and feng shui, the ancient Chinese system of channelling positive “qi” or energy, reinforce superstition among players. Mr Lam says that together, these ideas create the illusion of control. “You can control feng shui. You can control where you sit and your ‘qi’,” he says. Chinese are also fast gamblers who do not want to waste time. That is why baccarat is still the dominant game in Macau. Not only are Chinese players familiar with baccarat, but it is a rapid game and has a low house edge, so it is attractive. “That goes out to their values as well, because they want to achieve 77

high amounts very quickly. They don’t want to waste time,” Mr Lam says. A recurrent question is whether the non-gaming amenities that integrated resorts in Macau have been developing suit the profile of the Chinese consumer. “We are creating markets. It’s not just if there is a demand or not,” Mr Lam explains. Non-gaming amenities are another way to diversify the economy by attracting a different kind of person, he says. “These people might not be the gamblers. They are people who just want to enjoy.” As time goes by, even hardcore gamblers that only want to play may eventually “change their mindset” by taking an interest in non-gaming amenities, Mr Lam says.

CONFERENCE PROGRAMME

On guard

As Japan moves towards legalising casinos, is Macau’s leadership position under threat? BY LUCIANA LEITÃO

cussed by several congressmen. Although there seems to be a consensus about legalising gambling in Japan, there are some groups worried about possible consequences such as fraud, the involvement of organised crime, under-age gambling and gambling addiction. Gambling is generally prohibited in Japan but there are exceptions. Betting on sports and lotteries is allowed, as long as they are controlled by local governments or government corporations. And pachinko parlours, with machines similar to slot machines, can be found all over Japan, operated by private companies. The market is estimated to be worth 9 trillion yen (MOP900 billion), of which pachinko accounts for 2 trillion

Photo: Michael Maggs

bi-partisan league of congressmen is preparing a bill to be presented to the Diet, or parliament, proposing the legalisation of gambling in the country. The director of the Centre for Amusement Industries Studies at Osaka University of Commerce, Toru Mihara, believes there is the political will to go ahead with legalisation. From what has been said to the press “they want to present this draft to the Diet within this year,” says Mr Mihara. And it seems the bill is likely to be approved, he said after the “North Asia: South Korea, Taiwan and Japan” session at G2E Asia. Last month, a casino project to help economic regeneration in the tsunami-ravaged area of Sendai in northeastern Japan was openly dis-

yen, Mr Mihara says. “But we anticipate that we can attract a bigger market,” he adds, creating an alternative to Macau as a regional gaming hub. He says Japanese have both sufficient disposable income and the sheer numbers needed to make the gaming industry successful in Japan. Tokyo alone is home to more than 12 million people. Besides, the country is well connected to the mainland, Mongolia and Southeast Asia, which would make it easy to attract players from overseas. The legalisation of casinos in Japan seems inevitable. In the meantime, the media is filled with reports of the Yakuza organised crime gangs running illegal casinos and mahjong parlours where real money is on offer.

A pachinko parlour

Outlying challenge With new gaming legislation in the pipeline, Taiwan may be close to allowing casinos on its outlying islands BY LUCIANA LEITÃO

t is likely that Taiwan will allow casinos on its outlying islands sometime in the next three years. This is the view of independent gaming and leisure industry strategist Jonathan Galaviz. In the past few months, various meetings have been held to examine the feasibility of legalising gambling in Taiwan. Officials in Taipei have shown a clear interest in developing casino resorts on Kinmen, Penghu and Matsu as a way to boost economic growth on these underdeveloped islands. The law does not currently allow casinos on the main island of Taiwan but a development law for the smaller

islands permits casinos if they are approved by residents in a referendum. Two years ago, residents of the island county of Penghu rejected a casino proposal. The proponents of casinos suffered a setback but were undeterred. In April, a gambling bill was drawn up. According to some reports it will be presented to parliament as soon as September. The authorities on Matsu have said they will look into holding a referendum in the coming months. Kinmen is also moving toward a referendum, while Penghu must wait because three years must elapse before a proposal rejected in one referendum can be put to another vote. 79

Mr Galaviz, who moderated the “North Asia: South Korea, Taiwan and Japan” session at G2E Asia 2011, says a way to ensure that local referendums approve casinos is to make the islanders “confident that the development will be about tourism economics and not casino economics”. Mr Galaviz does not believe the opening of casinos on Taiwan’s outlying islands would hurt Macau. Macau’s gaming regulator, Manuel Joaquim das Neves, thinks otherwise. He recently told the Macau Daily Times that Taiwan hoped to set its special casino tax at between 12 and 15 percent of gross gaming revenue, far less than Macau’s 35 percent direct tax.

CONFERENCE PROGRAMME

Stunted growth potential If Vietnam wants to become a regional gambling hub, it needs to lift restrictions on Vietnamese players, analysts say BY LUCIANA LEITÃO

Ho Tram Strip

asinos are already a reality in Vietnam but limit entry to foreigners only. For the industry to develop and the country to be seen as one of the main gambling destinations in Southeast Asia, this must change, an analyst says. HSBC senior regional consumer and gaming analyst Sean Monaghan says the rule prohibiting access to casinos by Vietnamese must be scrapped because it limits investment. Compared to Malaysia, the Philippines, Cambodia and Singapore, Vietnam still has “an infant gaming industry”, Mr Monaghan says. However, “it is entering a new era,” with significant investment in coastal tourism centres. The Ho Tram Strip is an integrated

resort due to open in phases, starting in 2013 with the MGM Grand Ho Tram, which will include a five-star hotel, entertainment venues, shops, restaurants, bars, lounges, conference facilities and a golf course among other facilities. The project is a US$4.2 billion (MOP33.6 billion) undertaking that covers 164 hectares of beach front in Ba Ria Vung Tau, southeast of Ho Chi Minh City. “Government officials should be able to see the benefits derived from countries such as Singapore and use casino resorts as a way to stimulate tourism, create new jobs, and tax revenues,” said Mr Monaghan, on the sidelines of G2E Asia. Vietnamese authorities fear casi80

nos will cause social problems but Mr Monaghan says this only makes the case for proper regulation stronger. “It is better, in the long run, to regulate and tax it, because a well regulated industry can generate many benefits, as in Singapore,” he says. Independent gaming and leisure industry strategist Jonathan Galaviz thinks it is unlikely that the authorities will allow Vietnamese into casinos any time soon. That substantial issue aside, Vietnam is the second-biggest country in Southeast Asia and a country trying to develop its tourism industry, which presents “a very interesting proposition for the casino gaming industry”, Mr Galaviz says.

MOMENTS Photos: Carmo Correia

JULY 2011

83 BRAHMA CHELLANEY PROFESSOR OF STRATEGIC STUDIES AT THE NEW DELHI-BASED CENTER FOR POLICY RESEARCH

Deception by the boatload WHAT WAS TOUTED AS A FLOATING CASINO IS NOW BEING LAUNCHED AS THE FLOATING CENTREPIECE OF CHINA’S GROWING NAVAL PROWESS hina’s announcement that its first aircraft carrier is almost ready to set sail has refocused attention on the country’s naval ambitions. So, too, has the Pakistani defence minister’s disclosure that his country recently asked China to start building a naval base at its strategically positioned port of Gwadar, on the Arabian Sea. Both revelations underscore China’s preference for strategic subterfuge. After it bought the 67,500-ton, Soviet-era Varyag carrier – still little more than a hull when the Soviet Union collapsed – China repeatedly denied that it had any intention to refit it for naval deployment. For example, Zhang Guangqin, deputy director of the Chinese State Commission for Science, Technology, and Industry for National Defence, said in 2005 that the Varyag was not being modified for military use. However, work to refit the carrier had already begun in Dalian, China’s main shipyard. In order to deflect attention from the real plan, the state-run media reported plans to turn the Varyag into a “floating casino” near Macau. And, to lend credence to that claim, the two smaller Soviet-era aircraft carriers that were purchased with the Varyag in 1998-2000 were developed into floating museums. The first official acknowledgement that China was turning the Varyag into a fully refurbished, deployable aircraft carrier came this month, just when it was almost ready to set sail. And the acknowledgement came from General Chen Bingde, the chief of the People’s Liberation Army, in an interview with Global Times, the Communist Party’s hawkish mouthpiece.

Strategic foothold

Subterfuge is also apparent in China’s plans at Gwadar, where a Chinese-built but still-underused commercial port opened in 2007. From the time construction of the port began, Gwadar was widely seen as representing China’s first strategic foothold in the Arabian Sea, as part of its strategy to assemble a “string of pearls” along the Indian Ocean rim. It was known that Gwadar, which overlooks Gulf shipping lanes and is near the Iran border, would eventually double as a naval base. Yet, all along, China continued to insist that Gwadar’s only role was commercial. Not surprisingly, then, Pakistani Defence Minister Ahmed Mukhtar’s public comments about a naval base at Gwadar deeply embarrassed China’s government. At the end of a recent visit to Beijing with Pakistani Prime Minister Yousaf Raza Gilani, Mr Mukhtar reported that the Chinese government was more than happy to oblige whatever requests for assistance the Pakistani side made, including reaching an agreement to take over operation of the Gwadar port after the existing contract with a Singaporean government company expires. China also made a gift to Pakistan of 50 JF-17 fighter jets. More importantly, Mr Mukhtar disclosed that Pakistan had asked China to begin building the naval base. “We would be ... grateful to the Chinese government if a naval base is ... constructed at the site of Gwadar for Pakistan,” he announced in a statement. He later told a British newspaper in an interview: “We have asked our Chinese brothers to please build a naval base at Gwadar.”

After Pakistan revealed the plans for a naval base, China responded with equivocation, saying that “this issue was not touched upon” during the visit. Given China’s proclivity for strategic stealth, even its work on the Gwadar port was launched quietly. Moreover, China does not wish to deepen the concerns that it aroused in Asia last year by openly discarding Deng Xiaoping’s dictum, “tao guang yang hui” (“conceal ambitions and hide claws”). On a host of issues, including its territorial claims in the South China Sea and against Japan and India, China spent 2010 staking out a more muscular position.

Obscuring the truth

On these issues, too, the gap between Chinese officials’ words and actions is revealing. For example, China persisted with its unannounced rare-earth embargo against Japan for seven weeks while continuing to claim in public that no export restrictions had been imposed. Like its denials last year about deploying Chinese troops in Pakistani-held Kashmir to build strategic projects, China has demonstrated a troubling propensity to obscure the truth. The Global Times, however, has not been shy about advertising China’s interest in establishing naval bases overseas. In a recent editorial, “China Needs Overseas Bases for Global Role,” the newspaper urged the outside world to “understand China’s need to set up overseas military bases.” The insurrection against Pakistani rule in the mineral-rich southern province of Baluchistan may impede China’s plan to turn Gwadar into an energy transhipment hub to transport Gulf and African oil to western China by pipeline. But the insurgency is no barrier to China’s use of Gwadar to project power in the Middle East and East Africa, and against peninsula India. Indeed, to get into the Great Power maritime game, China needs Gwadar to redress its main weakness – the absence of a naval anchor in the Indian Ocean region, where it plans to have an important military presence. What was touted as a floating casino is now being launched as the floating centrepiece of China’s growing naval prowess. In fact, with a second and larger aircraft carrier currently under construction, it may not be long before China displays its naval capabilities by dispatching a carrier battle group to the Indian Ocean – if not basing one at Gwadar. JULY 2011

Tourism

Instead of talking down gaming in favour of a mythical “real” Macau, experts say tourism promoters need to integrate the city’s unique attributes into a complete package BY MUHAMMAD COHEN IN NEW YORK, HONG KONG AND MACAU ILLUSTRATION BY RUI RASQUINHO

JULY 2011

Tourism

acau’s tourism authorities try to play up the city’s unique heritage and play down its world-leading gaming industry. But the city’s image abroad, to the extent that it has one, relies on its reputation as Asia’s Las Vegas, experts say. The Macau Government Tourist Office talks about steering visitors from casinos and hotels, instead introducing them to areas such as the historic centre of the city, designated a UNESCO World Heritage site. The tourist office wants visitors to experience “the real Macau”. “Of course, casinos are part of the real Macau,” SJM Holdings chief executive Ambrose So Shu Fai says. He notes casino gaming here dates back at least to its legalisation in 1847 and that gambling is a mainstay of the economy, providing jobs for tens of thousands of residents. Moreover, casinos help the city prosper as a destination for both investment and tourism. “Thanks to the tax revenue contributed by the casino industry, Macau has been able to maintain its free port status and low taxes while investing in the infrastructure needed for modernisation and economic growth, as

JULY 2011

well as historic preservation and cultural development,” Mr So says. For its part, the tourist office said in a written statement: “What we mean by ‘the real Macau’ is a full understanding (or picture) of Macau, not just one segment but all the different facets of the destination, including heritage, culture, cuisine, festivals, hotels and resorts, casinos, performances, among others.”

Box-office flop “I think it’s difficult, unrealistic and maybe even undesirable in terms of tourism revenue for Macau to attempt to be seen as [something] other than Asia’s Las Vegas,” says branding consultancy FutureBrand’s chief growth officer for the Asia-Pacific region, Tim Riches. “When one reviews the current tourism marketing website, for example, there is a heavy emphasis on historic imagery which is at odds, or at least out of balance, with the entertainment side. That imagery is also somewhat similar to the kind of hybrid local post-colonial places around the region like Penang and Malacca in Malaysia.” Differentiating Macau from its competition is essential, warns Richard Mintz, the managing director of The

Harbour Group, a public relations firm in Washington. He says it is particularly important with “just about every major country and major city” making an effort at destination branding. Gaming sets Macau apart from other destinations, though Mr Mintz sees another reason for the persistence of the Asia’s Las Vegas label. “This is more than anything due to the lack of an alternative narrative, i.e. what are Macau’s equities beyond gaming? Just like in the movies, the story and script are everything. You can spend tens of millions on stars and special effects but if the story doesn’t grab you, the movie flops. So too, is it with marketing, especially destination branding.” Asia’s Las Vegas is what the world sees in Macau, says Institute for Tourism Studies senior lecturer Cindia Lam Ching Chi. There is no doubt in her mind that the city’s gambling has drawn most of the attention globally. News of gaming revenues surpassing that of the Las Vegas Strip, Macau joining the 20 richest economies in the world, and the government money-sharing programmes make headlines. “As these were being reported internationally, news on our entertainment facilities, MICE [meetings,

The Yanks are not coming D

espite Macau’s spectacular rise to eclipse Las Vegas as the world’s gaming capital, a rise partially fuelled by American know-how and capital, the city has barely made a ripple in the American psyche. Government agencies are trying to turn this around. Macau struggles in the United States market to find a foothold as a tourist destination as most Americans know nothing about it. This is reflected in the paltry numbers of Americans that visit Macau: 189,000 last year or 0.75 percent of all visitors. “There is still some misconception about Macau in the US. Especially, some might think that Macau is just like Las Vegas,” the Macau Government Tourist Office said in a written statement to Macau Business. “We want Americans to visit Macau and see what the destination has to offer outside of the new hotels and preconceived notion it is only about gaming. We want Americans to discover the UNESCO World Heritage sites in Macau, the cuisine, and more,” it said. Beyond perceptions, there are some practical barriers, most notably the lack of direct flights between the United States and Macau. The vast distance between the two, the poor English here, and the lack of practical connections also make Macau a tough sell in the world’s biggest economy.

ist office representative João Rodrigues works to educate the travel business and the media about the charms of Macau. Mr Rodrigues say most Americans he meets know that Macau was long ruled by Portugal and they have heard about the new hotel developments. But he says many believe “Macau is like Las Vegas and unless you are a gambler, there is nothing else to do there. We have been working to change that misconception.” In the US, the tourist office focuses on the travel trade and the media. The office also engages prospective tourists directly at travel shows. It emphasises special events, such as the Macau Grand Prix and the International Fireworks Display, and works closely in overseas markets with the China National Tourism Administration and Hong Kong Tourism Board. To promote the city, the tourist office also brings US journalists to experience Macau and write about it. “In the past couple of years, over 50 journalists have been invited to visit Macau,” the office says. “Biggest successes include a lot of positive coverage in the media, including visits by TV personalities like Samantha Brown and Anthony Bourdain.” Both host popular travel programmes focusing on food. “As our infrastructure improves more, we will be able to do more promotions in the US with airlines and tour operators looking to sell Macau as a mono-destination,” Mr Rodrigues says. M.C.

Drive time

To help persuade Americans to visit, two of the tourist office’s 21 branches outside Macau are in the United States – in New York and Los Angeles. In the New York branch, on the upper floor of a Fifth Avenue office building a couple of blocks from Times Square, tour-

“Of course, casinos are part of the real Macau,” SJM Holdings chief executive Ambrose So Shu Fai says

JULY 2011

Tourism

incentives, conventions and exhibitions] et cetera are barely reported,” she says.

If they can do it...

America’s Macau

Mr Riches believes it is pointless to expect balanced perceptions of Macau’s tourism assets at this stage of the industry’s development. “Regardless of any marketing effort, as long as the integrated resorts, with gambling at the core, remain the core of Macau’s investment as a destination, its image will necessarily be defined by that,” he says. “The challenge is to embrace that, and redefine the image of the place such that it becomes the benchmark against which other such places are compared. The goal should be that people describe Vegas as America’s Macau. In purely financial terms, this of course, was achieved some years ago.” Mr Riches, a branding executive in Australia and Singapore before taking on a regional portfolio, suggests Macau’s strongest marketing appeal will come from combining its top two attractions: its heritage and casino resorts. “Ultimately, unless the historic-cultural side and the entertainment side can be reconciled in some way, then I think Macau is doomed to become a gaming and entertainment centre alone.” To prevent that outcome, he suggests the tourism office works more closely with casino operators. “This would include cooperation

JULY 2011

nlike Macau, Hong Kong has a global branding programme to promote the city to tourists and investors alike. Concerned about its post-handover image on the world stage, Hong Kong launched the Brand Hong Kong programme in 2001, positioning itself as “Asia’s World City”. “Brand Hong Kong is an umbrella brand,” a Hong Kong government spokesperson says. “The objective is to entice international audiences to live, work, study and visit Hong Kong.” Government and quasi-government organisations such as the Hong Kong Tourism Board, Invest Hong Kong and the Hong Kong Trade Development Council all use the Brand Hong Kong or BrandHK platform to reach their target audiences. “BrandHK gives different agencies a unified platform to promote Hong Kong without having to compromise their tactical messages. The benefits are multi-faceted in terms of generating synergy and achieving individual organisations’ goals,” the spokesperson says. Destination marketing efforts feature the “Hong Kong, Asia’s Word City” slogan and logo, a representation of a dragon’s head that includes the city’s name in both English and Chinese. The logo and branding focus were adjusted last year “to add warmth to Hong Kong’s image and promote the city’s soft power,” according to BrandHK. “BrandHK has adopted a 360-degree integrated advertising and marketing communications approach to create a consistent message,” the spokesperson says. “The range of BrandHK’s publicity materials includes brand publications, TV commercials, promotional videos, website, print advertisements, outdoor displays and brand souvenirs. These tools complement and support the promotional efforts of our stakeholders.” M.C.

with them to ensure effective cross-marketing of Macau’s ‘traditional’ side,” he says. Since casino advertising is banned in many countries, destination marketers for Macau’s major hotels already focus on the non-gaming attractions and would likely welcome added script pages from the government.

Site-seeing distractions However, as prospective visitors increasingly turn to Internet travel reviews to get

opinions from people like themselves on destinations, Mr Riches sees particular difficulties for Macau’s efforts. “The current Macau experience is quite disappointing when taken as a whole. The place is a building site. There’s no sense of overall planning and place-making, which should be a strength, given its compact scale. You have to travel point to point, rather than moving around within pleasant precincts. There’s little sense of welcome,” he says. “Until these issues of the quality of the place are addressed, then I think it will be hard to build up a strong following among international visitors, when word of mouth may not be positive outside the core casino/resort visitors.” Visitors are far ahead of Macau’s marketing pros when it comes to integrating the city’s attractions. Ms Lam of the Institute for Tourism Studies and fellowlecturer Clara Lei Weng Si co-wrote a case study entitled “Branding Macau as the Las Vegas of the Far East”. The study tried to reconcile the predominance of gaming in Macau’s public image with government efforts to promote heritage. It found that visitors say their main activity in Macau is sightseeing. However, it also found that casinos rank high among the sights visitors want to see.

Money for MICE Stimulation programme extended to boost Macauâ&#x20AC;&#x2122;s business tourism he Macau Government Tourist Office has extended its Strategic MICE Market Stimulation Programme from July 1 to December 31 of 2011.

The goal is to attract more international meetings, incentives, conventions and exhibitions events to be held in Macau. The programme was first launched in May 2009. Until May 2011, it has supported a total of 246 events, which included 95 meetings and conventions, 47 exhibitions and 104 incentive travel events with a cumulative 1.1 million participants, involving a financial support of MOP49.6 million (US$6.2 million).

Over 140 illegal inns busted in less than one year The government has already sealed a total of 141 premises suspected of providing accommodation illegally since the new legislation on this matter was enacted, in August 2010. Inspections involved investigations into a total of 649 occupants of premises suspected of providing illegal accommodation, including 35 over-stayers and 29 illegal immigrants, whose cases are being followed up by police authorities. Furthermore, 29 operators who provided illegal accommodation were fined MOP200,000 each. As of mid-June, only two operators had voluntarily paid the fine within the statutory period.

Visitor numbers go up Total visitor arrivals increased by 9.4 percent year-on-year to 2.3 million in May, according to official figures. Same-day visitors accounted for 54.8 percent of the total. Analyzed by place of residence, visitors from the mainland rose by 16.8 percent year-on-year to 1.3 million, mostly coming from Guangdong province (679,000), Fujian province (77,000) and Zhejiang province (47,000). Visitors from Hong Kong (613,000) and South Korea (32,000) increased by 3.9 percent and 26.2 percent respectively, while those from Taiwan (103,000) and Japan (29,000) decreased by 1.2 percent and 22.2 percent, respectively. Total visitor arrivals reached 11 million in the first five months of 2011, up by 7.2 percent year-on-year.

More hotel guests Hotels and guesthouses received 676,000 guests in April, up by 1.7 percent year-on-year. The majority came from the mainland (53.4 percent of total) and Hong Kong (20.9 percent). The average length of stay of guests held stable at 1.4 nights, the same as in April 2010. The average occupancy rate of hotels and guesthouses was 84.5 percent, up by 3.6 percentage points year-on-year. The number of hotel guests increased by 1.9 percent yearon-year to 2.59 million in the first four months of 2011. At the end of April, Macau had 20,148 rooms, with those of 5-star hotels accounting for 59.8 percent of the total. JULY 2011

Tourism

DOUBLE FIRST For Okura Hotels and Resorts, opening in the Galaxy Macau is a double debut: for the first time, an Okura hotel is sharing premises with other hotels and gamblers are among clients it wants to attract, says the property’s general manager Harmen Dubbelaar BY EMANUEL GRAÇA PHOTOS BY ANTÓNIO FALCÃO

or Hotel Okura Macau general manager Harmen Dubbelaar the opening of the property does not mean the hotel is finished. Although its 488 rooms in the Galaxy Macau first welcomed guests on May 15, there are always adjustments to be made, he says. “When opening an hotel, you are very busy in the first months, fine-tuning the operation, making sure that everything runs seamlessly, making sure that all the staff are up to scratch to deliver the experience,” he told Macau Business. Although a veteran in Japan’s Okura Hotels and Resorts chain, Mr Dubbelaar admits that opening the Macau hotel was a challenge. First, the Okura shares premises with a casino. The gambling fraternity “is one of the market segments that we traditionally don’t have in our other properties,” says the Dutchman. “We knew from the offset, when we signed our management agreement with Galaxy Entertainment Group, that this would be one of the challenges.” Another novelty for Okura is to operate a hotel in a resort with two other hotels, in this case the Galaxy Macau and Banyan Tree Macau. “This is truly an integrated resort. There are no fences, so to speak,” says Mr Dubbelaar. In some environments, that might create additional competition to attract patrons. “The three properties have managed to maintain their true individual identity,” he says. “When you enter Hotel Okura Macau, there is a level of tranquillity and elegance there. Soft colour tones are used.”

JULY 2011

It adds to the Japanese ambience of the property, as do the kimono-clad women greeting guests in the lobby, or the origami birds placed on pillows in each room. “They are actually not just purchased. We purchase the paper but we fold them by ourselves. We have origami classes for all employees across the board – doesn’t matter whether they work in the kitchens or in our guest services.”

Power of three Instead of the difficulties, Mr Dubbelaar highlights the gains from being one of three hotels in the same complex, such as the increased bargaining power with suppliers that combined purchasing affords. Staff eat at a combined restaurant for all three hotels, which saves space and other resources. Patrons can use several shared facilities, such as the rooftop wave pool, that any one hotel would find hard to offer. “That makes our span much larger.” Okura and Banyan Tree are already partners internationally, having had a worldwide marketing alliance for six years. “So, we are married in this same building now, which has also prompted us to market together. The three properties [including the Galaxy Macau] are on the road together.” So far, Hotel Okura Macau has been successful, Mr Dubbelaar says. The hotel, which opened with all its rooms, restaurants, bars and other facilities available from day one, boasted an occupancy rate above 90 percent in its first month. The level of acceptance by visitors is “beyond my expectations,” he says.

Hospitality runs deep H

otel Okura Co Ltd, which operates Okura Hotels and Resorts, was founded in 1958, opening its flagship hotel, Hotel Okura Tokyo, in 1962. Okura Hotels and Resorts has 21 hotels – 15 in Japan and six overseas – with more than 6,700 rooms. It has plans to open a hotel in Taipei and one in Bangkok next year. Okura acquired JAL Hotels Co Ltd from cash-strapped Japan Airlines last year. At the end of March, JAL Hotels operated 57 hotels worldwide – in Europe, the Americas, the Middle East and throughout Japan and the AsiaPacific region. It owns Nikko Hotels International, an international luxury hotel group, and Hotel JAL City, a chain of medium-price business hotels in Japan.

JULY 2011

“What is also very important is that, as an Okura hotel, we bring new business to Macau. That is especially what we are looking for; not to take just a piece of the existing action, but to actually grow the market.”

Summer revival

Not the usual manager H

armen Dubbelaar can, in a way, be considered the Okura Hotels and Resorts man in China. He was involved in the preparations for the opening of its Shanghai hotel as assistant general manager and is now in charge of the Macau hotel. These are the only two Okura hotels in greater China. Mr Dubbelaar says there were no similarities whatsoever between the opening of the two hotels. “The time was different. Twenty-two years ago in China it was a different thing and Shanghai was in its infancy of development. It also required a different approach to selecting, hiring, training employees, building,” he recalls. “Twenty-two years onwards, coming to Macau is a distinct thing. There is experience here. There is already an established local hospitality scene.” Born in the Netherlands, Mr Dubbelaar has a degree in hospitality management. He started his hotel career with Okura Hotels and Resorts in 1979, at the Hotel Okura Amsterdam, and has never left the group. He was appointed the project leader and general manager of Hotel Okura Macau in April 2008. It “is highly unusual” that someone stays so long with a company in the hotel sector, Mr Dubbelaar admits. He is also one of the very few top managers in Okura Hotels and Resorts that are not Japanese. Now, a secret: Mr Dubbelaar is far from being fluent in Japanese. He understands and speaks only “a little bit”, he says. “It is a language that is not just consisting of words. It is much more than that. One needs to be able to read between the lines more than the lines themselves.” His advice is to get a good interpreter. JULY 2011

One would expect that some of the new patrons would be from Japan, where brand awareness of Okura is very high. According to data from the Statistics and Census Service, Japanese accounted for around 3 percent of hotel guests in Macau last year. However, after the earthquake and tsunami in Japan in March, outbound tourism “has definitely been a little bit slower” than first expected, Mr Dubbelaar concedes. But he is hopeful. “We think this summer the market from Japan will completely be back,” he says. “Being an Okura hotel and Japanese visitors being familiar with our brand, our quality service and our accommodations, we would certainly go above that [3 percent]. I would be happy with 10 percent at first.” On the food and beverage front, there are some improvements to be made at Hotel Okura Macau, Mr Dubbelaar admits. “The Japanese restaurant, Yamazato, our signature restaurant, has performed beyond expectation in the first month and that is encouraging, especially in times when Japanese restaurants have been suffering in this part of China,” he says. However, the Terrace Restaurant, a fusion-style outlet serving meals in traditional Japanese bento boxes “could do a lot better”. Mr Dubbelaar explains: “It is a sizeable restaurant, [but] people don’t know it yet. We still need to do a lot of work on promotion and marketing.” The same can be said about the Sakazuki Sake Bar, which has also had a “slow start”. Apart from problems on the demand side, the hotel’s food and beverage services have had supply issues, caused by the nuclear calamity in Japan that followed the earthquake and tsunami, which made it harder to import Japanese ingredients. The solution was to look for different suppliers in other parts of Japan or even in other countries, Mr Dubbelaar says.

93 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - gustavo.cavaliere@gmail.com

Taking responsibility MAKING HOTEL EMPLOYEES FEEL THEY ARE STAKEHOLDERS IS FUNDAMENTAL IF THEY ARE TO TAKE RESPONSIBILITY FOR THEIR ACTIONS

esponsibility is the state or fact of being accountable for something. But where does one’s responsibility start and end? Let us look at a simple but common example. You get up for work as usual, leave your house and go to the bus stop. The bus is behind schedule and you arrive late for work. Of course, your boss is angry because you missed that important meeting, scheduled a long time ago. Who is responsible for your late arrival? The vast majority of employees I have spoken to respond that it is not the worker’s fault; the bus was late and he had no control over that. Do you think this way too? Consider the topic in a little more depth. If the worker declares he is not responsible for his late arrival, automatically he claims he was a victim of the bus driver. The driver was responsible for the delay. Making yourself a victim of life’s circumstances takes power from you. It means you are not in control. In this case, the worker’s power now belongs to the bus driver. The driver had the power to make him arrive late for work. Does that scenario sound a little ridiculous to you? In fact, it is ridiculous. But it is how many people live their lives, every single day. A habit that goes hand-in-hand with this is to keep complaining about unexpected events: “Look at what happened to me: the bus is late and my boss now is blaming me. But I had nothing to do with it.”

Be a bellwether

Let’s play another game. Think for a second about the possibility of the worker actually being responsible for arriving late to work. He knew a long time ago that there would be an important meeting but he just did what he does every day. He got up, had breakfast, got ready and went to work without taking into account the possibility of an unpleasant, last-minute surprise. Should he not have been more conscious of the importance of the meeting and the need to be on time? Leaving home a bit earlier could have averted a lot of trouble. Who is really responsible for the worker’s lateness; the driver or the worker? Taking responsibility means not blaming others. It is about taking ownership of all of your actions, even those that, at a first glance, you cannot control directly. In other words, if you arrive late for work, it is easy to blame the bus driver. Truly responsible employees look inside themselves to see how they could have averted such an outcome. Of course, one cannot control all the variables affecting one’s life. But if you see yourself as responsible for your actions, you gain greater power to control them. Taking

What can hotels do to promote a culture of responsibility among their employees? First they can create a work environment where workers are stimulated to “wear the company T-shirt”, if only metaphorically

responsibility is moving forward. If you are responsible, you are not interested in earning credit or blaming others; you are interested in improving yourself.

No sir, yes sir

How does this affect the hospitality industry? There are two kinds of responsibilities when you work in this sector: the hotel’s responsibilities and the responsibilities of its employees – the ones who actually deliver the service. Hotels no longer sell just rooms. They promise customer satisfaction and comfort. Employees have the task of keeping such promises. Take these two examples. In the first, a hotel employee responds to a complaint or a request by saying: “Sorry, sir, there’s nothing I can do”. He then walks away. In the second example, a hotel employee responds to a complaint or request by saying: “I’m sorry for your inconvenience, sir. I’m not able to respond to your complaint or request but if you give me one second, I will find someone who can solve this problem.” It is hard these days to find a hotel employee in Macau who will give the second answer. Why? Because employees do not take responsibility for the service they are supposed to give. If it is not their direct task, they leave it to someone else to do. What can hotels do to promote a culture of responsibility among their employees? First they can create a work environment where workers are stimulated to “wear the company T-shirt”, if only metaphorically. In other words, employees should feel they are also stakeholders. If well used, this is a powerful way of motivating staff.

Three bags full, sir

I know this from personal experience. More than 20 years ago, I was a cashier at the Disney-MGM theme park in Florida. I was there eight hours a day, six days a week, attending to thousands of tourists speaking different languages and with an array of different needs, including the need to know where the nearest bathrooms were. My duty was only to be a cashier, not to man an information kiosk. But my work environment happened to be a place where people were on vacation with their families – in many cases, their dream vacation. My work philosophy was to “wear the company T-shirt”. The company’s customers were my customers. I should be a vivid representation of the brand. This is what most guests expect when they stay in a luxury hotel. They pay and they want to be given what the hotel brand promises them. Every single employee is instrumental in giving it to them. For hotel chains with premises other than in Macau, guests will expect no less than the same standard of service that they had previously experienced in their hotels in other locations. Note that buildings are not what make the big difference in the hospitality industry – employees are. If employees regard themselves as stakeholders, they will more easily assume full responsibility for their actions. If that happens, they will start seeing everything from a different perspective and may soon discover that anticipating and fulfilling a guest’s needs is not as hard as they thought, regardless of whether it is their direct task or not. At the end of the day, that makes them more satisfied employees too. JULY 2011

Grooming leaders In an unprecedented move for Macau, 15 leaders in the hospitality industry are endorsing a training fund for workers ith a growing need for more qualified labour in the city’s hotels, a group of 15 industry players have answered a call to offer financial backing for a new training fund, signing up at a public ceremony last month. The Hospitality and Tourism Industry Practitioners Fund will help workers within the hospitality sector further

JULY 2011

their careers through offering funds for higher education. The 15 signatories include all six gaming operators. The fund has been established by the University of Nevada Las Vegas Singapore Campus to offer scholarships for its Master of Hospitality Administration executive programme in Macau.

The programme costs MOP347,500 but the new fund will provide scholarships of MOP104,000 to cover part of the tuition fees. Combined with other scholarships available to students, the cost falls to MOP121,000. The university offers the 18-month master’s programme jointly with the Institute for Tourism Studies. The programme began last year, with a batch of 10 students who are due to graduate at the end of this year. “The meaning of supporting the fund is far more than just supporting the programme. It is actually a contribution to Macau’s tourism industry by helping to groom future leaders of the industry,” says Fanny Vong, the president of the Institute for Tourism Studies. “With the booming development in the hospitality industry in Macau, there is a demand for high-quality tertiary education in the area. We believe local executives are optimistic about the future of the tourism industry, and are willing to invest time in further equipping themselves to get prepared for the upcoming opportunities and development in Macau.”

Education

TIS in loco parentis

Macau’s first boarding school is set to open by the end of next month BY SARA SILVA MOREIRA

he International School of Macau (TIS) is a few weeks away from opening the city’s first boarding school. It will allow students from grades 7 to 12 to gain independence in a structured and safe environment, Howard Stribbell, head of schools at TIS, told Macau Business. The Canadian-curriculum school will cater to students from Macau and elsewhere looking to continue their studies at universities abroad. They are expected to come mainly from Hong Kong, the mainland and Macau. One obstacle is that Macau only gives visas to students in tertiary education. For now, students coming from abroad to attend the boarding school must “arrive on tourist visas and must request an extension to stay in Macau,” Mr Stribbell says. How long a tourist visa is good for depends on which country the student comes from. Mr Stribbell expects that eventually Macau will grant student visas to boarders from abroad. “Boarding school students are not a security risk. They do not pose a threat to local jobs nor are they a drain on the current infrastructure,” he argues. By late last month, TIS had enrolled five boarders. It is aiming for as many as

By late last month, TIS had enrolled five boarders. It is aiming for as many as 20 for the 2011-2012 academic year

20 for the 2011-2012 academic year. The first boarders are expected to arrive at the end of August. Mr Stribbell says Macau’s tax regime allows TIS to be less costly than other boarding schools in this part of the world. It could prove to be decisive in convincing expatriate families in the mainland and Hong Kong to send their children to board in Macau. Students can be full-time or weekly boarders or occasional boarders (if their parents are away only from time to time). The annual fees (excluding tuition) range from MOP50,000 for a weekly boarder staying in a four-bed room to MOP95,000 for a full-time boarder in a two-bed room. Occasional boarding costs MOP310 per day. Initially boarders will stay in Macau University of Science and Technology residences, which will have room for 50 students but TIS is building its own accommodation, with room for 300 students, which is due to open in 2013. Founded in 2002 with 55 students, TIS now has a headcount of 850, 45 percent from Macau, Hong Kong and the mainland and the rest from 40 other countries. Typically they are the offspring of expats working in Macau. JULY 2011

Sunday, September 25th

Caesars Golf Macau

Friday, September 30th

Macau Golf & Country Club

Friday, September 30th

The Westin Resort Macau

For more information visit macaubusiness.com or write to golf@macaubusiness.com

JULY 2011

THE WINE MASTER JEANNIE CHO LEE EXPLAINS ALL ABOUT CHOOSING THE RIGHT WINE FOR ASIANS DELICIOUS NEWS THE LATEST FINE DINING PROMOTIONS AND RESTAURANT OPENINGS COCKTAILS AROUND TOWN LAVISH YOURSELF WITH SOME OF MACAU’S MOST SPECIAL MIXES

BREAKDOWN BY THE NUMBERS

THE TASTIEST FIGURES ON FOOD AND BEVERAGE IN MACAU

MOP 1.4 billion

The value of Macau’s wine imports last year, which translates to more than six million litres, according to official figures

The number of restaurants and bars at Galaxy Macau, including signature outlets Terrazza, Yamazato, Laurel and Belon Oyster Bar & Grill

The number of different sakes available at Japanese restaurant Okada, in Wynn Macau

Macau is the third biggest market in Asia for the premium handmade cigars trade (mainland China excluded)

The percentage of market share in terms of volume that French wines have in Macau, being mainly purchased by luxury hotels and casinos. In terms of value, French wines have an 83 percent market share

350

The number of whiskies available at the world’s first Macallan Whisky Bar & Lounge, located at Galaxy Macau

t’s time to sit down, relax and take our tour around Macau’s – and the region’s – universe of fine dining, wines and spirits. In this edition, we present an interview with Jeannie Cho Lee, the first Asian to have been granted the extremely difficult Certificate of Master of Wine by the Institute of Masters of Wine in the United Kingdom. She is now working for the recently-opened Galaxy Macau and tells us about that strange thing called the ‘Asian palate’. Prepare yourself to be surprised by the mysteries behind the Chinese taste for wines. In this edition, we also bring you a feature story on ‘Paradis Impérial’, the latest creation by legendary cognac house Hennessy. Now available in Macau, this shimmering, amber coloured cognac was released at a spectacular party at Grand Hyatt Macau bringing together guests from Hong Kong and Macau. Following our own tradition of periodically requesting the hotels with the biggest cellars in town to choose their best wines, this time we approach MGM Macau. To know what to order next time you have dinner there, just read on. Finally, if you want to transform your own dining table into a luxury restaurant, continue reading: we choose the hippest items available in Macau and Hong Kong for you to serve your guests in style. You (and they) will certainly enjoy it.

DRINKING IN CHINA ‘Destructive drinking’ is an indispensable social ritual. Even if you don’t like to drink, you need to do it to give your business partners face and respect, and also to show them that you are honest and trustworthy.

DRINKING IN THE WEST ‘Destructive drinking’ is not a social ritual. A great deal of value is put on enjoying and savouring one’s drink.

“Gan Bei!” (“Bottoms Up!”) are the words used when making a toast in China. Drinks, usually Bai Jiu, or “white liquor”, a strong Chinese liquor, are the currency of the game.

Drinking games are not common among adults, unless they are in a party mood.

Rice wine is probably the most traditional alcoholic drink in China. It is very strong, usually with 40-plus percent alcohol by volume.

Rice wine is not produced in the West, but there are a wide variety of fortified wines, which are stronger than regular wine, like sherry, Madeira wine or Port wine, to name a few.

Beer is also very popular in China, but local brands are all very similar to each other, with none of the stronger or darker varieties brewed in the West produced locally.

Beer is very popular in the West, with different varieties brewed, including pale ale (the most common), stout, mild ale, wheat beer, lager and lambic, among others.

Drinking is still a male custom, with male guests routinely offered alcoholic drinks and cigarettes at meal times.

Drinking is no longer a male custom. Women are becoming very knowledgeable about the drinks they are consuming.

FIVE THINGS YOU SHOULD KNOW ABOUT… CHOPSTICKS 1

Ok, you just love Chinese food, but don’t let that ruin your manners. At several restaurants, guests are served with two sets of chopsticks – one set to eat with and the other one to pick the food from the serving trays with. Don’t mix the two sets up.

There are a few conventions you need to observe when using chopsticks. For instance, don’t move your chopsticks around in the air too much or play with them. It is not polite.

In some areas of the mainland, wannabe grandparents offer chopsticks to their justmarried offspring hoping for a grandson.

Don’t covet your neighbour’s jade, gold, bronze, brass, agate, coral, ivory and silver chopsticks. The bamboo chopsticks, besides being the most traditional, are also inexpensive, readily available, resistant to heat and odourless.

According to Chinese tradition, since knives could be used as a weapon, they could hurt peace and harmony during mealtime; so they were banned from the dining table in favour of chopsticks.

FEATURE

AN IMPERIAL

COGNAC P

‘

aradis Impérial’ is the latest creation by cognac house Hennessy and is now available in Hong Kong and Macau. The company unveiled the new product at Grand Hyatt Macau

BIG SPENDER

in May, during a spectacular party recreating the nostalgia of Imperial Russia. Hennessy ‘Paradis Impérial’ draws its inspiration from a special order placed by the Russian empress Maria

Feodorovna in 1818 to celebrate the 42nd birthday of her son Tsar Alexander I on Christmas Eve. She clearly specified that she wished to receive a cognac of “excellent, very old, gold-coloured eau-de-vie of the very finest quality”. Nearly two centuries later, Hennessy has decided to reinterpret this special order and to launch a premium cognac inspired by it. For this new product, French designer Stéphanie Balini has created a unique decanter, crowned with a crystal cabochon and adorned with an 18-carat gold-plated label. Each is individually numbered. Although the decanter itself is already a sign of elegance, it’s only in the mouth that the entire sophistication of the ‘Paradis Impérial’ is revealed. Gently arousing the palate due to the maturation in old casks, this riceless mélange of ancient eauxde-vie still subtly retains a hint of oak. With aromas of jasmine, orange blossom and other floral scents, the delicacy of the texture ensures a light and surprising finish. This superb drink is now available at selected retailers, at a suggested price of HK$18,800. To taste with care.

Exclusive tastes F

or those looking for a unique meal, The Krug Room, at the Mandarin Oriental, Hong Kong, is the place to go. It is considered one of the world’s most elite intimate restaurants. Located in the heart of the main kitchen of the Mandarin Oriental, Hong Kong, guests are guided through the back door of another restaurant to get there. The Krug Room has been specially styled by eminent Hong Kong designers Marc and Chantal to create a space that is both elegant and surprising. The restaurant seats up to 12 guests around a communal table, and menus and messages from the kitchen are hand-written on slate walls in chalk, similar to that of the chalk deposits from which the cellars in Reims of Champagne house Krug are carved. Meanwhile, the custom-designed chairs have been fashioned to resemble the shadows cast by a full wine glass. There is no menu in The Krug Room; instead, Chef Uwe Opocensky creates each evening’s dinner

100

which can vary from ten to 14 courses according to his inspiration, with the meal accompanied by the diner’s choice from the largest collection of Krug Champagnes outside of France. Chef Uwe describes his cuisine as “progressive gastronomy”, which reveals the influence of his training at El Bulli in Spain, where he learned the basics of molecular gastronomy from the acknowledged master of the genre, Ferran Adrià. A “must try” for visiting gastronomes, the spectacular personalised dinner menu created by Chef Uwe is priced at HK$1,988 per person, including two glasses of Krug Grand Cuvée.

SUMMER TREATS

WHAT’S NEW

HERE ARE THE LATEST PROMOTIONS AND OPENINGS IN TOWN

Gentlemen, you may smoke Located on the second floor of Galaxy Macau and for the pleasure of those who can’t refuse a smoke, a new Davidoff Cigar Lounge has just opened in town. Right next to the Macallan Whisky Bar & Lounge, it offers a wide range of cigars as well as all the right accessories. Just relax and sit on one of its rattan chairs while enjoying a pure Davidoff.

Dream promotions City of Dreams has a lot of promotions ready for the summer. Golden Pavilion restaurant brings three thrilling lobster dishes - baked rice, congee and braised noodles prepared from the chef’s own recipes especially for the season. For only MOP228, guests are able to enjoy all three. Also at City of Dreams, food-fun lovers can enjoy the popular weekend barbecue buffet, for MOP278. Available for Saturday brunch and dinner and Sunday brunch, right beside the Hard Rock swimming pool, guests can sit, relax and eat. Oh, and swim! For those aiming at a different kind of treat, R Bar and its chicken wings with a selection of international flavours may well do the trick.

Vegetarian delicacies Wynn Macau has gone green for the season: there are new vegetarian dishes at all fine dining and casual restaurants throughout the property. Each outlet even has options for the stricter vegetarian diets, becoming the first resort in the territory to create such menus. New dishes include creations where eggplant, avocados, zucchini, mushrooms, lily bulbs as well as other healthy ingredients are the highlights. For instance, at Café Encore, guests can taste a Macanese salad or chick peas with spinach soup, while Wing Lei’s stewed fresh bean curd with tea mushrooms and ginkgo nut promises to catch the attention of all, even meat lovers.

The lion is back One of the trendiest nightclubs in town is back. The revamped Lion’s Bar, at MGM Macau, reopened with a new design and a huge LED screen that promises to revitalize Macau’s nightlife. Now with access from the non-gaming area, civil servants can enjoy the new premises with no worries. Adding to the return of Upfront band and DJ Butch, the Lion’s Bar is also putting on a series of special parties on Friday nights.

Seasonal star Temptations Restaurant has new treats for the season. With a splash buffet filled with international specialties made with fresh fruit, guests are sure to enjoy this special promotion at one of StarWorld’s finest restaurants. Highlights include the summer fruit salad, mango sabayon, as well as wok-braised pork neck infused with lychee in Thai-style.

101

INTERVIEW

“WINES FROM CHINA ARE GETTING BETTER AND BETTER” There has never been a strong wine tradition in China, but this is starting to change. In this interview, Jeannie Cho Lee, Galaxy Macau’s master of wine, explains wine consumption patterns in the mainland, the regional preferences and her experience in the field By Luciana Leitão hen did you first become interested in wine?

When I was 19 years old. I was an exchange student at Oxford University and I went to formal dinners where I was served different wines. You would have, typically, three or four different wines. Some of them were wines that the college had purchased a long time ago – older Bordeaux, some with very high quality. I had tasted wine before, but it was really only when I started to taste very good quality wine that I began to realise it was a really fascinating beverage. During that year, as I was travelling to different countries in Europe and understanding that wine was like a condiment or a normal part of any meal, I started studying it more.

How about professionally?

It was much more recently, because I really didn’t pursue the wine industry as a profession. I got interested in wine as a writer, and started to do a lot of freelance wine articles. My first wine article was in 1994, in Hong Kong. Actually, my first few articles on wine were for the South China Morning Post and I also wrote for The Far Eastern Economic Review magazine. Then, I worked for a few years in Malaysia – first as a journalist, then as editor of a weekend magazine where I started to write a weekly wine column, starting from 1996.

Over the years, have you noticed any big differences in the way Chinese consume wine?

Absolutely. In fact, the reason why I didn’t become a full time wine writer was because there wasn’t enough work. No one was interested in reading about wine and this has changed dramatically over the last five to ten years. When I arrived [in Hong Kong], I was writing business articles and writing about everything else, but wine. Even though I wanted to write about wine, there just wasn’t enough interest. Almost from day to night, there has been a huge change in attitude. Wine has definitely become very trendy; it’s something that a lot of people have embraced, whereas in the early 1990s only a small community had.

102

I think the way you can tell is by looking at Macau and Hong Kong supermarkets. Before there was hardly any wine there and now there is a huge section devoted to it.

What kinds of wines are Chinese drinking?

It goes into different categories, mainly because of their budget. Someone who is buying in a supermarket is probably looking for good value wines under HK$300 or HK$400 a bottle. There, you have a lot of choices - Chile, Argentina and France are always popular. At that price level, people are trying to get good value [for money], but are still going mostly for reds. Whether you are at a large supermarket like Carrefour, in the mainland, or in ParknShop here, people who are buying off the supermarket shelves probably look for value [for money], and then where the wine is from and whether it is red or white. If that is what you are looking at, still the largest volume is French [wine]. Australian reds are number two in the market in Hong Kong and in the mainland. If you are looking for fine wine over HK$800 or HK$1,000, it ends up being predominantly French. There still is a really [strong] attraction and luxury status associated with the very best French wines.

How about in Macau, do you see a different pattern of wine consumption compared to Hong Kong and the mainland?

In Macau, when people are looking for everyday drinking wine, good value, instead of going for Australia, Chile or Argentina, they are going for Portugal. In Macau, there is a strong support and community of Portuguese red wine consumers that is different from other markets.

But wine consumption in the mainland is still in a beginning stage, particularly when compared to Western countries.

I would say so. If you compare a region with hundreds of years of history with [one that has] 20 years, of course there is a huge difference. But we are also catching up very quickly. There is [now] a huge difference in the way information is communicated and the whole globalization of the world means that we have very easy access to goods and products we may be

103

curious about, as compared to before. All that means that we will probably get there quicker than the Europeans did, but definitely our region is very new to wine. At most, [we are in] the second generation of serious wine drinkers.

What is the right way to present wine suited to the Asian palate?

Even though I wrote a whole book about it [called “Asian Palate”], to really understand the Asian palate is a complex thing. It has a lot to do with our dining culture; it has also a lot to do with which part of Asia and so forth. What may work in one part of Asia may not work in another. So, understanding what the Asian palate wants is something that we are still discovering. With my book I tried to better define the Asian palate. My conclusion it is that it is very regionally based. If you’re living in Sichuan province, your palate is going to be very different because of the food you eat there. The only thing we know for sure in terms of what the Asian palate prefers right now is that we like red. And there is a strong preference for reds from France. We still don’t know for sure if it is because people prefer the taste of red wine, like Bordeaux, or if it is just because French wines have been marketed longer and have done a better job at promotion. I think it is something we won’t discover until we do some serious market research.

You are the master of wine at Galaxy Macau. Given that it is so difficult to assess what Asians really like, how do you choose the best wines?

There are general principles that can be used as guidelines; and we know that there are certain ingredients that don’t work so well with wine. For example, if the food has a lot of vinegar we know it ‘fights’ with wine – it’s an understood and accepted concept. We also know that if you have a lot of chilli in the meal, it can really kill the wine flavour; more refreshing wines, such as

those with higher acidity work better with really spicy food. The goal, when you introduce the wine, is to make sure it doesn’t kill the flavours of the food. On the other hand, you also want that the food doesn’t completely kill the wine; you want to appreciate the wine flavours. You want to keep the integrity of both present. [Here are] some of the basic principles within Galaxy Macau: [Let’s think of] Terrazza, the Mediterranean restaurant - almost all Mediterranean wines will work well there. Another guideline is that a lot of the customers are coming from the mainland and we know that they like quite a lot of different styles of red. So, we have a lot of that on the menu. Because there are a lot of Asian restaurants at Galaxy Macau – especially Chinese restaurants – we want a selection of wines from China, wines from different parts of Asia, because of the concept “local food goes with local wine”. We know that the best wines from China are getting better and better and these will work with local dishes. I have identified the grape variety Pinot Noir as very versatile. When you have spices and all those interesting flavours, you really want to have a wine that doesn’t change that flavour and doesn’t fight against it. To me, Pinot Noir is the red grape variety that works the best. It doesn’t really have high tannins – those can affect a lot of flavours from different parts of Asia, such as India, or influence the seasonings used. That is why I have made sure that we have a huge selection, with 88 Pinot Noirs from around the world – it is probably one of the biggest selections in Asia.

On Galaxy Macau’s wine list, where do the majority of wines come from? Mainly from the mainland, just by sheer size and also proximity. We are closest to the mainland and they are one of the top ten producers of wine in the world now. Chinese are producing a lot more wine than Thailand or Japan and we will continue to build on and increase our selection.

“Even though I wrote a whole book about it [called ‘Asian Palate’], to really understand the Asian palate is a complex thing. It has a lot to do with our dining culture; it has also a lot to do with which part of Asia and so forth. What may work in one part of Asia may not work in another. So, understanding what the Asian palate wants is something that we are still discovering”

104

A LIFE DEVOTED TO WINE

Born in Seoul, Jeannie Cho Lee moved shortly after to the United States, where she received her undergraduate degree from Smith College and a Masters in Public Policy from Harvard University. Based in Hong Kong since 1994, she started writing as a business journalist in Asia, writing for Asia Inc, Far Eastern Economic Review and The Asset. Furthermore, she started writing wine reviews for publications such as Wine Spectator, The World of Fine Wine, Wine and Dine, Wine Business International and La Revue du Vin de France, having become the Asian contributing editor of Decanter. Three years ago, Ms Lee became the first ethnic Asian to achieve the title of Master of Wine from the Institute of Masters of Wine in the United Kingdom, generally regarded in the wine industry as one of the highest standards of professional knowledge. She is a frequent judge at international wine competitions and also teaches wine courses. In November 2009, Ms Lee launched her first book called “Asian Palate”; one year later she created a website with the same name. The book won first prize in the “Wine, Spirits & Beer” category of the 2011 International Association of Culinary Professionals Cookbook Awards, one of the most prestigious cookbook awards in the world. It also won the 2009 Gourmand World Cookbook Award for “Best Book on Matching Food and Wine in the World” against nearly 6,000 other books from 136 countries. Recently, she launched her second book called “Mastering Wine for the Asian Palate”.

105

WINES WE RECOMMEND

DIRECTOR OF WINES AT MGM MACAU ADOLPHUS FOO SELECTS THE BEST WHITE AND RED WINES AVAILABLE IN THE RESORT’S WINE CELLAR

106

The whites

The reds

LUCIEN LE MOINE BATARD MONTRACHET 2007, FRANCE Lucien le Moine is a new négociant and has been getting great reviews on his wines. This stone fruit character wine is steely, floral, has good minerals and is full of liveliness and texture. Price: MOP5,650

CHATEAU DUHART-MILON 2003, FRANCE

DOMAINE LEFLAIVE PULIGNY MONTRACHET 1ER CRU CLAVAILLON, FRANCE From one of the leading producers in Burgundy, this wine is fresh, tasting of apple, melon, vanilla and a touch of spices. Pure, it has a flavour packed with delicious fruit in balance with oak. Impressive length. Price: MOP3,300 NIEPOORT REDOMA RESERVA 2008, PORTUGAL This white Redoma has been very consistent in terms of quality every year. This wine is fresh, filled with fruit of citrus and stone fruit. Elegant, its minerals are driven with excellent complexity. It has crisp acidity and broad texture that is easily matched with the food. Price: MOP580 BUÇACO 1967, PORTUGAL This wine came from the Palace of Buçaco in Portugal. It is rare and hardly found outside of the country and MGM Macau is the only local property to have a collection of these wines. This Buçaco is dry, has very interesting character with dry fruit notes and good acidity to complement food. This particular vintage is the favourite of director of wines at MGM Macau Adolphus Foo. Price: MOP5,100 QUINTA DO MONTE D’OIRO MADRIGAL 2007, PORTUGAL This particular winery is an expert at producing Rhone Valley varieties, both red and white. The tasting profile of this wine: aromatic with ripe peaches, apricot, honey and wild flowers. The wine is rich, with high alcohol and has a great depth of flavours. Mr Foo was at the winery once and was very impressed with the passion for wine, food and music. Price: MOP420

This is the best value wine. Why would you drink Carruades Lafite, a second label wine with a price of First Growth when you can drink Duhart Milon? Also, the price of the Carruades Lafite is far higher than most First Growth wines. It came from the same Rothschild family. Price: MOP3,500

CHATEAU LEOVILLE POYFERE 2003, FRANCE This is director of wines at MGM Macau Adolphus Foo’s favourite wine when it comes to investing, because it is ready to drink now or good to keep. This particular chateau is becoming more popular for good value wines. Elegant, it has blueberries, cassis, sweet spices and great complexity. Price: MOP4,500

1812 JOSÉ BENTO 2008, PORTUGAL A new addition to the MGM Macau collection, this wine was specially crafted for the hotel. Portuguese José Bento is a great Syrah winemaker who is able to blend the international grape with local indigenous grape Touriga Nacional. Price: MOP820

BUÇACO 1983, PORTUGAL Among the rare red Buçaco, this is Mr Foo’s favourite. It is good to drink now or maybe in a few more years. Silky, smooth on the palate, it has nice red cherries, smoked aromas and a lingering finish and great acidity. Price: MOP4,500

CHATEAU MONTELENA 1987, UNITED STATES For those who were born in the year of the rabbit, this wine may be for you to drink or for cellaring. Elegant, this wine has black currant and sweet spices. One of the best this winery has ever made. Price: MOP4,500

107

HOST WITH THE MOST

HERE ARE SOME GREAT IDEAS FOR TABLE AND DINNERWARE TO HAVE AT HOME WHEN ENTERTAINING GUESTS

Harvard set, by Vista Alegre Using an American New England style, in strong blue and platinum, the geometrical shapes get elegantly mixed up. Price: On request Where: Upon order at Vista Alegre Atlantis Macau

Symphonie Du Vin No.1, for Peugeot The Symphonie Du Vin No.1 is a valuable tool for those who wish to better recognize the aromas of wine. From amateurs to professionals, all who are interested in improving their ability should have this kit containing an inhaling glass, aroma strips and 32 tiny flasks of aromas. Price: HK$1,730 Where: Exclusivitès, in Hong Kong

Peugeot’s Elis Sense A stainless steel body with black contrasts, the Elis Sense mill combines technology with elegance. Salt and pepper are carefully delivered in the exact needed quantity. A sophisticated object to have on any dining table. Price: HK$1,060 Where: Exclusivitès, in Hong Kong

Graffiti by Ritzenhoff A part of Ritzenhoff’s new crystal collection, this plate looks sharp on every dinner table and will be a hit with guests. Price: MOP1,350 Where: Dora Tam Design Gift & Jewellery, Macau

Blossom, by Alessi Superbly elegant, this fruit bowl is inspired by a contemporary pattern that reflects the Arts & Crafts movement. Blossom is a mix of flowers, clovers and shamrocks and has two variations: one in 18/10 stainless steel; the other in white epoxy resin coated steel. Price: HK$2,110 (white); HK$1,250 (stainless steel) Where: Shop 247, Prince’s Building, Central, Hong Kong; Shop 3230A, Gateway Arcade, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong

Alessi’s ‘La Stanza dello scirocco’ The ‘Room of the Desert Winds’ (or ‘La Stanza dello Scirocco’) is more than a vase – it is a stylish piece that provides support for long stemmed flowers. Perfect for those beautiful orchids that you never know where to put. Price: HK$1,870 (White); HK$1,090 (Black) Where: Shop 247, Prince’s Building, Central, Hong Kong; Shop 3230A, Gateway Arcade, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong

109

COCKTAILS

SHAKE IT SOME OF THE BEST SPECIAL MIXTURES IN TOWN FOR YOU TO TRY

Rendezvous Lobby Lounge, Sofitel at Ponte 16 BLUEBERRY BLISS A blissful mouth of cleansing blueberry delight. With 60ml of blueberry infused vodka, 30ml of blueberry liqueur, sour mix and fresh blueberries, meet the Blueberry Bliss. Price: MOP58

38 Lounge, Altira GOLDEN DREAM Vodka, Galliano, orange juice and milk combined turn into a Golden Dream, one of the signature drinks at 38 Lounge. Price: MOP100 BLANCHE A bit of crème de cacao, crème de menthe and milk and the mixture is ready to taste. Price: MOP100 HAWAIIAN BREEZE Take rum, vanilla vodka, pineapple juice and a touch of grenadine and you have a cocktail perfect for this season. Price: MOP100

BLOODY MARY It’s Sofitel Macau’s twist on a classic cocktail - 30ml of black pepper infused vodka, 30ml of house radish infused vodka, 30ml of jalapeno infused vodka, tomato juice, Worcestershire and fresh celery. Price: MOP58 LYCHEETINI A silky elegant martini with a lingering fresh acidity. It has 60ml of lychee infused vodka, 60ml of lychee liqueur, sour mix and fresh lychees. Price: MOP58 FIERY CHILLI A refreshingly-made cocktail with a bite. It’s 60ml of infused chilli vodka, red chilli, ginger ale and finished with 30ml of flamed Absolut blue. Price: MOP58

Wynn Macau

FIESTA FATALE This is an incredible explosion of flavours – tequila, Grand Marnier, passion fruit puree, cinnamon, 5-spice syrup, vanilla, fresh sweet and sour (lemon, sugar syrup and water) and Thai chilli for an added punch. Price: MOP70

110

JASMINE A delicious mix of gin, limoncello, Jasmine signature tea from Wing Lei restaurant, fresh sweet and sour syrup and garnished with chrysanthemum petals, this cocktail offers a unique blend of tastes that is completely unexpected. Price: MOP75

SEX AND SPIRITS

The seductive mix HEN YOU GOOGLE ‘SEX’ AND ‘COCKTAILS’, most results are related to the same topic: the TV series “Sex and the City”. So, as far as this topic goes, it is almost impossible to discuss it without thinking about Carrie, Miranda, Charlotte and Samantha (the series’ characters, in case you where living on the moon in the late 1990s/early 2000s) sitting in a trendy bar in Manhattan and having a Cosmopolitan or a dry Martini while discussing their sex lives. Over the past few decades, Hollywood has been associating sex/ sexy with cocktails. Do you remember “Cocktail”, starring Tom Cruise? Well, there is nothing sexier than looking at gorgeous Mr Cruise mixing a ‘Sex on the Beach’. We can add other examples to this list, since cocktails - either because of their names or because of their appearance - have often been used to catch the audience’s attention. Do you remember the movie “The Seven Year Itch”, with that iconic image of Marilyn Monroe clutching her white dress on the subway? Well, the ‘Whiskey Sour’ became famous after this.

Combining bourbon, lemon juice, sugar, orange juice and Maraschino cherry, this cocktail reminds of a sexy Marilyn tempting a married Tom Ewell. Or, better yet, think of the ‘French 75’ cocktail, from “Casablanca”. Even though it is named after a weapon, it is still a glamorous blend of champagne, gin, lemon juice and sugar, from a time when sex was portrayed in a more subtle way at the movies. Still in “Casablanca”, who doesn’t remember Humphrey Bogart staring at Ingrid Bergman over the rim of a cocktail glass? “Shaken, not stirred” ring a bell? The catch line for ordering a martini became popular because of James Bond movies. Overall, cocktails – with or without sexy names – and Hollywood are a winning ticket. Why? Because there is nothing hotter than sipping an elegant and mysterious martini while sitting at a bar in a 1930s movie, or having a Cosmopolitan in the middle of busy New York in a more recent day production. So who do you want to be: Humphrey Bogart, Carrie Bradshaw or Tom Cruise?

111

Next month look for GOLF Grand Canal Shoppes, The Venetian Macao 3D Gold 5cm Abiste Adidas Adidas Originals agnès b. Aigle Aimer Alqvimia Anagram Anteprima Apothecary Armani Exchange Arté Madrid Artini Ashworth Atelier Autore b+ab Bauhaus Belle Bershka Blancpain Blush Bossini Boucheron Boutique di Gondola Boutique V Breguet Breil Brooks Brothers BSX Butani BVLGARI Canudilo Canudilo Holiday Carat Carl F. Bucherer Cerejeira Century Chai CHARRIOL Chevignon Chocoolate Chow 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 Daks Damiani Davidoff Deicae Demandor Derain DG Lifestyle Store Diesel Dilys’ Dooney & Bourke Ecco Edelweiss Jewellery Elegant Prosper Elle Jewellery Elov Embry Form Empezoni Emphasis Jewellery Emporio Armani Emporio di Gondola EQ:IQ Esprit Eu Yan Sang Expressions Fabio Caviglia Fables Fancl Fila Florsheim Folli Follie Fossil Franck Muller

2115 2611 2629 2211 2211 2615 2419 2628a 2606 2446 2618 1036b 2442a 2623c 2015 2323 1013 2643 2312 2428 2108 2508 2706 2642 2210 2007a 2301, 2660 1036b 2011 2610 2711 2212a 2523 2006 2705 2005 2400 2207 2202 2402 2646 2402c 2432 2302a 2118a 2118a 2010 1044 2019a 2622a 2431 2601a 2625a 2446 2009 2423 2211 2211 2212a 2023a 2211 2101 1013a 1001/2623b 2107 2105 1019 2201 2632 2109 2616 2025 1020a 2609 K3 2207a 2646 1021 2020 2700 2660 2612 2303 2100 2103 1008 2300a 2635 2401 2603 2407 2413 2012

French Connection Furla G-Star Raw G2000 Geox; Joy & Peace Giordano girls talk Giviea Glashütte Original Godiva Göessele Grossé Guess Accessory Guess Jeans Hanmac H&B Medicine Shop Hauber Hearts On Fire Herborist Henry Jewellery&Watches HKW Medicine Shop Hogan Home of Swallows Hugo Boss Orange Label Hush Puppies i.t innée Izzue Jaquet Droz JC Shop Premium JC Versace Jean Scott Jean Scott Sport Jipi Japa Joan&David Kaltendin Kego Kilara & Ceu Killah Lacoste Lacoste Accessories Lancel Le Saunda Levi’s Links of London LLadró L’Occitane Longines Luisa Cerano Luk Fook Jewellery Lush M Missoni Malo Clinic Health & Wellness Malo Pharmacy Mango Karen Millen Marisfrolg Marjorie Bertagne Marlboro Classics Marathon Sports Massimo Dutti Maubossin Maud Frizon Paris Max&Co. Meng Tim Telecom Mercato MICHAEL WYLER Michel René Mikimoto Milestone Millie’s Mirabell Miss Sixty Mocca Moiselle Montagut Montblanc Monte Carlo Jewellery Moreline Murphy & Nye NaRaYa Natural Beauty Mix Nautica Next Nike Nine West Nokia Normana Omega Optica Boutique Optica Fashion Optical 88 Osim Oto Outdoor Fashion Patchi

2440 2628 2427 2303 2641 2218 2302c K5 2706 2640a 2627 2631 2601 2429 2417 2120a 2622 2008 K6 2013b 2637 2510 2201a 2031a 2111 2328 2636 2613 2523b 2112 2001 2007a 2433 2102a 2612a 2017a 2402a 2306 2306a 2508a 2403 2701 2210a 2425 2608a 2013c 2608 2400 2622 2018 2636a 2630 3015 2652a 2321 2605 2619 2648 2509 2221 2442 1013 2650 2623 K11 2508 2446 2703 2011 2112a 2405 2658 2438 2322 2607 2525a 2002 1001a 2639 2702 2212 2128 2709 2211 2432a 2605 2111a 1020 2003a 1010 2005a 2019 2106 2120 2523a 2111a

Paul & Shark Piaget Piquadro Private i Salon • Nail Nail Promod Pull&Bear Rado Rayure Rich Jade Rimowa Rockport Sa Sa Sa Sa Selective S. Culture S.T. Dupont Samsonite Sisley Sisley Paris Skechers Soft & Intimate Staccato Stefanel Steve Madden Stone Market Stradivarius STS Canada Sulwhasoo Sunglass 88 Swarovski Swatch Tara Moor The Body Shop The Kiss The Manchester United Experience Thomas Sabo Tie Rack / Bric’s Tiffany & Co. TISSOT Tokyu Walker Tommy Hilfiger Tonino Lamborghini Triple Five Soul Triumph and Hom Trussardi Jeans TSL Tumi Tung Fong Hung UM Undergarment United Colors of Benetton Venetian Flori Venilla Suite Verri Vertu Vilebrequin Wolford Yes Zara

2007 2013 2023b 2617a 2316 2525 2006a 2606a 2117 2708 2203 2318 2642a 2300 1022 2527a 2310 2630a 2216 2527 2319a 2421 2612b 2402b 2509a 2643k 2617 K9 2415 2426a 2426 2300b 2302b 2215 2426b 2435 2003 2411 2652 2710 2646a 2436 2220 2625 2022 2707 2102 2526 2308 2633 2600 2703a 2006b 2623a 2626 2023 2313

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

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

The Esplanade, Wynn Macau

Shoppes at Four Seasons

Alfred Dunhill Bvlgari Chanel Christian Dior Ermenegildo Zegna Fendi Ferrari Giorgio Armani Gucci Hermes Hugo Boss Louis Vuitton Miu Miu Cigar Imporium Piaget Prada Sundries The Signature Shop Tiffany & Co. Tudor Van Cleef & Arpels Versace Vertu Wynn&Co Watches and Jewellery

The Encore, Wynn Macau Cartier Chanel Piaget

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

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

DFS Galleria, The Four Seasons Bally Burberry Caran d’Ache Cartier Celine Chanel Chloe DFS Beauty World DFS Jewellery and Watch World DFS Sunglass World Dior Emporio Armani Fendi Gucci Hermes Jurlique Kiehl’s Lancome L’Occitane Loewe Louis Vuitton Omega Prada Ralph Lauren Salvatore Ferragamo Shiseido Swarovski Tag Heuer Tod’s Tumi Vacheron Constatin Van Cleef & Arpels

1123 1110 1129 1125 1109 1117 1123a

1101/18-30 1101/33-45 1101/36 1120 1101/23 1102 1108 1116 1101/26 1101/21 1101/28 1101/25 1121 1115 1101/45 1126 1111 1113 1101/29 1101/38 1101/33 1105 1101/31 1101/39 1101/40

Abiste Aquascutum Archaic Chinese Arts Armani Collezioni Audemars Piguet Bottega Veneta Brioni Canali Cerruti 1881 Cho Cheng Coach Cocco Cole Haan David Yurman Diane Von Furstenberg Dilys’ D’urban E-Rave CustomShop Fabio Caviglia Fish Spa Galerie du Monde Gieves & Hawkes Givenchy Guess by Marciano H&B Medicine Shop Hugo Boss Juicy Couture Just Cavalli Kate Spade Kent & Curwen Kenzo Kwanpen La Perla Marc by Marc Jacobs Max Mara Old House Gallery On Pedder Optica Privé Ports 1961 Samsonite Black Label Shanghai Tang Shiatzy Chen St. John Stefano Ricci Stuart Weitzman Tse Valentino Versace Vintage Fine Wines Vinum Fine Wine Merchants

1208 2836 1213 2805 & 2806 1130 & 1131 2845 2802 2850 2801a 2821 2856 2847 2812 2801 2846 1211 2835b 1210 2838 1209 1220a 2835a 2851 2858 1215 2807 2859 2841 2829 2837 2840 2817 2849 2831 2808 1220 2848 2823 2810 2825 2839 2833 2809 1128 2850a 2832 2842 2853 & 2855 1206 1216

One Central Bally Bottega Veneta Bvlgari Burberry Cartier Céline CentralDeli CK Calvin Klein Dior Dolce&Gabbana Emporio Armani Ermenegildo Zegna Europe Watch Company Fabio Caviglia Fendi Furla Gucci Hermès Hugo Boss Kenzo Lancel Leonard Loewe Loro Piana Louis Vuitton Marc by Marc Jacobs Marc Jacobs Max Mara Montblanc Officine Panerai Pal Zileri Rainbow Ralph Lauren Rimowa Salvatore Ferragamo Shiatzy Chen Tod’s Vertu

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

113

SURIN PITSUWAN SECRETARY-GENERAL OF ASEAN

The ASEAN heart of Asia ASEAN IS EMERGING AS THE FULCRUM OF GEOPOLITICAL STABILITY IN ASIA. WHAT COULD HAVE OTHERWISE BEEN A LIABILITY – ASEAN’S DIVERSITY – WAS TRANSFORMED INTO AN ASSET he Association of Southeast Asian Nations (ASEAN) stands at a defining moment. Its member states are constantly being evaluated for their economic potential and desirability as a market for investments, goods, and services. At the same time, their effort to forge a community free from external intervention is shaping a new regional order based on common security and shared prosperity. In geopolitical terms, ASEAN is well placed to be an acceptable and equal partner to many larger, more powerful economies, such as China, India, Japan, Australia, and South Korea – a part of the world that, for the first time, is leading a global recovery. ASEAN has also contributed to building one of the most dynamic economic-integration platforms in the world, and now acts as a de facto regional hub of wider economic cooperation and integration. Indeed, the importance of regional economic integration for global stability and security cannot be understated. The combined annual gross domestic product of China, Japan, India, and ASEAN is US$14.45 trillion (MOP116 trillion), roughly equal to that of the United States, at $14.62 trillion. More importantly, East Asia’s economies are expected to grow at an average annual rate of 5.1 percent, compared to 3.2 percent in the US. That said, the wide disparities and development gaps between ASEAN members call for a multi-track and multispeed approach to deepening economic integration. In anticipation of worsening food and energy security concerns in the future, ASEAN has set priorities for programs that increase productivity and production, strengthen policy coordination on agricultural trade, and boost efforts to alleviate poverty. East Asia needs to maintain a fine balance of politicalsecurity requirements in much the same way. Continual restructuring and consolidation will be needed to create a balanced regional geopolitical architecture, which must broaden beyond ASEAN members to meet the needs of Japan, the US, Australia, India, China, and Russia – all of which have vital interests in the region. ASEAN pursues an inclusive growth strategy.

Remaining focused With the participation of the US and Russia in the expanded East Asia Summit, the regional architecture is, indeed, becoming more dynamic. Given this, it is imperative that ASEAN becomes pro-active and remains focused on relevant strategic issues. In engaging the major powers, ASEAN will not shun traditional security issues, such as maritime cooperation, as well as humanitarian assistance and disaster relief. Japan has been the biggest provider of development assistance and technological know-how to ASEAN for the past four decades. Indeed, Japan’s investment and aid to Southeast Asia have fuelled ASEAN’s economic progress. I believe that Japan’s strategic role in the region will only increase, because its economy and industrial production chains have been

regionally integrated. Both sides have pledged to forge closer cooperation and initiate new programs to consolidate their relationship. Nevertheless, unresolved and overlapping maritime and territorial claims remain ASEAN’s biggest challenge. We believe that maritime cooperation between ASEAN and major powers including China would benefit all countries. ASEAN will continue to address this issue strategically. And, as to Myanmar, ASEAN has deferred the decision on its prospective chairmanship in 2014. At its recent summit, ASEAN leaders asked Myanmar for more clarification about the country’s internal situation. In doing so, ASEAN showed its continued influence on Myanmar’s progress towards democratic reforms.

Internal issues Not all challenges, however, are external. The critical issue concerns ASEAN’s engagement with civil society. Indonesia’s government has expressed support for more proactive engagement with the region’s civil society organizations, pledging to organize “community conferences or forums” to engage with stakeholders in efforts to strengthen the security, economic, and socio-cultural pillars that support ASEAN as a group. Indonesia hopes that these community conferences will gradually gain acceptance at the ASEAN level. Through these efforts, ASEAN is emerging as the fulcrum of geopolitical stability in Asia. What could have otherwise been a liability – ASEAN’s diversity – was transformed into an asset that has set the benchmark for regional integration in a troubled and complex world. Yes, we have our share of challenges. Nevertheless, ASEAN is constantly demonstrating its determination to create a region where no member is left behind, even as we collectively pursue prosperity and an equitable distribution of our burgeoning wealth. Moreover, ASEAN is seeking to forge a clearer position on key international issues to heighten its standing on world affairs. Disaster management, peace-keeping operations, and, again, maritime-security cooperation are some of the areas in which ASEAN members can work together to formulate common policy approaches and action plans. In the years to come, ASEAN will make further progress on unified responses to climate change, human trafficking, and food and energy security. Of course, as it moves forward, ASEAN will have to make structural and policy adjustments to strengthen its voice. And the ability to deter and resolve conflicts among its members must remain one of its priorities. At its recent summit, ASEAN agreed to establish an ASEAN Institute for Peace and Reconciliation that will deal with issues of peace and reconciliation – a milestone achievement for ASEAN. There will be many more innovative breakthroughs as ASEAN develops into an integrated, open, peaceful, and outward-looking region. That outcome will benefit ASEAN’s members – and the world.

JULY 2011

114 114

Charity

Winged mercy International charity Global Flying Hospitals picks Macau as its base in East Asia BY SARA SILVA MOREIRA

acau has been put on the map for international non-governmental organisations with Global Flying Hospitals making the territory its administrative base in East Asia. Global Flying Hospitals, a charity that converts aeroplanes into flying hospitals that bring medical training and medical care to needy areas of the globe, has chosen Macau for both its East Asian hub and its point of access to mainland China. “Macau is a geographic bull’s-eye for the charity. It allows us to be a part of Asia, without the higher costs of Hong Kong and provides an open door to China. It also allows for easy access to all Asian countries, namely India and Japan,” says Neill Newton, the Australian founder and chairman of Global Flying Hospitals. Mr Newton says Macau’s “fast-growing image, clear legal pathway, impressive growth and superb vitality” are other reasons for the choice. “We have had no difficulties in establishing in Macau. In fact, the government was efficient and welcoming,” he says. The organisation, incorporated in Macau in late 2009,

JULY 2011

shares office space with a law firm which is representing it pro bono. The charity aims to start flying out of Macau early next year. The airport will play an important role as a stopover for refuelling and restocking aircraft on missions. Global Flying Hospitals hopes to get the airport’s cooperation to allow its aircraft to land and park free of charge. The airport’s size and its limited space will prevent the charity’s wide-bodied aircraft from using it and negotiations have begun with mainland authorities to discuss allowing parking in nearby airports, such as Zhuhai. Mr Newton says Global Flying Hospitals is also looking for companies that can supply modular field clinics, sanitation, water purification and solar power systems for emergency accommodation. “With the plethora of natural disasters, this is now a must, to be loaded and landed within 24 hours,” he says.

Quid pro quo Finding sponsors and volunteers are the priorities. The organisation still lacks adequate warehousing in Macau for medical and humanitarian supplies, but it hopes to

115

expects to grow to employ around 100 people in Macau. The branch will be responsible for most of the charity’s work in East Asia, such as coordinating fundraising centres to be opened in Singapore, Hong Kong, Taiwan, South Korea and Japan. It will oversee aircraft refitting in the mainland and aircraft servicing in Hong Kong, and draw up mission plans and flight plans.

Flash of inspiration

establish partnerships that will take care of the logistics. “We certainly look forward to having VIPs join as patrons, to lend support and help,” says Mr Newton. The organisation has received donations only from small and medium enterprises but its founder hopes Macau will be a source of bigger sponsors. It expects to close negotiations with a big hotel company soon. Volunteers can come from any walk of life and are needed to help in fields ranging from marketing to fundraising and administration. Global Flying Hospitals is also looking for medical staff and pilots interested in giving one or two weeks of their time a year to help those in need. Mr Newton believes that his charity can give something to Macau in return, by creating new jobs, boosting business and ultimately promoting the city internationally. Global Flying Hospitals receives requests for help every week, Mr Newton says. It is just waiting to get its fleet fully up and running to respond to all in need. The organisation has 53 full-time employees and 60 volunteers, ranging from medical professionals to fundraisers. It

At present Global Flying Hospitals operates leased aircraft but it plans to eventually own and operate 12 planes of three different sizes. Mr Newton has lived in China for three years and has travelled all over the mainland. It is vital to be close to mainland China, to obtain central government approval to use mainland airspace and to mount medical missions, he says. While impressed by the country’s rapid development, Mr Newton has seen the lack of infrastructure and healthcare facilities in some rural areas and the need for swift assistance in the event of calamities such as the Sichuan earthquake. A pilot himself, Mr Newton created Global Flying Hospitals in the United States in 2001. The idea for the charity struck “like a lightning flash from heaven – put a hospital inside an aircraft and take it to developing countries,” he says. The organisation began raising funds to buy aircraft and refit them as flying hospitals, and soon started mounting missions. Using two narrow-bodied aircraft, Global Flying Hospitals has already provided relief in areas struck by natural disasters such as Haiti, Japan, New Zealand and Pakistan. The organisation has also been on medical missions in remote areas of West Africa to set up field clinics. These clinics, known as domes, are designed to be assembled in less than two hours and their versatility allows them to be used either as treatment centres or as temporary housing. “I clearly recall this 80-year-old lady in Nepal who had suffered with cataracts for years. She was fending for herself, living in a small wooden hut in the hills. She would climb up and down the same small path holding a staff for support. After the surgery, when her bandages were removed, she had the largest smile that you could imagine. For the first time, she could find her way home by herself and unassisted.” “Surely, this is what it is all about,” says Mr Newton. “Transforming people’s lives. It is the most rewarding [thing] all of us can do.” JULY 2011

116

July Date: Event:

4th

AmCham Macau Independence Day Celebration

Venue: The Veranda, Grand Lapa Organiser: American Chamber of Commerce in Macau Address: Alameda Dr. Carlos d’ Assumpção No 263, Edif. China Civil Plaza, 20 Andar, Macau Tel: (853) 2857.5059 Fax: (853) 2857.5060 E-mail: info@amcham.org.mo Date: Event:

4th - 6th

Asian Infrastructure & Property Development Summit 2011

Venue: The Venetian Macao Resort Hotel Organiser: Marcus Evans Address: 4 Battery Road, 13-01 Bank of China Building, Singapore 049908 Tel: (357) 22 849 333 Website: www.aipdsummit.com E-mail: delegates@marcusevanscy.com Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:

5th - 7th

World Gaming Executive Summit

Hotel Meliá Avenida América, Madrid, Spain Terrapinn Wren House, 43 Hatton Garden, London, EC1N 8EL (44) 0 20 7092 1000 (44) 0 20 7242 1508 www.terrapinn.com/2011/wges/ enquiry.uk@terrapinn.com 8th - 10 th

Macao Franchise Expo 2011

The Venetian Macao Resort Hotel MFE | IPIM World Trade Centre Building, 1st & 4th Floors, 918, Avenida da Amizade, Macao (853) 6212 8811 | 2871 0300 (853) 2825 7277 | 2859 0309 www.mfe.mo contact@mfe.mo | ipim@ipim.gov.mo 13th - 14th

Mobile Payments & NFC Asia 2011

Eaton Smart, Hong Kong Symphony Global 10 Anson Road, #25-03 International Plaza, Singapore 079903 (65) 6221 8119 (65) 6221 8796 www.symphonyglobal.com registration@symphonyglobal.com

Date: Event:

Gaming Industry Luncheon with David Green

Venue: Mandarin Oriental, Macau Organiser: BBAM | Co-hosted, Macau Business Address: Alameda Dr. Carlos d’Assumpcao, No. 263, Edf. China Civil Plaza, 20 andar, Macao Tel: (853) 8798 9697 Fax: (853) 2875 7762 Website: www.britchammacao.org E-mail: bbam@britchammacao.org August Date: Event: Venue:

21st - 23rd

Date: Event:

22nd - 24th

Australasian Gaming Expo

Sydney Convention and Exhibition Centre, Darling Harbour, NSW, Australia Organiser: Gaming Technologies Association Address: Level 34, 50 Bridge Street, Sydney, NSW 2000 Australia Phone: (612) 82160931 Fax: (612) 82160701 Website: www.austgamingexpo.com E-mail: info@gamingta.com

Gaming, Racing & Wagering Australia

Venue: Sydney Convention and Exhibition Centre, Australia Organiser: Beacon Events Address: 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong Tel: (852) 2531 6107 Fax: (852) 2586 1999 Website: www.beaconevents.com E-mail: cs@BeaconEvents.com Date: Event: Venue:

25th - 27th

GTI Asia China Expo

Poly World Trade Expo Center, Pazhou, Guangzhou, Guangdong, China Organiser: Haw Ji Co., Ltd Address: 2F, No. 17, PaoChing St., SongShan District, Taipei City 10585, Taiwan Tel: (886) 227607407~10 Fax: (886) 2 27420522 Website: www.gtiexpo.com.tw/cnen E-mail: gametime@taiwanslot.com.tw September Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:

JULY 2011

27th

3rd - 6th

G2E Las Vegas

Sands Expo & Convention Center, Las Vegas AGA | Reed Expo 1299 Pennsylvania Ave., NW, Suite 1175, Washington, D.C. 20004, USA (1) 888 314 1378 (1) 203 840 9626 www.g2e.com info@globalgamingexpo.com

117 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 â&#x20AC;&#x153;List me as an eventâ&#x20AC;?. TBA : To be advised |

: A Macau Business partner event

November Date: Event:

19 th - 22nd

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

Milan, Italy, TBC Clarion Gaming Earls Court Exhibition Centre, London SW5 9TA, UK (44) 0 20 7370 8579 www.eigexpo.com yeemay.huang@clariongaming.com

Date: Event: Venue: Organiser: Address:

Tel: Fax: Website: E-mail:

European iGaming Congress and Expo

26th - 27th

2nd Annual Green Tech Asia

GTower Hotel, Kuala Lumpur, Malaysia Comfori E-02-03, East Wing, Subang Square Business Centre, Jalan SS15/4G, 47500 Subang Jaya, Selangor, Malaysia (603) 5621 3630 (603) 5638 8248 www.comfori.com/greentech/ lydia.aziz@comfori.com

Date: Event:

Venue:

3rd - 5th

4th China (Zhongshan) International Games & Amusement Fair

Complex Hall of Zhongshan Expo Center, Zhongshan, China Organiser: China Zhongshan Municipal Government/Guangzhou Grandeur Address: 2nd Floor, No.318 Chebei Road, Guangzhou, 510660, China Tel: (86) 20 2210 6418 Fax: (86) 20 82579220 Website: www.zsgaf.com E-mail: info1@grandeurhk.com Date: Event:

10 th - 11th

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

TBC American Conference Institute 45 West 25th Street, 11th Floor, New York, NY 10010 (1) 212 352-3220 (1) 212 352-3231 www.americanconference.com info@americanconference.com

C5 International Gaming Law Summit - US

JULY 2011

118

Arts & Culture

ENDING ON AN EMOTIONAL NOTE

The Macao Orchestra invites one of the world’s most talented pianists to close its concert season

aving the best for last, the Macao Orchestra is closing its 2010-2011 concert season with a very special guest: world-renowned pianist Barry Douglas. The Irishman joins the orchestra and maestro Lü Jia to perform a masterpiece of the Romantic piano repertoire, Brahms’ “Piano Concerto No. 2 in B-flat major”. Concluding the programme is Beethoven’s emotional and exciting seventh symphony. Mr Douglas has made a grand international career since winning the Gold Medal at the 1986 Tchaikovsky International Piano Competition in Moscow. At the time, he was the only non-Russian since American Van Cliburn to have won the prestigious award outright. Although that was his life-changing moment, until a short time before the competition Mr Douglas had not considered entering. The final decision was only made about 10 days before the competition started. The required repertory was not a problem, since he was already familiar with most of it. “I wasn’t expecting anything to happen. I went to Moscow determined to eat caviar, enjoy myself, play the best I could in my own style. It is a big mistake to try to alter your

2010-2011 Season Closing Concert WHEN: July 31, 8 pm WHERE: Macau Cultural Centre, Grand Auditorium PROGRAMME: J. Brahms, Piano Concerto No. 2 in B-flat Major. Op. 83 L. van Beethoven, Symphony No. 7 in A Major, Op. 92 PERFORMERS: Barry Douglas (Piano), Lü Jia (Conductor), Macao Orchestra SEATS: MOP150, MOP120, MOP120 TICKETING: 2855 5555 - INQUIRIES: 2853 0782 WEBSITE: www.icm.gov.mo/om JULY 2011

playing to satisfy a jury. An artist has to express himself, and that is what I was determined to do. If I could win, fine; if not, no tears,” Mr Douglas explained to the “New York Times” two years after grabbing the distinction. Mr Douglas went on stage with the Moscow Philharmonic Orchestra for his final performance after rehearsing for just 45 minutes, owing to a food allergy that made his hands swollen. Last month Mr Douglas returned to the Tchaikovsky International Piano Competition, this time as a jury member. “The most important thing on any stage is to make music and have respect for the composer. That underpins the decision of the jury,” he tweeted from Moscow.

Directors’ chair In 1999, Mr Douglas formed Camerata Ireland, an all-Irish chamber orchestra, with players from both the north and south of Ireland to celebrate “the wealth of Irish musical talent”. He remains artistic director. With his orchestra, Mr Douglas devotes an increasing part of his time to directing from the piano and conducting. He is also the artistic director of the Clandeboye Festival and the Castletown Concerts in Ireland. Mr Douglas has performed with every important international orchestra and collaborated with some of the best conductors in the world. Recently he has played with the London Symphony Orchestra, BBC Symphony Orchestra, Berlin Radio Symphony Orchestra, Moscow Philharmonic Orchestra and Hong Kong Philharmonic Orchestra. The pianist has recorded extensively throughout his career and has recorded all the Beethoven concertos with Camerata Ireland. In 2008, Sony/BMG released his recording of Rachmaninov’s first and third piano concertos with the Russian National Orchestra and Russian conductor Evgeny Svetlanov. Taking classical music to a wider audience, in 2007 Mr Douglas presented his first television series for RTE Ireland’s “Symphony Sessions” – a programme showing orchestral life behind the scenes. He has also presented a series for BBC Northern Ireland that shows the development of young Irish musicians. He received the Order of the British Empire in the 2002 New Year’s Honours List for services to music.

119

Barry Douglas

RISING ABOVE TROUBLES

was born in 1960 in Belfast. His childhood was far from normal, growing up in a Northern Ireland divided by political conflict, a period remembered in the history books as “The Troubles”. Despite his growing interest in music since he was three and a half, violent Belfast was not the best place in the world to be an aspiring musician. There were few cultural events taking place and unpleasant surprises occurred all too often. “My first operatic experience was [Verdi’s] ‘Rigoletto’ where there were four bomb scares during the performance and everyone filed out into the streets,” Mr Douglas told Reuters earlier this year. “By the time it got to the fourth bomb scare the singer playing the Duke of Mantua said, ‘Enough, I’m going back to the hotel to get drunk.’ I didn’t see the end until years later.” JULY 2011

120

Arts & Culture

THEATRE REMIXED The surround-sound world of cinema collides with live theatre in an adaptation of a story born from the worst of human nature that also reveals its best

he idea to combine the best of the world of cinema and live theatre provides the magic for Compañia Teatrocinema’s ‘Sin Sangre’ or ‘Without Blood’. Destined for the Macau Cultural Centre in September, ‘Sin Sangre’ brings the dark novel by Italian Alessandro Baricco to life. The thriller is an excellent choice for a play that merges celluloid and stage. The split-screen effects and flashbacks are artfully rendered by director Juan Carlos Zagal and film maker Dauno Totoro. The central plot of the story is one of revenge as a woman who survives the murder of her family as a child, decades later is confronted with the dilemma of having to kill a man who saved her life. The work by the Compañia Teatrocinema is technically, at the very least, a marvel. The reality of keeping a production flowing across two media, with parts for five actors, each working on a narrow stage where timing and choreography must be precise is daunting. That it can be done live, without missing a mark that would tear apart the illusion, and sustained for a 90-minute performance is a real credit to the troupe.

Classic company If there is a common theme to modern-day Chile it is its recent past. The company behind ‘Without Blood’ was also borne from the revelation and subsequent renovation of the country after the military dictatorship fell. In 1987, a group of diverse talents came together under the name La Troppa, or The Troop. Their mission was to combat what it saw as the “cultural decay” of the country under Pinochet. JULY 2011

121

A common goal was found; a quest for beauty, poetry, literature, image and music. They told stories that create an illusion of moving through space and time, all with an exceptional level of creativity. The Troop won widespread acclaim through international tours before winding down. In 2006, core members renamed the group to its current name but with the same yearning to heal the hurt Pinochet’s rule inflicted. “We still hurt about what happened in Chile, so we must do stories like ‘Sin Sangre’ to heal ourselves. I will live with what happened all my life but life goes on as well,” Zagal told The Herald newspaper in Scotland. Grandly, the reborn troop is a “quest for a new language” for drama, Zagal wrote in the notes for a 2009 tour of Singapore. The combination of cinema and theatre gives Teatrocinema the opportunity to “jump in time and space in an instantaneous way, not as cinema does it already, but in the way done by magicians”. ‘Sin Sangre’ has been one of the first efforts from the reborn troop. Last year it made the programme at the Edinburgh International Festival where, to be fair, it received mixed reviews. A review in The Guardian said that the high-tech elements in the performance deadened the imagination that normally drives live theatre. Similar reviews were turned in by The Telegraph.

Big story-telling Just as Chile’s dark years provided the spark for Teatrocinema’s creativity, the plot owes much to those events. In the immediacy and confusion in the aftermath of a civil war, three men raid the hideout of a doctor nicknamed The Hyena. He is the alleged perpetrator of macabre experiments on live prisoners and delivered summary justice. He is gunned down, taking his innocent son with him. The Hyena’s daughter survives, even though her hiding spot is uncovered by a gunman hell-bent on vengeance. The daughter grows into a vigilante, seeking justice for her father’s death. She eradicates her father’s killers one by one until 50 years later, she comes face to face with the assassin that spared her life as a child. It is a big plot, with larger than life characters and a certain melodrama to the performance. Again, it is easy to see why the company would opt for this hybrid storytelling medium with the benefits of its surround sound, three-dimensional characteristics. ‘Sin Sangre’ runs over two nights, September 17 and 18, at the Small Auditorium at the Macau Cultural Centre. JULY 2011

122 122

Entertainment

IT’S MINGLING TIME Guests from Macau, Hong Kong and Guangdong province gathered last month at Sofitel Macau at Ponte 16 for the fourth edition of the Delta Inter Chamber Event. The series, hosted by Macau Business together with Delta Bridges, was this time devoted to urban planning in the Pearl River Delta. The conference – which included representatives from the Zhuhai government, the Architects Association of Macau and members from the business community (read more in our Economy & Finance section) – was followed by a networking cocktail reception. Once again the Delta Inter Chamber Event could count on the support and presence of the European Chamber of Commerce in Hong Kong, the American Chamber of Commerce in Macau, the British Business Association of Macau, the Canadian Chamber of Commerce in Macau, the German Chamber of Commerce (South China), the Portuguese-Chinese Chamber of Commerce (Macau), the Zhuhai Chamber of Commerce, the Australian Chamber of Commerce (Hong Kong and Macau), the France Macau Business Association, the New Zealand Chamber of Commerce in Hong Kong and the British Chamber of Commerce in Hong Kong. Special thanks to major event sponsor EcoTech Environmental, venue patron Sofitel Macau at Ponte 16 and event supporters Seapower Trading Co., Ltd, Waaa! Studio and Icon Communications.

Angelina Gomes Wong and José Lupi

Clement T. Browne and Richard Whitfield

Alistair Cannons

Andrea Mansfield

Mariana Oom, Sofia Basto da Silva and Gonçalo Alvim JULY 2011

Michel Molliet

Li Wei and Luciana Leitão

Manuel Carvalho, Zhao Xuejun and Niu Jing

The audience listens carefully to the presentations

Cornelius O. Mueller

Vincent U

Luís Mesquita de Melo, Beth Doherty and Mafalda Melo

123

Sonny Liu

Deborah Biber

David C. Whitwam

Nunu Khan

Cecilia Wong and Charles M. Choy

João Baptista Lung

Filipe Senna Fernandes and Ada Chan

Guests engage in some serious networking

Luiz Da Silva Pedruco

Deny Lau

Abigail Gonzales and Paul Town

Maria da Conceição Coelho and Stefanie Fun Leung Yuen

Andrew and Alex Macaulay

Simon Lo Shing Hing and Glenn McCartney

Rutger Verschuren, Real Hryhirchuk and Howard Stribbell JULY 2011

124 124

Entertainment

ROCKING THE BALLROOM For the third year running, local Brits and their guests put on their dancing shoes for the British Business Association of Macau’s annual gala ball. This time, the theme for the party was “Best of British – Royalty Rocks,” with partygoers challenged to dress up either as princes and princesses or as rock stars. Again, StarWorld was the venue chosen for the ball, with The Bloom Brothers once more in-charge of rocking the dance floor and providing extra excitement to an amazing party.

Dave Gibson

Meet the ball committee: Erica Knight, Neil Harvey, Mike and Lynn Jacobson, Eileen Stow and Henry Brockman

Glenn McCartney and wife, Andrew Seaton and Stuart Knight

Faith and Paul Town

Dan Turner and Faye Ho

Dale Martin and Helene Wong

Guy Lesquoy and wife

Dora Deparis with daughters Milena and Helena JULY 2011

Derek and Samiya Allen

Greg and Andrea Mansfield

125

The amazing Bloom Brothers

And the crowd goes wild for Lovely Cox

Jessica Leong and Eddie Lam

The ‘Royal Family’

Jhett Baroma

Penny and Rob Stubbs with Amanda and Tony Pieris

Ana Tique and Lynn Jacobson

Chris Comper and Ardith Klander

Neil Harvey and Julia Whitwall

Luis Pereira and Luciana Leitão

Cristina Lobo

Sophie Lei and Joseph Chan JULY 2011

126

MICHAEL SPENCE NOBEL LAUREATE IN ECONOMICS

A post-crisis world of risk EMERGING-MARKET GROWTH IS THE WORLD’S BRIGHT SPOT. BUT EVEN THERE, RISKS LURK he global economy’s most striking feature nowadays is the magnitude and interconnectedness of the macro risks that it faces. The post-crisis period has produced a multi-speed world, as the major advanced economies – with the notable exception of Germany – struggle with low growth and high unemployment, while the main emerging-market economies (Brazil, China, India, Indonesia, and Russia) have restored growth to pre-crisis levels. This divergence is mirrored in public finances. Emerging economies’ debt-to-GDP ratios are trending down toward 40 percent, while those of advanced economies are trending up toward 100 percent, on average. Neither Europe nor the United States has put in place credible medium-term plans to stabilize their fiscal positions. The volatility of the euro-dollar exchange rate reflects the uncertainty about which side of the Atlantic faces higher risks. In Europe, this has led to several ratings downgrades of the sovereign debt of the most distressed countries, accompanied by bouts of contagion spilling over to the euro. More seem likely. As for the United States, Moody’s recently issued a warning on the country’s sovereign debt in the face of uncertainty about Congress’s willingness to raise the debt ceiling amid highly partisan debate about the deficit. Both issues – the debt ceiling and a credible deficit-reduction plan – remain unresolved. Moreover, economic growth in the US is modest, and appears to come mainly from segments of the tradable sector that are exposed to and benefit from emerging-market demand. The nontradable sector, which created virtually all of the new employment in the two decades prior to the crisis, is stagnating, owing to a shortfall in domestic demand and seriously constrained government budgets. The result is persistent unemployment. Meanwhile, the tradable side is not large enough in competitive terms to take up the slack in growth and employment.

Need for adjustments

By contrast, emerging markets’ rapid growth and urbanization are delivering a global investment boom, documented in a recent McKinsey Global Institute study. A likely consequence is that the cost of capital will rise in the next few years, putting pressure on highly leveraged entities, including governments that have grown accustomed to a low interest-rate environment and may not see this shift coming. Countries with persistent structural current-account deficits will incur additional external-financing costs, and eventually will reach the limits of leverage. At that point, the weak productivity and competitiveness of their tradable sectors will become clear. Adjustments will need to be made. The options are higher investment levels financed by domestic savings, productivity growth, and increased competitiveness, or stagnant real incomes as rebalancing occurs through the exchange-rate mechanism (or a large dose of domestic deflation in the debtJULY 2011

distressed eurozone countries, since they do not control their own exchange rates). Many of these structural problems were hidden from view before the crisis, thereby delaying both market and policy responses. In the US, excess domestic consumption, based on a debt-fuelled asset bubble, helped to sustain employment and growth, though the current account held worrying signs. In several European countries, governments, aided by low interest rates, filled in the gap created by lagging productivity. In all cases, assessments of fiscal balance were mistakenly predicated on the assumed stability and sustainability of the existing growth paths. The assumption that a benign growth and interest-rate environment was a permanent state of affairs led to a massive failure of fiscal countercyclicality in the advanced economies, as budget deficits became chronic, rather than a response to depressed domestic demand.

China’s crucial role

In emerging markets, China’s growth is crucial, owing to its size and importance as an export market for Brazil, India, South Korea, Japan, and even Germany. But inflation is a dual threat to China, jeopardizing both economic growth and internal cohesion. Housing has become unaffordable for many young people entering the work force. Reining in price and asset inflation without undermining growth will be a delicate balancing act. Moreover, China shares with the US the challenge of limiting growth in income inequality. In both cases, the employment engines need to keep running or be restarted, in order to prevent political volatility and social unrest. Protectionism on a large scale is not a likely outcome – at least not yet – but that could change if employment and distributional issues are not handled well. For Asia, which is relatively poor in resources compared to the Middle East, Latin America, and Africa, the rising cost of commodities, driven in part by emerging-market growth, is a cause for concern. Energy security is also a notable risk factor, especially given the uncertain outcomes of the popular uprisings in the Middle East. Emerging-market growth is the world’s bright spot and looks to be sustainable even as the advanced countries experience an extended period of rebalancing and slow growth. But even there, risks lurk. A major downturn in Europe or America would have a significant negative impact on these economies, which can generate enough incremental demand to sustain their own growth, but not enough to make up for a large drop in advanced-country demand. Markets may have factored in the combined effect of these macro risks, which nowadays are pervasive and correlated, but I doubt it. Nonetheless, all countries share a strong and immediate interest in reducing them. Let’s hope that an awareness of this will add a much-needed sense of urgency to national policy responses, as well as to efforts by the G-20 and other international bodies to improve international policy coordination.

127

NOWHERE IN A HURRY

WHEN IN ROME Unlike some of our detractors, Frozen Spy is not all about bad news. For a change, the six gaming operators are to be commended because of the positive energy they put into last month’s dragon boat races. It is not a first. The casino companies have been engaged in the event for a couple of years, encouraging their staff to participate. They also bring a lot of joy to the stands, with organised cheer squads, decked out in team colours, supporting their crews. Frozen Spy praises their involvement in what is one of Macau’s most traditional and popular festivals. We hope the community engagement does not end there.

THE BIG QUESTION A couple of interesting figures were released by the government last month. First was the announcement that just two of 316 applicants passed the final entry exam to join the Health Bureau as a medical intern. Then there was the news that just 12 of the 126 applicants for a magistrate’s training course were successful, following a trend set in previous exams. Frozen Spy wonders what is happening. Is the standard of questions too hard or could the quality of candidates be too low. Let us hope it is the former.

Frozen Spy is puzzled by recent comments by Wynn Macau’s chairman and chief executive, Steve Wynn. He seems to be promising much to a lot of people to extend the company’s reach in Asia. First, he announced that “after Vegas and Macau, South Korea will be the next milestone of my life”. Shortly after, Mr Wynn was quoted as saying he was “dying to go to Singapore”. Frozen Spy has a piece of advice for Mr Wynn: maybe it would be better for him to focus first on his Cotai project, which, by the way, the casino mogul says will be his “best ever”. With Melco Crown finally unblocking Macao Studio City’s stalled project, the forecast is for more delays until Wynn Cotai gets the go-ahead from the government.

YELLOW CARD The government’s bill to increase the minimum age to enter or be employed by a casino from 18 to 21 years will face a difficult passage through the Legislative Assembly. On its first reading, the proposed legislation encountered heavy criticism and passed with one vote against and, more significantly, seven abstentions. For those who understand the nuts and bolts of the city’s legislature, it is a worrying sign for the government. It is uncommon to have so many legislators, especially heavyweights like Kwan Tsui Hang, Kou Hoi In, Leonel Alves or Ho Iat Seng, not vote in favour of a governmentsponsored bill on its first reading. Expect a troubled ride through the Legislative Assembly’s first standing committee, which will now look into it in detail. Changes will be introduced.

JULY 2011

128

Advertisers

July 2011

index

7 Luck Casino

www.7luck.com

Aristocrat

Page 73

www.aristocratgaming.com

Aruze Gaming

Page 82

www.aruze-gaming.com

Bally Technologies

Page 67

www.ballytech.com

BNU

Page 21

www.bnu.com.mo

CEM

Page 46

www.cem-macau.com

Galaxy Entertainment Group

Page 17

www.galaxyentertainment.com

GPI Gaming

Page 65

www.gpigaming.com

IGT

Page 61

www.igt.com

Kings Consulting

Page 39

www.pokerking-club.com

Macau Cultural Centre

Page 19

www.ccm.org.mo

Macau Daily Times

Page 55

www.macaudailytimes.com.mo

Macau Post Office

Page 41

www.macaupost.gov.mo

Macau Sport Development Board

Page 51

www.sport.gov.mo

Menzies Macau

Pages 02-03

www.menziesaviation.com.mo

MGM Macau

Page 05

www.mgmmacau.com

MGTO

Page IBC

www.macautourism.gov.mo

Morton’s The Steakhouse

Page 25

www.mortons.com

Our Dental Clinic

Page 38

www.ooioc.com

PokerStars Macau

Page 07

www.pokerstarsmacau.com

Sands China

Page IFC

www.sandschinaltd.com

Shuffle Master

Page 71

www.shufflemaster.com

SJM

Page 94

www.sjmholdings.com

Zung Fu Motors – Mercedes

Page 01

www.zungfu.com.mo

JULY 2011