MB 92 | December 2011 by Macau Business

Higher learning Resort-casino master’s program puts Macau at heart of industry training December 2011

ISSN 1812-6855

Urban attraction

Banyan Tree’s budding high-rise resorts Tech time bomb

Bosses struggle to find right I.T. staff

Exclusive interview

French businesses feature

in a 14-page special

Anniversary Macau SAR

of the establishment of the

Double play Jim Murren makes MGM’s pitch for the non-players

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

DECEMBER 2011

Photo: Luís Almoster

Economy & Finance 28 Twice as nice GDP goes up, unemployment heads down

Supplement 35 French connection France steps up its Macau business presence

Property 50 Market watch Slump period following the stamp duty enactment may be over

Special 61 Facing up to the future The 12th anniversary of the establishment of the Macau SAR

CEO Interview 80 Jim Murren MGM Resorts’ chief executive officer says he wants more than just two properties in Macau

DECEMBER 2011

Gaming 86 Billions race Gross gaming revenue growth slows down 88 Stock watch Macro-economic instability and fears about the mainland’s future impact on gaming stocks 92 No shockers Policy address brings little change for gaming in 2012 96 Making managers University of Macau to launch a master’s degree in resort management 98 Resorting to the whip The Hong Kong Jockey Club wants to fight back against Macau casinos 100 Winning ticket Mainland lottery market to hit MOP800 billion by 2015 102 Pretender to the throne Entertainment City Manila is eyeing to overtake Las Vegas and Singapore 106 Exhibitionist tendencies Museums bring something new to Singapore’s casino resorts

SEPTEMBER DECEMBER 2011

Photo: Carmo Correia

Hospitality 112 Urban paradise Banyan Tree brings its urban resort concept to Macau 116 Getting down More budget accommodation can be positive for tourism

Human resources 122

Business 124

Arts & Culture 126

128

130 Charity play Macau Business Charity Golf Tournament winners present cheques to Caritas and Macau Special Olympics

Opinion

12 From the publisher’s desk Paulo A. Azevedo 15 Editorial Technically challenged Emanuel Graça Local businesses are still unsure 25 Alternative awards for excellence about computerisation and technology Keith Morrison 34 Legal difficulties José I. Duarte One day, my son 55 China’s crippled financial sector Succession planning is crucial for family firms Yao Yang 60 The Philippines joins the Asian race Benigno S. Aquino Art for money’s sake 68 A poor student The success of Macau Creations explained Bill Kwok-ping Chou 76 Seize the day Carlota Proença de Almeida Cracking ballet 118 Letter to Santa The Macau Cultural Centre presents Gustavo Cavaliere “Firecracker” ballet 134 The neuroeconomics revolution Heritage grandeur Robert J. Shiller Europe’s UNESCO-listed heritage sites visit Macau

Technology 120

Corporate Social Responsibility

DECEMBER 2011

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Hiding away RECURRENTLY, THE MACAU GOVERNMENT becomes a hostage of its own apparent inability to decide. In any part of the world, to be a leader is to take risks after considering the advantages and disadvantages, and to go ahead fearlessly to achieve the common good. Unfortunately, in Macau it happens differently, and needlessly so. The attempt to please all is gradually creating the idea in some sectors of society that there is always an underlying, less clear goal behind each and every government decision. The most recent example is the controversy surrounding the Outer Harbour ferry terminal being transferred to Pac On, in Taipa. First, we had a badly disguised intention to move the terminal, as suggested in a public consultation document regarding the future development of Macau’s new reclaimed land. Since reaction was swift and many voices rose against the proposal, a new public consultation of some sort was proposed – a very popular solution nowadays. This time, the government is up against some heavyweights. Part of the wider population is against the transfer. The criticism is understandable: the majority would become dependent on a terminal a few kilometres out of their way and would also make downtown access harder for visitors, apparently for no good reason. Part of the business community is equally unhappy. The Macau Chamber

DECEMBER 2011

of Commerce’s position seems to be a wise one, saying the ferry terminal still has some value and capacity to operate for up to 10 years more, before the Hong Kong-Zhuhai-Macau Bridge is completed. The chamber also notes that one could argue that the Zhuhai-Macau-Hong Kong Bridge may diminish the terminal’s importance, but that there is no study to back this assertion. Besides, the bridge still has to be erected. We are years away from its inauguration or even decades if its construction follows the same path as the light rail transit system. What makes people suspicious of government intentions is the swiftness with which officials bring outside experts to support what we all know to be the government’s will. Out of nowhere, the former head of Taipei city’s Department of Transportation publicly supports the move. We feel that Mr Lao Iong’s position is more legitimate. The head of the Land, Public Works and Transport Bureau’s Urban Planning Department is alert to the fact that the waterways into the terminal are crowded, which is causing safety problems. It is precisely how officials must act: find the strength to defend their positions and justify them with real, cut-clear evidence. Otherwise, doubts regarding the government’s real intentions will remain over their heads, like a threatening dark cloud ready to unleash a furious tropical monsoon.

Good faith, bad faith A PROUD GOVERNMENT HAS TO MAKE ITSELF accountable for its acts. Honour is priceless. Throughout the years, some public bureaus have made wrong decisions on several public tenders. That happens and is not at issue here. The problem is when officials choose to run from their mistakes, instead of solving things. This situation took place last year with the exclusion of one candidate from the public bus system tender for allegedly delivering its application four minutes late. In the end, the company was given one of the five groups of routes in return for dropping a series of pending lawsuits. The remaining two candidates suffered damages in the process and faced delays but they were never properly compensated. In the public tender for the contract to operate the wastewater treatment plant in Areia Preta, another strange episode took place. One of the excluded candidates appealed to the Court of Final Appeal and the court ruled in

favour of the company’s inclusion in the tender. Although a winner for the tender has already been announced and is already running the plant, the Infrastructure Development Office decided to open the previously excluded bid to solve the situation and follow the court’s decision. The solution is seen by some experts as an act of bad faith, with the sole purpose to prevent the payment of compensation, since it is utterly impossible to annul the tender. It would be possible if the chief executive found it necessary but we all know he will not. This is the wrap-up: candidates were excluded from an international public tender for no good reason whatsoever, mistakes were made and, in the end, to avoid solving the problems, which would likely include paying some kind of compensation, all sorts of legal “tricks” were used. This is not the way an honourable government would behave. It is ugly.

Better late than never ACCORDING TO SOME ESTIMATES, ECONOMIC GROWTH will reach “just” 12 percent next year. For the first time, government revenue is estimated to surpass the MOP100 billion (US$12.5 billion) mark, a tenfold increase over the final budget under the Portuguese administration, 12 years ago. In the first ten months of this year alone, the budget surplus was five times that of 1999. Still, what good is all this money when our officials still suffer from short sightedness? Finally, the secretary for economy and finance, Francis Tam Pak Yuen, has recognised the difficulties in managing Macau’s human resources. Let us not forget that the labour shortage contributes the most to the imbalance that currently affects all areas of development, due to the government’s blindly restrictive human resources policy. The blame should also be placed on some legislators, including those from the pro-democracy field who, just recently, came charging again with

their populist intentions. That was the case of lawmaker Au Kam San, who proposed that the few existing unemployed residents should be given the opportunity to fill all the currently available job vacancies. Forget about education, skills or vocation, if the applicant is a resident, the job is granted. Similar demonstrations of a lack of intelligence have recently earned Hong Kong’s prodemocracy field one of its biggest losses in their district council elections. We could say that in Macau democrats risk becoming their own worst enemies. In the end, it is curious that the most traditional associations were the first to change their ideas on labour importation – a shift that might have helped the government to re-evaluate a wrong orientation, while looking for a better balance between local and imported workers. Better late than never.

DECEMBER 2011

VOL.1 Nº92

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

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

Executive Director Business Development Luis Pereira pereiraluis@macaubusiness.com

Senior Analyst José I. Duarte jid@macaubusiness.com

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

Europe Bureau Paula Joyce paulajoyce@gmail.com

Special Correspondent Muhammad Cohen info@muhammadcohen.com

Beijing Correspondent Maria João Belchior

Contributing Editors Alexandra Lages, Christina Yang Ting Yan, Derek Proctor (Bangkok), Filipa Queiroz, Helder Beja, Joana Freitas, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lia Carvalho, Lois Iwase, Luciana Leitão, Ray Chan, Sara Farr, Sara Silva Moreira, Sofia Jesus, Steven Chan, Tiago Azevedo 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, Richard Whitfield, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang Advertising Xu Yu, Irene irene@bizintellingenceonline.com

Advertising Agents Bina Gupta bina@macaubusiness.com

José Reis

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Manila Correspondent Max V. de Leon

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Translations PROMPT Editorial Services, Poema Language Services Ltd, TLS Translation and Language Services

Art Directors Connie Chong, Luis Almoster

Agencies AFP, Lusa

design@macaubusiness.com

Exclusives Gambling Compliance, Hoje Macau, Project Syndicate

Assistant to the Publisher Weng Fung

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

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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.

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

15 15

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

Auto-pilot leadership

Macau has a cabinet that hides behind public consultations and “scientific administration” to avoid making decisions. Instead it acts as a day-to-day management committee

NO SURPRISES. THE 2012 POLICY ADDRESS failed to bring any major breakthrough. The speech delivered last month by chief executive Fernando Chui Sai On fell flat in tackling Macau’s major headaches: inflation, housing, transportation and welfare. There was no significant new measure announced, aside from hiking several grants that were already in place. Worse still, Mr Chui’s speech was at times unclear and lacking in sense. The highlight from the policy address was a review of the electoral systems for both the chief executive and the legislative assembly. But Mr Chui was quick to add that his cabinet had no concrete ideas on which changes would be put forward or even if change was required. It would instead listen “carefully” to the population. The cash-bloated government also lacks ideas when it comes to solving the issue of a pay rise for civil servants. Inflation peaking at a three-year high or the growing competition from the private sector for skilled workers seems not to be inspiration enough. Instead, officials will create a Civil Service Pay Council to “scientifically” set up a pay adjustment mechanism for civil servants. Curiously, Mr Chui did not need to consult a think-tank when it came to wage policies in the private sector. He was clear-cut in calling on private companies to raise salaries so workers can catch up with the city’s economic development and deal with rising inflation. Is that a double standard? The chief executive also used his address to announce relaxed thresholds for homeownership scheme flats that would mean 80 percent of Macau households would be eligible. He did not clarify the actual number of families that the government expects to live in these homes. Alongside the policy address, the government also presented next year’s budget. Mr Chui and his cabinet should be

pleased that no one seems to take the document seriously, otherwise it would be incredibly damaging for Macau.

Budget calculus

The budget predicts the territory’s gaming industry will contract. The government is expecting to take MOP85 billion (US$10.6 million) in direct taxes from gaming next year. The forecast is less than it will collect this year, extrapolating from the latest data available for the first 10 months of this year. The forecast is in contrast to an industry consensus that Macau’s casinos will post yearon-year growth of up to 20 percent in 2012. It is understandable that officials take a conservative line in estimating gross gaming revenue. It is a volatile industry and impacted on by external factors over which the government has no control whatsoever. What is less understandable is that year after year bureaucrats will not even risk a proper estimate. It is a serious problem if the government cannot accurately predict its own revenue but it is far worse that it cannot properly estimate its spending. Here, the city faces a problem almost unique worldwide: it is unable to spend what it budgets. By the end of October, the government had spent just 58.9 percent of what it had budgeted. It was a similar story last year and the year before. Overall, both the policy address and budget give the feeling of a government that is afraid of politics. Macau has a cabinet that hides behind public consultations and “scientific administration” to avoid making decisions. Instead it acts as a day-to-day management committee. Macau needs more. The territory is desperate for a group of visionary leaders capable of grabbing the wealth created by the casino-led economy and putting it to good use. This policy address once again proves that Mr Chui and his cabinet are not up to the task. DECEMBER 2011

Recently, after dinner, I was waiting for a taxi at the stand in front of the old Lisboa. Suddenly, a taxi stopped a few metres before and asked people where they wanted to go, ignoring those standing in the line. After seeing this happen a few times, I could not handle it any longer. I stood in front of the taxi while telling the couple the driver was trying to pick up, to wait in line. Eventually the people left and the driver stepped out in disgust. We argued; he started to shove me and tried to intimidate me. I stood my ground and hit his taxi with an open palm, causing no damage. Eventually, the police officers standing by took us both to the station. I declined to press charges but insisted on making a complaint. This has not been my first run in with Macau taxis. In August I caught a taxi in the early hours of the morning and paid the fare of around MOP60 using a MOP500 (US$62.5) note. The taxi driver purposely counted one of the MOP100 notes twice and then handed me the cash. I didn’t pick up on it until I counted the change

Photo: Luís Almoster

Taxi bullying

and then confronted the driver who realised the game was up. During the day, the drivers are generally more polite. But as soon as 5pm rolls around, drivers change. They drive around asking people their destination before choosing to take them because they are “changing shift”, their manners become appalling, they are insulted when you only

want to go on a MOP25 ride and passengers need to be careful that they are not being taken the longest route. I agree there is a lack of taxis available at peak times but I feel the cause of this is zero management. I have lost count of how many times it has taken me ages to get a taxi, being told over the hotline that there are none available, then drive past

a casino to fi nd a cue of 50-plus waiting outside. I for one don’t feel you should be increasing fares for a service that doesn’t exist. As a resident I’m fed up with the lack of public transport. It’s substandard and has no regulatory authority that is concerned about residents or tourists. Michael Keen

Corrections In our November issue, the article “Not feeling the pinch” on page 77 misstated Wenzhou as the capital of Zhejiang province. Although Wenzhou is indeed located in Zhenjiang province, the region’s capital is Hangzhou. In the same issue, the article “Crowds and cash”, on pages 82 to 84 misstated the names of two companies: Foremost In Line Media e Tipografia Lda. (and not Line Media e Tipografia Lda.); and Foshan Shanhu Electric Appliances Co., Ltd. (and not Foshan Shanghu Electric Appliances Co., Ltd.). Also in the November issue, one of the photo captions on page 107, in the article “Helping hand” misstated the name of Diogo Giraldes from EPLD as Diogo Geraldes. On “The Frozen Spy” section, on page 110, the final part of text “Sweet-and-sour scam” is missing. Here is the full story: “Punters, think twice the next time an attractive girl approaches DECEMBER 2011

you. She may be in it for the money. Hong Kong police have uncovered a loan-sharking operation that used a “honey trap” to snare gamblers. The newspapers reported that a Hong Kong man met a girl in an Internet chat room. She convinced him to visit Macau and the pair went to a casino, where he was persuaded to gamble. After losing his money, he was enticed to borrow about HK$180,000 (US$23,140) from loan sharks, which he also lost. With big debts and facing threats from the loan sharks (and of course no more girl), the victim went to the police, who arrested the gang. The lesson to be learned is: gentlemen, with women, your wallet is never safe.” We offer sincere apologies to our readers and the companies involved.

Poster avalanche I don’t understand why every time there is a significant event in Macau, lampstandards are festooned with advertising posters; 50 metres apart, the same thing over and over again! Can anyone explain? One questions what the target market is for these posters. If it’s local people, most of them will know the events already from newspapers and radio, or will remember it if it’s an annual fixture. If it’s targeting overseas visitors, most of them will have left Macau by the time the event takes place or will have planned their activities ahead of arrival and so will not attend. In many places in the world such roadside advertis-

ing is banned as it creates a distraction to drivers. If we must have this type of advertising, then why not tax it to ensure that only really necessary posters are produced? However, the net revenue generation will not be high, as the main perpetrators of this kind of advertising are government and government-sponsored organisations. It would be interesting to know just how much money is spent on this kind of marketing. It is doubtful that the perpetrators will disclose that information but the printers might! Can anyone explain? I don’t understand. Roy Goss

Write a letter to the editor To submit a letter to the editor e-mail editor@macaubusiness.com with the subject “Letters to the Editor”. Letters may also be sent by regular mail to this address: Letters to the Editor, Macau Business, Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No 679 Av Dr Francisco Vieira Machado, Macau. Please include your full name, address and a telephone number for confirmation purposes. Letters should be 200 words or fewer and all are subject to editing.

Macau Business again among IGA Awards finalists For the fourth year in a row, Macau Business is among the finalists of the International Gaming Awards. Macau Business is among the finalists in the Industry Publication/Portal of the Year category. Macau Business is the only non-gaming publication nominated, as well as the only Asian publication. The winners will be announced in London on January 23, 2012.

DECEMBER 2011

MONEY FOR ALL Cash handout scheme to continue in 2012, chief executive announces in policy address

The government will keep the cash handout scheme next year, chief executive Fernando Chui Sai On said last month. He made the announcement while delivering the 2012 Policy Address at the Legislative Assembly. His speech didn’t bring groundbreaking news, aside from raising several social subsidies. For gaming, there were no major announcements (read more in our gaming section). Mr Chui announced next year’s cash handout will be MOP7,000 (US$875) for each permanent resident while non-permanent residents will get MOP4,200. This is the same amount residents received in 2011, but divided into two cash handouts instead of one. Mr Chui also said the upper loan limit of the government-backed small and medium enterprises assistance scheme would be increased to MOP600,000 from MOP500,000. He called on employers to raise employees’ wages in 2012, but announced no salary increase for civil servants. Instead, the government will study the establishment of a “fair, independent and scientific pay adjustment mechanism” for public servants. Mr Chui said the electoral system for both the chief executive and the legislative assembly will be reviewed, but announced no concrete reforms. For next year, local authorities are expecting to rake in MOP85 billion (US$10.6 billion) in revenue from direct taxes on gaming. Officials say they are forecasting the sector to post an average monthly gross gaming revenue of MOP20 billion for 2012. This is a conservative estimate: the current monthly average for 2011 stands at above MOP22 billion. For 2012, the industry consensus is that local casinos will post a year-on-year growth of 15 to 20 percent. Estimated government expenditure for 2012 stands at MOP77.4 billion while revenue is projected to go up to a record MOP115.2 billion.

CLOSER TO SHENZHEN The Macau and Shenzhen governments last month signed three cooperation agreements to enhance mutual support in several areas. These cover areas including culture and creative industries, tourism and economics and trade. One of the aims of the agreements is to tackle tourism disputes involving mainland tour groups visiting Macau. “This would further foster healthy development of tourism between the two regions,” said Francis Tam Pak Yuen, secretary for economy and finance.

CTM AND CISCO INK DEAL Macau-based telecom operator CTM and IT company Cisco announced last month a partnership on cloud computing services. Donald Shaw, vice president of sales and marketing of CTM said, “the collaboration between CTM and Cisco lays a solid foundation for Macau to march towards a new era of cloud computing.” Mr Shaw added that by combining the strengths of both parties, CTM is looking to provide customers with a comprehensive range of cloud based value-added services with greater security, reliability and flexibility.

EFFIE CHINA AWARDS IN MACAU Effie China is showcasing the 2011 Effie China award winning entries in Macau. The exhibition at One Central lasts until December 14. The objective is to educate and raise the standard of the marketing and advertising industry. The Effie awards are given yearly and honour the most effective marketing communication ideas. Today there are over 40 national and regional Effie programs worldwide.

DECEMBER 2011

UM’S NEW CAMPUS MORE EXPENSIVE Construction budget increases 50 percent, to almost MOP10 billion

The budget to build the new campus of the University of Macau on Hengqin Island has soared by 50 percent to MOP9.8 billion (US$1.2 billion). The price includes the tunnel connecting Macau to the campus. The secretary for transport and public works, Lao Si Io, made the announcement after visiting to the construction site. According to Mr Lao, the budget increase is due to changes in the campus’ design, inflation and the appreciation of the renminbi. The government pledged in a press release that there wouldn’t be any new increases in the budget. The new campus is expected to be ready by December 20, 2012.

COMMERCIAL REGISTRY TO BE REVAMPED The government has finished a bill aimed at revising the commercial registry regime. The goal is to upgrade the regime, creating a legal framework to allow for its computerization. The bill now needs to be approved by the Legislative Assembly before being enacted.

DECEMBER 2011

CRIMES INCREASE The number of crimes committed in Macau in the first nine months of 2011 went up by 5.9 percent, to almost 9,200. Thefts cases rose by almost 16 percent to around 3,300 cases. The secretary for security, Cheong Kuoc Vá, said the increase in crimes was related to the growth in the number of tourists and imported workers. He stressed that overall Macau is still a safe city.

MACAU’S FIRST CHINESE JUDGE PASSES AWAY Court of Final Appeal judge Chu Kin – the first ethnic Chinese appointed as a judge during the Portuguese administration in 1996 – died last month, at the age of 42. Mr Chu suffered severe brain damage from a car crash in the mainland earlier in August. The accident had already forced his compulsory retirement due to permanent incapacity.

DECEMBER 2011

CASH FILL UP Government injects MOP700 million into Air Macau

An Air Macau shareholder meeting last month approved the injection of MOP700 million (US$87.5 million) in cash in the company through an increase in issued share capital. The restructuring process raises the airline’s equity to MOP442 million, involving the issuing of 420,420 new ordinary shares with a nominal value of MOP100 each and a premium of MOP1,565 per share. The increase in the issued share capital of Air Macau was exclusive to the government. With the capital injection, the government becomes Air Macau’s second biggest shareholder, with 520,420 ordinary shares or 21.5 percent. Air China still controls the company. Air Macau says the capital injection will allow the airline to upgrade its aircraft fleet and improve its facilities and staff training. This is the second capital restructuring process for Air Macau in the past two years. The company posted a profit of MOP230 million in 2010.

NEW COMPANIES UP A total of 850 new companies were incorporated in the third quarter of 2011, up by 8.7 percent year-on-year, the Statistics and Census Service said. The majority of the new incorporations are operating in wholesale and retail (341), business services (144) and construction (96). Almost 60 percent of the new companies were established solely by Macau shareholders, while 106 were joint ventures between local shareholders and business people from other countries or regions. In the third quarter of 2011, the number of companies in dissolution totalled 125, of which 37 were operating in wholesale and retail, and 25 in business services.

BANKS EMPLOYING MORE The banking sector in Macau employed a total of 5,200 people at the end of September, up by 7.8 percent year-on-year. According to data from the Statistics and Census Service, in September, average earnings (excluding bonuses and allowances) of full-time employees amounted to MOP19,900 (US$2,488), up by 5.7 percent compared with a year before. Average earnings of directors and managers stood at MOP40,760, up by 3.8 percent year-on-year, and that of bank tellers increased by 6.5 percent to MOP11,540.

DECEMBER 2011

HELLO-JOBS.COM LAUNCHES APP Hello-jobs.com has just launched what it dubs the fi rst mobile jobs app in Macau. Through it, users can access the company’s job database, as well as job market information. The app is available for iPhones and Android-powered smart phones, both in Chinese and English. The company also created a Macau Employee Job Happiness Index – users can vote thorough the app.

DECEMBER 2011

SHOPPING SPREE Macau posted a new all-time high for retail sales in the third quarter of 2011, with watches, clocks and jewellery leading the way in terms of value

MOP10.59 billion The value of overall retail sales in Macau from July to September, beating the previous record of MOP10.03 billion established in the first quarter of 2011. For the first nine months of the year, the value of retail sales spiked to MOP30.43 billion

38%

The year-on-year increase in value of overall retail sales in the third quarter of 2011. All major categories posted two-digit growth rates. Quarter-on-quarter, the value of retail sales was up 8 percent

MOP2.70 billion The value of retail sales of watches, clocks and jewellery from July to September. The figure was up 28 percent year-on-year. Leather goods sales soared by more than 50 percent, to MOP1.18 billion

32%

Quarter-to-quarter jump in the value of retail sales of motor vehicles from July to September, to MOP771 million. For the first nine months of the year, the value of retail sales of motor vehicles reached MOP2.02 billion

MOP1.93 billion The amount people spent on shopping at supermarkets in the first nine months of 2011. The amount was up by 23 percent year-on-year

25%

Retailers who anticipate that sales volumes will decrease quarter-to-quarter in the last three months of 2011. Concurrently, 32 percent predict an increase in retail prices

DECEMBER 2011

WORKERS EARN MORE

Median monthly employment earnings in Macau stood at MOP10,000 (US$1,250) in the third quarter of 2011, the Statistics and Census Service said. The figure was up by MOP400 or by 4.2 percent quarter-toquarter. Compared with one year ago, median monthly employment earnings went up by MOP1,000 or 11.1 percent.

CREDIT CARDS UP

The total number of personal credit cards in circulation in Macau stood at 503,000 at the end of September, an increase of 6.4 percent over a quarter ago, the monetary authority said. The number of renminbi cards continued to soar, standing at 52,400, a 15.5 percent jump quarterto-quarter. From July to September, the credit card turnover rose 8.2 percent quarter-to-quarter to MOP2.5 billion (US$313 million).

EXTERNAL LOANS DECREASE

External loans decreased 3.8 percent month-onmonth in September to MOP147.8 billion (US$18.5 billion), the monetary authority announced. In the opposite direction, domestic loans to the private sector increased 2.4 percent on a monthly basis to MOP164.9 billion. Meanwhile, total deposits with the banking sector grew 0.5 percent in September from a month earlier to MOP391.3 billion.

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

Alternative awards for excellence THE NOBEL PRIZE, OSCARS, EMMYS, BAFTAS AND PULITZERS – THEY AREN’T NEEDED IN MACAU WHERE WE HAVE OUR OWN HONOURS t is the season of goodwill and time for the end-of-the-year awards. What a wonderful prize-giving event that could be for Macau. Looking back over the year, here is my list of awards and prize-winners.

FOR BRAVERY Gold award: The head of the secretary for security’s office, for declaring in the middle of the year that “so far, Macau’s system [for handling human trafficking] has worked well”, in spite of there being fewer than five cases prosecuted since the middle of 2008. Silver award: The director of the Office for Personal Data Protection, for saying that the rise in the number of investigations it carried out from 47 in 2009 to 63 last year showed “that our public awareness campaigns are effective”. What public awareness campaigns were those? Bronze award: The government, for giving two cash handouts to all Macau citizens while neglecting to act to reduce structural inequality.

FOR INGENUITY The government’s greening of Macau, for making many of its few green areas inaccessible to the public by creating them in the middle of roundabouts, in central road dividers and on the verges of major roads.

FOR ARCHAEOLOGY The government, for its insatiable appetite for digging, preferably roads, pavements, roundabouts and walkways.

FOR ENDEAVOUR The government, for attempting to expand and diversify the economy while enforcing a restrictive labour law and processing labour and immigration paperwork at snail’s pace.

FOR INVISIBILITY Hengqin Island, for being so close to Macau, yet managing to remain out of sight for most of the year because of air pollution.

FOR A SENSE OF HISTORY Macau’s public security police, for continuing the medieval practice of parading suspected criminals in black hoods and handcuffs in front of the media and the public.

FOR TIME TRAVEL The throwback award goes to the Education and Youth Affairs Bureau, for going back decades to the time when many countries stopped kindergarten classes from setting formal examinations that children would pass or fail and stopped compelling “failing” children to repeat a year, and for supporting this ban as current educational policy.

FOR NONSENSE The director of the University of Macau’s Educational Research Centre, for reportedly saying: “Parents of children who were born post-1980s don’t really care how their children perform in school, whereas this younger generation [parents who had children post-1990s] is completely different.”

FOR EASING TRAFFIC Macau’s new bus company, for introducing 245 new buses on the city’s already highly congested roads.

FOR NANO-IMAGING Macau’s proposed infrastructural transport strategy.

FOR RAPIDITY The consolation prize goes to the government, for starting to discuss the rapid transit (or light rail) system in 2003, deciding in 2006 to build it and, five years later, still giving no appreciable indication of when it might materialise.

FOR SIGNPOSTING Galaxy Macau, for making it virtually impossible to find its public car park, and for requiring visitors to enter the building by what could be mistaken for the tradesmen’s entrance.

FOR AFFRONTING REASON The prize is jointly awarded to the managing director of casino operator Sociedade de Jogos de Macau, for reportedly saying a “3 percent growth [rate for live gaming tables] a year is reasonable” without giving any reasons; and to the secretary for economy and finance, for his comment that the government’s objective is to promote “healthy growth” of the gaming industry without giving any reasons why a 3 percent growth rate is healthy.

FOR AN INTERESTING PARADOX Macau, for having record GDP growth, in the top ten in the world, while Caritas in Macau is expecting that its food bank will have to help feed 6,000 of the region’s citizens over the coming two years.

THE BOOBY PRIZE FOR WEATHER FORECASTING The government, for forecasting sunshine in its government, which did not seem to happen.

FOR EYESIGHT The government, for seeing without vision. Bring on the awards, the tiaras, the handshakes and embraces, the tear-soaked speeches, the thanks to families and friends, the backslapping and toasting, and the victory parties that last long into the night.

DECEMBER 2011

Joyful feasts

Celebrate the holiday season at Mandarin Oriental, Macau with an array of fine cuisine and unique entertainment

hether Christmas or New Year’s celebrations, spoil yourself at Mandarin Oriental, Macau. Scrumptious menus orchestrated by Chef Dirk Haltenhof will be available in Vida Rica Restaurant and Bar and Lobby Lounge, providing holiday goers with the best delicacies in town. There will also be plenty of exciting activities to ensure memorable moments in the company of your loved ones. For Christmas Eve, the Mandarin Oriental team is offering a special six-course set dinner menu sure to delight the most discerning customers. Featuring a unique selection of international treats, even Santa Claus won’t be able to resist: he is scheduled to make a special appearance ahead of starting his long journey to deliver gifts to children around the world. Luckily, Vida Rica Restaurant guests will be on the top of Santa’s list, with Christmas presents and photo opportunities for all. After all the joy and laughter of the previous night, no one is expected to wake up early on Christmas Day. Thoughtfully, Vida Rica Restaurant will be featuring a special brunch buffet, offering a series of season blockbusters and lots of sweets! And kids, keep your eyes open for Santa. For the evening, a lavish, one-of-a-kind four-set dinner menu will round up the festivities. Christmas also means chocolate, chocolate and more chocolate.

DECEMBER 2011

To indulge guests in this temptation, the Vida Rica Bar will be featuring a special smorgasbord, blending together two of its weekend signatures – the tapas and chocolate buffets. The chocolate buffet will satisfy even the sweetest tooth with a chocolate fountain, chocolate cakes, mousse cakes, macaroons and cooked-to-order soufflés. The delectable tapas buffet includes Portuguese delicacies and a selection of European and Asian delights. The afternoon promotion will be presented from December 24 to 26, plus an exceptional running on the evening of Christmas Eve. The Christmas spirit will also take over the Lobby Lounge,

Sponsored Feature

Learn with the stars

side from financially assisting those in need, Sands China Ltd. diligently works to turn the dreams of the city’s youngest into reality. This is what happened back in August, when highprofile pop stars Show Luo and Sammi Cheng spent time backstage with some of Macau’s youth before rocking the stage at the Venetian Macao Anniversary Concert at the CotaiArena. The groups representing the delighted youngsters were the Make-A-Wish Foundation, the Fuhong Society of Macau and the Association of the Parents of the Mentally Handicapped of Macao. A similar goal was behind the basketball clinic hosted by NBA superstar Kobe Bryant in September. For 30 teenagers from the Macau-China Basketball Association U20 Training Team, it was their lucky day, as

Sammi Cheng with guests from the Association of the Parents of the Mentally Handicapped of Macao

and since then Sands China Ltd. has contributed a total of MOP700,000 to its activities.

Eye-opening experiences The Sands China Care Ambassador Programme also aims to increase awareness and understanding of physically impaired individuals in Macau. In September, 30 ambassadors participated in a sign language workshop conducted by hearingimpaired mentors. “I’m amazed at how much I learned from this workshop,” said one of the participants. “I had never stopped to really think about what life is like for the hearing-impaired in Macau, and now I have such an appreciation

they got a chance to sharpen their basketball skills with the 13-time NBA All-Star and 2008 Olympic gold medallist. The one-hour clinic was sponsored by the Venetian Macao and was held at the CotaiArena. One month later, Sands China Ltd. did it again. Eleven junior golfers from the Macau Golf Association had the opportunity to meet with and learn from four top pros. World number two Lee Westwood, U.S. Open winner Rory McIlroy, Ryder Cup hero Ian Poulter and Chinese number one Liang Wen-chong were all on hand to demonstrate proper technique and to take photos with the excited young golfers. A two-hour golf clinic followed, delivered by coaches from the Butch Harmon golf school, to further hone the skills of the young devotees of the sport.

Kobe Bryant with players from the Macau-China Basketball Association U20 Training Team

of not only the daily challenges they face, but also of their ability to overcome them. It was really inspiring and eye-opening for me.” Sands China Ltd. has a history of contributions and partnerships with the Macau Deaf Association. The company has financially supported the group since 2005, with a total contribution amount of MOP300,000. In August, 40 Macau Deaf Association members and their families were also invited to the Ice World exhibition as part of the Youth Volunteers Association of Macao community outreach activity, “One Day Volunteer 2011”. The latest activity by the Sands China Care Ambassador Programme took place just late last month. Macau Special

Olympics members and their families were treated to a fun day out at the Macau Science Centre, followed by a buﬀet dinner at the 888 Gourmet Place restaurant at Sands Macao. The activity was aimed at helping to develop the social and communication skills of Macau Special Olympics members through interactions with the Sands China Care Ambassador volunteers. “Every time I participate in one of our Sands China Care Ambassador activities, I’m glad I did,” says one of the Sand China Care Ambassadors. “The smiles on the faces of the Macau Special Olympics members and the appreciative hugs are so rewarding for me.” DECEMBER 2011

60 BENIGNO S. AQUINO PRESIDENT OF THE PHILIPPINES

The Philippines joins the Asian race THE CURRENT FILIPINO ADMINISTRATION IS COMMITTED TO TRANSFORMING A COUNTRY WHERE NICE GUYS FINISH LAST INTO ONE WHERE THOSE WHO DEVIATE FROM THE STRAIGHT AND NARROW FACE PUNISHMENT FOR THEIR CRIMES n 1980, my father arrived in the United States to undergo a heart bypass, due to the rigors of his imprisonment by the dictatorship of Ferdinand Marcos. The dictatorship offered him a reprieve, but, true to its nature, one dependent on its whims. Having already been condemned by a kangaroo court to death by musketry, my father refused to hoist a white flag. “The Filipino,” he insisted, “is worth dying for.” Three years later, my father went home, not to die, but to infuse new life into the demoralized ranks of the opposition to the dictatorship. His assassination upon his arrival at Manila airport became the ultimate proof of the sincerity of what he had proclaimed throughout his life. In 1986, my countrymen peacefully defied Marcos’s tanks and demonstrated their faith in themselves. Marcos fled and democracy was restored without bloodshed. My mother, who then became President, also had an enduring message: the democracy that we had regained at such a high price could be ensured only by a vigorous commitment to making its institutions work. In 2009, my countrymen again took to the streets to accompany my mother to her final resting place. This massive expression of solidarity evolved into an effort to draft me to run for the presidency in 2010. At the polls, my countrymen conferred a solemn mandate on me to make democracy the means for eliminating corruption and alleviating poverty.

Food security first Our administration is committed to transforming a country where nice guys finish last into one where those who deviate from the straight and narrow face punishment for their crimes. Our goal is to empower citizens to demand the rule of law, regardless of who is in power. My colleagues in government are expected to demonstrate this by means of sustained reforms that foster meritocracy, transparency and accountability. We started with the National Food Authority, a government corporation tasked with ensuring an adequate supply of rice. From 1972 to 2000, the National Food Authority accumulated 12.9 billion pesos (MOP2.38 billion) in debt. Within a year of taking office, my predecessor increased the National Food Authority’s debt to 18 billion pesos. In the course of the next eight and a half years, her administration imported much more rice than was needed, resulting in 177 billion pesos in debt by the time she stepped down. In a shift from the illogical import policy of the past, we focused

The Philippines reopened for business under new management only a little more than a year ago. It is faring very well – and is set to become increasingly profitable

DECEMBER 2011

our energies on revitalizing rural irrigation, which boosted the first dry-season crop yields. This year, our government will import 64 percent less rice than in 2010. My father taught me that the most important freedom is freedom from hunger. Without food security, individuals can have no chance of achieving social mobility. That is why we are investing in our fellow citizens by means of a conditional cash-transfer programme, called “Pantawid Pamilya” in Tagalog, which is patterned after Brazil’s Bolsa Familia. We are also providing cash assistance to eligible poor families on the condition that pregnant mothers and children avail themselves of preventive health care, and that children regularly attend school. This programme already covers roughly 2.3 million poor families, providing them with yet another key to social mobility. Mobilizing resources for these programmes depends on cutting wasteful programmes and rooting out corruption in our bureaucracy. One agency where large-scale graft and corruption was traditionally rampant was the Department of Public Works and Highways. By instituting open, competitive and transparent bidding, the department has saved 2.5 billion pesos from 3,692 projects nationwide in the past year. We expect 6 to 7 billion pesos in savings by the end of this year, which can be used for other high-priority development projects. Back to business To promote fiscal transparency, our Finance Department has created a website called “Pera ng Bayan,” or “The People’s Money.” It allows the public to report tax cheats, smugglers and crooks anonymously. The government likewise subjects officials to lifestyle checks and vets their statements of assets and liabilities to find out if what they have acquired is commensurate with their declared income. These campaigns are yielding results. Sixty-seven tax-evasion cases and 43 smuggling cases, with claims totalling more than 26 billion pesos and 58 billion pesos, respectively, have been filed against groups and individuals. But it is not enough to be efficient and honest in public spending. We must also attract foreign investment, despite the difficulties facing Europe, the U.S. and Japan. Our economic diplomacy has three key objectives, one of which is to secure more markets for our exports and enticing more tourists to visit the country. Our diplomacy is also focused on protecting the wellbeing of the roughly 10 million Filipinos working overseas. But attracting investment to create jobs at home and ease poverty is the best way to ensure that our countrymen are not forced to go overseas in the first place. Investment has been coming in, but more is needed. Our Business Process Outsourcing industry is now the second largest in the world, behind India, with revenues of US$8.9 billion (71.2 billion) in 2010 rising to a projected US$11 billion in 2011. The Philippines also ranks fourth in the world in terms of shipbuilding. Our sound fiscal management has been widely recognized, with all of the major credit ratings agencies upgrading the Philippines within our government’s first year. And the World Economic Forum ranked us 75th in its latest Global Competitiveness Report – a tenspot jump from last year and the Philippines’ highest ranking since it entered the survey. The Philippines reopened for business under new management only a little more than a year ago. It is faring very well – and is set to become increasingly profitable.

Facing up to the future DECEMBER 2011

Unchanging of the guard As the Macau SAR celebrates its 12th birthday, many senior officials are also marking their 12th year in office. But some observers say political rejuvenation is in the offing BY ALEXANDRA LAGES

he city’s elite is getting ready to mark one more anniversary of the establishment of the Macau SAR. If one looks carefully, most of the faces in the front row at the official celebrations will be the same as those that were there for the handover ceremony. In the first 12 years of the Macau SAR, the city has known only two chief executives: Edmund Ho Hau Wah, from 1999 to 2009, and now Fernando Chui Sai On. In the cabinet, three secretaries have been in office since day one of the Macau SAR: secretary for administration and justice Florinda da Rosa Silva Chan, secretary for economy and finance Francis Tam Pak Yuen and secretary for security Cheong Kuoc Vá. Mr Chui has been also in the government since the handover. He held the role of secretary for social affairs and culture for almost 10 years. Some observers say having the

DECEMBER 2011

same people heading the government for so long is unhealthy. They regularly demand a cabinet reshuffle. Others stress that the SAR is still young and that, therefore, officials need time in office to improve their skills. They add that the experience of the existing crop of officials should not be wasted. After the first 12 years of the new political structure, there have been just two new cabinet members. Cheong U, the former commissioner of the Commission Against Corruption, was appointed as secretary for social affairs and culture in 2009, succeeding Mr Chui. In 2007, Lau Si Io replaced secretary for transport and public works Ao Man Long, who was arrested, tried and found guilty of corruption. Political analyst Camões Tam Chi Keung says it is of the utmost importance to replace the three secretaries who have been in office for more than 10 years. “They have stayed longer than

[former chief executive] Mr Ho. This is quite ridiculous. Why do some government members stay in their position longer than their master?” he says.

Rising star Until recently there was some expectation that Mr Chui would reshuffle his cabinet next year, increasing the number of secretaries but nothing has been announced and there was no mention of change in his 2012 Policy Address last month. Changes in the leadership in Beijing are due next year, further reducing the likelihood of a shake-up in the government here in the short run. Political analyst and University of Macau academic Eilo Yu Wing Yat does not believe the government is reluctant to change. He points out that it is increasing training for civil servants and trying to identify new talent within the public administration. Alexis Tam Chon Weng, who is in charge of the

63 chief executive’s office and the government spokesman – among other things – is one rising star. The reasons that the government has remained largely unchanged for 12 years are not internal but external, Mr Yu says. “It’s difficult to recruit suitable people for senior positions because there has been a lot of political and social pressure. There are capable people but they don’t feel attracted,” he says. Eric Sautedé, a political scientist at the University of Saint Joseph, sees things differently. The elite are nearing a crisis point, “less because of a lack of talent and more because of a deficit of openness,” he says. “Ultimately, this could put at risk both the economic development of the city and the social harmony of the community.”

Fifth way Mr Sautedé believes there are welltrained people in the public administration who are ready to be promoted to high positions but that there is a problem with the structure of the political establishment.

“If you look at the structure of the highest layer of government, nobody holds enough power or is independent enough to upset the delicate balance that exists between what is often referred to as the four families of Macau,” he says, referring to the clans of Mr Ho, Mr Chui, Stanley Ho Hung Sun and the vice-chairman of the National Committee of the Chinese People’s Political Consultative Conference, Ma Man Kei. “My belief is that political salvation will somehow have to come from the rise of a fifth family or at least a coalition of interests.” The obstacle to change is a lack of qualified human resources, according to indirectly elected legislator Leonel Alves, who represents the professional services sector. “Macau is a small place and short on human resources, so experience is an important asset and must be well used,” he says. He also stresses that being a senior official is no walk in the park. He thinks there should be more training for future leaders. In the Legislative Assembly, rejuvenation is happening more quickly,

especially among the directly elected members and those appointed by the chief executive. Jason Chao, 25, is the president of the outspoken New Macau Association, which won three seats through direct election, although he himself narrowly missed winning a seat. Mr Chao is a rarity in the ranks of leaders of local associations, most of which are headed by middle-aged or elderly people.

Platform planking He acknowledges that more youth groups are entering the public arena. But the younger generation is disinterested in pursuing a career in social activism or in the legislature because of a “weak civil society and the lack of opportunities outside the pro-establishment camp,” he says. Mr Chao says that only if you work for a pro-government organisation do you have a chance of being appointed to a government committee. “Outside the pro-government camp, the reality is that, except the 12 directly-elected seats in the legislature, there is no other

DECEMBER 2011

64 way to help you climb the power ladder gradually,” he says. “In Hong Kong, the district council election that took place in early November elected many new district councillors in their 20s or 30s. The district councils are stepping stones for the younger generations to serve the community, gain experience and build their reputations.” Macau has community-level consultative committees but their members are not directly elected. The University of Saint Joseph’s Mr Sautedé agrees there should be more ways for young people to engage politically. He remarks that the absence of formal political parties makes it hard for youngsters to gain early experience in politics. Yet young people do seem motivated

to participate. New youth organisations, formal and informal, have mushroomed in recent years. These groups use Web-based social networks to organise themselves. At times, they have taken their dissent onto the streets, as it had happened recently with a “planking” protest against the CTM monopoly’s Internet access charges. However, the University of Macau’s Mr Yu doubts that they are yet the kind of stuff that future leaders are made of. The problem is not only a lack of new blood but also a lack of new ideology, says the president of the Macau Civic Power association, Agnes Lam Iok Fong. An assistant professor in the University of Macau’s Department of Communication, Ms Lam stood in the 2009 Legislative Assembly elections, heading a group

of new faces that included artists, civil servants, teachers and social workers, mostly from the middle-class. None were elected.

Young conformists “What is actually happening in Macau is that we are not coping with the development here, and we need to change the way of governing and the way of running political groups,” Ms Lam says. “More and more associations are now giving room for young people and there are young people willing to take part in politics.” However, Ms Lam wonders whether local associations are really pressing for the necessary changes, and suspects that youngsters may just be conforming to the status quo. Although Mr Yu says local associations are grooming new leaders, he doubts that there will be big changes in the 2013 Legislative Assembly elections. He says politics in Macau is static. “People don’t change their preferences and that is why the faces are more or less the same.” Mr Sautedé is confident politics is starting to evolve, with the growth in the ranks of the middle class and young professionals. “We can see signs that some associations are becoming more challenging towards established institutions, thus following a path where they could rapidly transform into political platforms or at least think-tanks in their initial stages of development,” he says.

GIVE IT TIME T

he Macau Federation of Trade Unions, which represents 70,000 workers, may be regarded as being pro-government but it has no greying problem, says its president, Chiang Chong Sek. The federation has no shortage of young leaders, he says. Potential leaders have already been identified and are now being coached but it will take time. It is a similar story in other usually pro-government bodies such as the Macau General Neighbourhood Unions Association, popularly known as Kai Fong, he says. Mr Chiang is not worried that most of the city’s main associations are headed by middle-aged and elderly people. What matters to him is know-how. “In politics, age should mean more experience,” he says. “One association should include people from all ages to be healthy. Young people are more creative and active but those middle-aged and senior people have the experience.”

Young enough

Mr Chiang himself joined the Macau Federation of Trade Unions more than two decades ago, when he started work as an engineer for electricity utility CEM. Before becoming president of the association, he was vice-president for six years, on a part-time basis. Now he is full-time. Mr Chiang rejects the idea that most of the actors on Macau’s political stage are too old. “If you look at the Legislative AssemDECEMBER 2011

bly, Lee Chong Cheng, Ho Ion Sang and Chan Meng Kam are very young.” Mr Lee is a member of Mr Chiang’s federation. The younger generation can take part in politics by attending public forums and joining in consultations held by the government, he says. “Our association recommends more young people join those activities to express their feelings and opinions.” Four members of the Legislative Assembly wear the Federation of Trade Unions colours, including two elected indirectly to represent labour, one of them being the assembly’s president, Lau Cheok Va. The star is Kwan Tsui Hang, who has been in the legislature since the time of the Portuguese rule. Ms Kwan originally intended to vacate her seat in 2009 but changed her mind because there was nobody popular enough to replace her. Mr Chiang concedes that his federation should eventually inject new blood into the assembly. “I’m sure we will have new people to join the team. It’s too early to talk about this.” Mr Chiang also thinks it is too early to say if Fernando Chui Sai On should run for a second term as chief executive. And he considers the cabinet a young one, despite three out of the five secretaries having been in office for 12 years. “Everything is young in the SAR, not only the government, but also the civil servants,” Mr Chiang says. “We need to accumulate experience and then smoothly introduce changes. The government is still young and we need to give them time to improve.”

DECEMBER 2011

BY THE NUMBERS 29.7 square km The land area of Macau last year. In 2000, the region was 25.4 square km. The expansion is due to land reclamation, with Cotai almost doubling in size to 6 square km. Coloane is the only district that has not expanded since the handover.

129,500 people The net variation in the number of people living in Macau between 2000 and the end of September 2011. The cityâ&#x20AC;&#x2122;s population is now estimated to be 560,100, the most ever. The population density has increased from 17,000 to almost 19,000 people per square kilometre.

476

The increase in the average of the composite consumer price index for the 12 months ended October 2011, the main indicator of inflation. It was very different in 2000, when Macau was suffering from deflation. Back then, an egg cost MOP0.74. An egg now costs MOP1.19.

3 The number of hospitals in Macau, just one more than before the handover. Only one is public. Since the handover, the number of in-patient beds per 1,000 people has remained at 2.1. The number of doctors per 1,000 people increased to 2.4 at the end of last year from 2.0 in 2000.

The number of motor vehicles per kilometre of public road last year. The figure went up by more than one-third in just 10 years. Last year Macau had 413.4 kilometres of public roads, an increase of 27.5 percent over 2000. The number of traffic accidents rose by roughly 60 percent to nearly 13,200.

22,300

230 percent

312 concerts

The net increase in the number of nonresident workers between the end of 2000 and the end of September 2011, when there were 89,900 of them. Over 52,000 come from the mainland. The hospitality sector (including restaurants) is now the biggest employer of non-residents, giving work to 26,000.

6.8 percent The unemployment rate in Macau in 2000. The figure has since fallen almost without interruption and is now 2.4 percent. Median monthly employment earnings have doubled from MOP4,822 to MOP9,600.

63,400 workers The number of employees in the gaming industry at the end of last year. This is almost five times the number in 2000, when the industry employed around 13,200 people. In between, gross gaming revenue leapt from MOP23.5 billion to MOP189.6 billion.

DECEMBER 2011

5.34 percent

The number of university students at the end of the 2009/2010 academic year. This is three times more than in 1999/2000. Business administration courses are now the most sought-after, with one in every three university students studying in this field.

The number of concert performances last year, almost 50 percent more than in 2000. The number of people attending them grew at an even faster rate, from 105,000 in 2000 to 180,000 in 2010. The number of dance performances jumped from fewer than 40 in 2000 to 170 last year, with the size of the audiences increasing by 800 percent.

1,021 The number of sports clubs in 2010. There were just 661 in 2000. Football dominates, with more than 110 clubs last year. The region had 43,500 registered athletes in 2010, double the 2000 figure. Among the registered athletes last year, almost 5,000 practised Chinese martial arts.

31 percent The net increase in the number of crimes reported between 2000 and 2010. There was a sharp drop in homicides, from 22 to just four, while sexual offences doubled to more than 100. Assaults increased from 1,240 to around 1,830.

SOURCE: STATISTICS AND CENSUS SERVICE

Macauâ&#x20AC;&#x2122;s official statistics give a clear picture of how much and how fast the city has developed since the handover. But the boom has mixed success with growing pains, as the figures show. We chose 12 numbers to highlight the transformation that has taken place in the first 12 years of the Macau SAR

DECEMBER 2011

68 BILL KWOK-PING CHOU ASSOCIATE PROFESSOR OF POLITICAL SCIENCE, UNIVERSITY OF MACAU

A poor student MACAU HAS ZEROED IN ON SINGAPORE AS THE MODEL FOR ITS PUBLIC ADMINISTRATION BUT THE REALITY IS THE TWO CITIES ARE OCEANS APART fter the handover, the Macau government announced it would start looking at Singapore as a model from which to learn good practices in public administration. That led to groups of civil servants being sent there for field studies, while associations were sponsored to make exchange visits to Singapore. The results seem meagre in relation to the amount of money invested. I have a positive impression of Singapore, gathered during my year as a visiting scholar doing research at the National University of Singapore and later during several visits, which lasted for anything between two days and one month. In my opinion, out of all things that the Singapore government does well, the Macau government can do barely any and it has very little chance of ever learning to excel in any of them. Policies to nurture the best candidates for the job are one of the tenets of governance that Singapore cherishes most. Every year the government and private enterprises award scholarships to several hundred high-school graduates to study at the world’s top universities, like Harvard, Cambridge, Yale and Princeton. Those who are not graduates of top universities have a limited chance of being promoted to top management posts in the government or large corporations. In contrast, the Macau government prefers to treat all diplomas as equal in selecting or promoting its personnel. Little importance is attached to the reputation of the university that produced the candidate. Some people with strong background and connections, having obtained their bachelor degrees from low-tier universities in the mainland and master’s degrees from unknown universities in Europe, were hired as senior civil servants immediately. Within few years, they were promoted to leadership positions in the government.

Communication breakdown While the government says the public administration is to mainly follow an open recruitment policy, it was still common (at least until recently) for a “friend” to get a phone call from a government department boss and quickly find himself behind a desk, without having to face any open selection or examination process. In view of such cronyism, few students aspire to be admitted to famous universities abroad, preferring instead to cultivate relationships and their networks of influence, or “guanxi”. During a visit to Singapore’s Lee Kuan Yew School of Public Policy, the chief executive at the time, Edmund Ho Hau Wah, expressed the hope that the school would admit Macau civil servants to study. But the project didn’t go through, because DECEMBER 2011

candidates would have to meet the school’s admission requirements. As long as applicants for civil service positions have insufficient qualifications, the wish to bring the quality of governance in Macau up to Singapore’s standard will remain a comical pipe dream. Singaporeans, especially those that have received a higher education, usually communicate in English. But the standard of English in Macau is appalling – too poor for people to make themselves understood in a simple day-to-day conversation. So I am pessimistic about the results of exchange and study programmes in Singapore.

Gently weep A Singaporean friend, a researcher in Japanese and East Asian politics, told me that he had received a group from a Macau association to discuss several of Singapore’s public policies. On hearing this, I became suspicious and asked: “Why should they meet with you, an expert on Japan, rather than consult the experts in Singapore policies at the Institute of Policy Studies?” He replied that they had probably had to resort to him because the experts at the Institute of Policy Studies spoke only English and the Macau visitors’ command of English was poor. A similar story was told by another friend, an early immigrant to Singapore from Hong Kong, who works at a school for the mentally handicapped. Her school once received a party representing Macau associations. As the visitors could not speak English and the headmaster could not understand Cantonese, she was asked to be the interpreter. Worse, when a group from a Macau association visited Singapore this summer for an evaluation trip, instead of taking the low-cost direct flight, they preferred the A380 deluxe flight, and instead of staying in a three-star or four-star hotel, they checked into the Marina Bay Sands. The Macau government sponsored these associations. Yet nobody from the government has ever shown any concern about the practical results of such visits. To reduce traffic congestion, Singapore tries to make its residents use public transport by making owning and using private cars expensive. It takes less than one year to get permanent residency in Singapore. For greening its landscape, Singapore uses mainly trees with broad leaves, which give shade, reduce the temperature and keep the dust down. And it has enough cleaners to sweep up the leaves should they fall off the branches. Of all these things, which ones could Macau do at all, let alone do well?

DECEMBER 2011

Swings and roundabouts Macau’s closer integration with the Pearl River Delta region brings both opportunities and challenges, experts say BY ALEXANDRA LAGES

purring on the economic integration of Macau with the Pearl River Delta region is one of the desires most often expressed by chief executive Fernando Chui Sai On’s government. Economic integration is also supported by Beijing. It is in the central government’s Five Year Plan for 2011 to 2015, the first to have a full chapter on Macau and Hong Kong. Ground has been broken for several projects, one being the new campus of the University of Macau on Hengqin Island. Other projects are on the drawing board. A string of measures to make it easier for Macau companies to invest across the border have been proposed. The Pearl River Delta transport network is being improved immensely to ease the flow of people and goods. Academics and other observers say integration is inevitable and will bring a lot of benefits to Macau. The big question, they note, is whether the city is up to the many challenges integration will entail. “Regional integration is a way for Macau to better achieve its development objective of economic diversification, with the support of the central, Guangdong and Zhuhai governments,” says Henry Lei Chun Kwok, assistant professor of business economics at the University of Macau. “We could be able to make good use of the resources from the mainland side, for example, land, human capital and technology.” Mr Lei says greater integration will accelerate economic diversification in Macau and make the entire greater Pearl River Delta region a market for the city. Wang Jianwei, who heads the department of government and public administration at the University of Macau, also believes integration will bring benefits. He says it is hard to

DECEMBER 2011

nurture new industries in an economy as small as Macau’s.

Greener grass The director of the Small and Medium Enterprises Association, Kenneth Lei, shares the enthusiasm for integration. He foresees more business opportunities. But he warns that it could further shrink Macau’s pool of skilled manpower. “The shortage of workers may worsen, as part of the local human resources may go outside for career development,” he says. And he adds SMEs are likely to face more competition, as Macau residents may choose to spend their money across the border, where the choices will be wider. The University of Macau’s Mr Henry Lei says Macau must embrace integration wholeheartedly or risk being marginalised. “The territory should make good use of its competitive advantages such as international connections, fiscal strength and experience in the hospitality sector.” He wants Macau to use its knowhow and experience in the meetings, incentives, conventions and exhibitions industry and roll out that knowledge in the mainland. “Zhuhai can supply us with land and human capital to allow sustainable development in this area.” In other fields, Macau is at a disadvantage, the scholar says. “Macau simply has no experience. [But] we could learn from our neighbourhood in the regional integration process.” The SME association’s Mr Kenneth Lei urges Macau enterprises to study the business environment in the mainland, especially the labour, tax and legal aspects, before deciding whether to expand over the border. Joint ventures may be a way around some obstacles, he suggests. However the University of Macau’s

Mr Wang says one hindrance to integration is the slowness of Macau in adapting to changes in the economic environment. “The Macau people need to change their mentality of taking things as they are – to become more proactive and competitive,” he says.

Brown air Émilie Tran, assistant professor at the University of Saint Joseph School of Management, Leadership and Government Studies, draws attention to another issue: pollution. She says integration is likely to mean more urbanisation and so aggravate pollution problems in the Pearl River Delta region. “I believe integration is the natural process for our economic development. I just hope our leaders and interested parties will have the wisdom to look at it from a sustainable development perspective,” Ms Tran says. “That is the real challenge.”

The new campus of the University of Macau on Hengqin Island

Proper planning is needed, she says. “It is possible to limit the impact of pollution in the greater Pearl River Delta region and to have more companies that are into environmentally friendly technologies participate.” Integration is likely to mean keeping the border open round the clock, making it easier for more Macau people to live in Zhuhai but work in Macau. Rose Lai Neng, a real estate expert at the University of Macau, says only good will come from keeping the border open around the clock. It may reduce housing prices in Macau, because real estate is perceived to be cheaper in the mainland, but only in the short run. “The two markets are still different and not really directly substitutable. Simply put, the real estate market will experience more healthy development in Macau, albeit at the expense of higher prices in Zhuhai, boosted by additional demand from Macau,” Ms Lai says.

Keeping the border open round the clock will also benefit the gaming industry, says Union Gaming Research Macau analyst Grant Govertsen. “Access has always been a bit of a problem. If access increases, there will be more visitations,” Mr Govertsen says. He says the massmarket segment of the industry will be the biggest beneficiary.

Tired eyes Mr Govertsen predicts that the codevelopment of Hengqin Island by the Macau and Zhuhai authorities will increase the population just over the border. “It’s going to be more people living across the border. With the propensity to gamble and easy access, all that benefits the [casino] concessionaires dramatically.” On the other hand, the tourism industry will have to persuade visitors to continue to stay overnight in Macau rather than opt for cheaper lodgings

across the border, Mr Govertsen says. “We already have a supply problem. There isn’t enough accommodation for the mass-market consumer. We need more low and medium [accommodation] to keep those tourists in Macau,” he says. He would also like the government to encourage more non-gaming attractions to lure tourists other than gamblers. Integration may also deprive Macau of its uniqueness. Hong Kong faces the same problem, the University of Saint Joseph’s Ms Tran says. She urges the authorities to make efforts to preserve what makes the city different. “It is up to the government and the community to preserve this. To me, identity is a social construction. It is up to Macau to find, along with its economic development and further integration into the Pearl River Delta region, its new identity, mixing old traditions with new values.” DECEMBER 2011

Drowning, not waving

The Macanese continue to search for a new role in the post-handover era, with older community members worried about the preservation of the community’s identity BY LUCIANA LEITÃO

welve years after the handover, the Macanese community is still alive but undoubtedly different. The changes have come not only with the new political order but also with the breakneck economic growth that followed the liberalisation of the gaming industry. The question remains: will Macanese culture survive in the long run, integrated in a city now part of China? Members of the community are divided in their answers. Macanese is the name given to Macau’s Eurasian population: people whose ancestors came from Portugal, China or former outposts of the Portuguese empire such as Goa and Malacca. That combination created a distinct social and cultural identity, with its own creole, patuá – a mixture of archaic Portuguese, Malay, Sinhalese and Cantonese, spiced with influences from other languages. In 2009, the United Nations Educational, Scientific and Cultural Organisation or UNESCO classified patuá as a “critically endangered” language because it had very few surviving speakers, and said that it might be close to extinction. According to UNESCO there were only 50 patuá speakers left in 2000. Before the handover, the Macanese enjoyed a high social status, acting as a bridge between Macau’s Portuguese rulers and its predominantly Chinese inhabitants. Their language skills – many were fluent in both Portuguese and Chinese – made them indispensable in the bureaucracy. Tânia Marques, a 29-year-old Macanese, left Macau in 2000 to study abroad, first in the United States and then in England, eventually graduat-

DECEMBER 2011

ing with a degree in astronomy. She returned in 2007 to find a city that was very different from the one she left. The economic and physical changes were striking and so were the social changes.

Cultural recycling “I felt people were more open and that the Macau community was more mixed, with more foreigners,” says Ms Marques, the daughter of Macau’s last mayor under the Portuguese flag, also Macanese. “It seemed a more international city in terms of the resident community.” Before 1999, Ms Marques was a teenager and was not wholly engaged with the affairs of her community. But as the years went by, a sense of belonging blossomed. Ms Marques says that today, she is more aware of what it means to be Macanese. “You want to participate, because there is a line that joins together the Macanese,” she says. That line has to make up for the absence of a clear definition of what makes a Macanese, Macanese. Each family has its own origins and traditions, making the concept of Macanese hard to pin down. “Some families live more within the Chinese community, while others, like mine, don’t,” Ms Marques says. Returning to Macau also meant resuming the weekly ritual of the family gathering, at which all members sit down for a long, leisurely meal of traditional Macanese dishes. “In our family that is very important,” Ms Marques says. She believes other young Macanese have adjusted to the posthandover reality. Some are active in

73 Macanese associations and making “an effort to know things that not even my father’s generation knows,” she says. “That is recycling. We are doing it differently and the needs are different. We are doing it in our own way.”

Leisure lost

Patuá drama group Dóci Papiaçám di Macau

Macanese food

Miguel Khan left Macau in 1996, when he was a teenager, to study abroad, first in Portugal and then in England. He returned to Macau in 2006. In between, the city nurtured the world’s largest casino industry. “My father had already talked about what was happening in Cotai while I was away, but only when I returned did I realise,” says the 32-yearold Macanese graphic designer. Macau had grown, the gaming industry had been liberalised and, consequently, there were a lot more people living here. The Macanese community had changed, too, he says. The mindset was different: people were no longer as pessimistic as they had been in the years leading up to the handover; they were ambitious and eager to grow. Mr Khan says some traditional gatherings such as the “chá gordo”, a typically Macanese version of English high tea, have suffered changes. He stresses this does not mean the younger generation no longer care about their background. “Anyone who knows their roots is interested in preserving them, but it has to be adjusted to nowadays,” Mr Khan says. Daniel Sousa, 36 years-old, has always lived in Macau. He is a first-hand witness of all the changes the city has gone through. “[The] slow pace that was inherited from the Portuguese is reaching an end,” he says. Before 1999, life was more relaxed. “In the first few years after the handover, it was not so clear, but after the liberalisation of gambling, it changed,” says Mr Sousa, a civil servant. That is not to say that Macanese culture is doomed. He says the authorities have shown an interest in preserving it.

Language problem

Meeting in Macau of Macanese now living abroad

The son of a Portuguese father and a Chinese mother who divorced when he was a child, Mr Sousa feels closer to the local Chinese community but says he cherishes his roots. “I hope to teach

Before the handover, the Macanese enjoyed a high social status, acting as a bridge between Macau’s Portuguese rulers and its predominantly Chinese inhabitants my daughter to speak Portuguese, so that she knows she is a part of the Macanese culture.” Shortly before the handover many Macanese went to Portugal, fearing a future under Chinese administration. As the years went by and their worries faded, some returned to Macau, attracted by the city’s economic growth. Miguel Senna Fernandes is one of the leaders of the Macanese community. The 50-year-old lawyer is also a patuá playwright and heads the creole drama group Dóci Papiaçám di Macau. His late father chronicled the lives of ordinary Macanese in a series of novels. Mr Fernandes acknowledges that the government shows support for his community. The backing comes in the form of grants to Macanese associations, he says. Last month, in his 2012 Policy Address, chief executive Fernando Chui Sai On once again stressed DECEMBER 2011

74 the importance of the Macanese community to the city’s cultural identity. Despite these good intentions, Mr Fernandes says, Macanese face several challenges. “We face a language problem and that is a problem the government has to solve,” he says. He reckons many Macanese usually also speak Chinese but that most are much more familiar with Portuguese. Government inaction over the language problem “leaves a general ill-feeling,” he says. Mr Fernandes believes Macanese have become more united since the handover. “I see the Macanese community increasingly debating its own problems,” he says. And the younger generations are still aware of what it means to be Macanese – although whether they follow Macanese traditions by the book is another matter, Mr Fernandes says. “It all depends on how the parents transmit such knowledge to their children.”

Back to basics “The younger generations have adjusted to the current reality of Macau. We cannot look for the same lifestyle that we had during the Portuguese administration,” says Rita Santos, 51 yearsold, a senior official of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Countries, which is based here. She says the Portuguese language is crucial to the Macanese identity. “I hope the Macanese youngsters continue to speak Portuguese but that depends on the education path their parents choose for them.” Francisco Manhão, 62 years-old, who heads a pensioners association, Apomac, acknowledges that the government has been showing great “friendship” towards the Macanese community. The official support given to meetings in Macau of Macanese now living abroad is one sign of that, he says. But when it comes to stimulating wider use of Portuguese, Mr Manhão says officials should do more. “It still isn’t good enough. It goes against our own Basic Law,” he says. The Basic Law says Portuguese, like Chinese, is an official language. Mr Manhão does not feel able to clearly judge whether the Macanese community has changed. “The Macanese were never united,” he says. The community encompasses DECEMBER 2011

numerous groups and has no universally accepted head. In the political arena, legislators Leonel Alves and José Pereira Coutinho are the most prominent Macanese, but they are political opponents – although they usually avoid direct personal confrontation. Looking ahead, Mr Manhão says it is important to get young Macanese involved in the affairs of the community, and to give them opportunities to shine. Unfortunately, “[older] people don’t want to leave their seats,” he says. If the old guard stays put, Mr Manhão warns, the younger generation is likely to “move away”.

Lone voice

Each family has its own origins and traditions, making the concept of Macanese hard to pin down

Shortly before the handover many Macanese went to Portugal, fearing a future under Chinese administration. As the years went by and their worries faded, some returned

He says young Macanese have more pressing concerns and are not fully aware of the need to protect their own culture. “That would be sad – that, one day, it ends.” Aida de Jesus is the owner of a family restaurant, Riquexó, and at the age of 96 is one of the most treasured figures in the Macanese community. She is not happy with the differences the handover made. “Macau has changed a lot. There are more cars and much more people,” Mrs Jesus says. Today, she says, there are many more Chinese and fewer and fewer Macanese, who were always a minority. She says Macanese traditions are being lost. “Slowly, the Macanese are disappearing. Today, for instance, no one speaks patuá. I do, but I don’t have anyone to talk to,” she says. Mrs Jesus is sceptical about the younger generation, believing they are not really interested in preserving their cultural identity. “They don’t understand anything about being Macanese.” She says there is more mixing with the Chinese community nowadays, diluting what is uniquely Macanese and so making it more difficult to preserve. “Maybe only through the existing associations can you still see a lot of Macanese together,” she says. Macanese cuisine, which she serves at Riquexó, is also in danger of dying out. “My daughters don’t cook. They work and they have no time to cook. I do some cakes and they don’t even want to see them.” Mrs Jesus is trying to preserve her legacy in her recipe books. “When I die, my daughters have it there,” she says.

DECEMBER 2011

76 CARLOTA PROENÇA ALMEIDA ARCHITECT

Seize the day WHY THE RESPONSE TO UNESCO’S REQUESTS ABOUT MACAU’S CONSERVATION OF ITS HERITAGE COULD TURN OUT TO BE A CHANCE TO ENHANCE THE WIDER HISTORICAL CENTRE OF THE CITY ast June the World Heritage Committee of the United Nations Educational, Scientific and Cultural Organisation (UNESCO) expressed for the third time its concern about “the continuing inadequacy of the current management system, the buffer zone and legal provisions, to protect effectively the very important visual and functional linkages between the [Macau] inscribed monuments [in the organisation’s World Heritage list] and the wider urban land and seascape of Macau”. Achieving UNESCO recognition for the city’s historical centre in 2005 was a huge triumph but it also committed Macau to conserving its heritage for future generations by meeting the standards required by UNESCO. However, Macau’s Urban Plan is still being prepared. And while draft amendments to the heritage preservation law were sent to the Executive Council in September, they do not change the list of what must be protected – supposedly because there has been no consensus on the matter. And yet Macau must report to UNESCO on the state of its historical centre and on the progress made in the implementation of its management system. This report must be submitted to the World Heritage Committee within 13 months, by February 1, 2013. Failure to do so could result in the historical centre being removed from the organisation’s World Heritage list. This is not about maintaining or restoring listed heritage and places of interest to tourists, or about beautifying the main routes between the listed structures. Macau already does that well, in accordance with local conservation practice.

DECEMBER 2011

This is about going beyond the material and functional preservation of each listed structure. It is about being able to manage and preserve the wider urban area and the functional and visual links between the listed structures and the urban landscape and seascape of Macau, as expressly required by the United Nations. This is mandatory for all UNESCOclassified sites.

Triple guarantee To do the job of protecting their history, many countries with good records in heritage conservation have adopted management plans, with excellent results not only in protecting sites but also rehabilitating, enhancing, revitalising and promoting them. Their historical centres are defined as places that actively nurture contemporary culture, making them more than just places that preserve historical culture. The management plan for Macau, which the Cultural Affairs Bureau ought to be drawing up right now, must be a precise yet flexible guide on how a site should be managed today and in the future. Management should be a continuous process. The plan should list what actions need to be taken to guarantee the authenticity, integrity and continuity of the site, all of which make its heritage status legitimate. These actions should also foster cultural and social development, and economic growth, making the conservation of the heritage for future generations sustainable. Action should be taken in the fields of research and knowledge, protection and conservation, infrastructure, tourism

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78 and culture promotion, enhancement of social and economic well-being, environmental improvement and sustainability. If its management plan is to work, the government must: 1. Work out how to deal with problems caused by the further development of Macau, particularly problems caused by private interests, bearing in mind that cultural heritage is a unique and irreplaceable common good to which everybody is entitled equal access; 2. Determine the goals to be reached and how to reach them, by soliciting contributions from the widest array of interested parties, public and private, and forging consensus among them; 3. Exercise political will to make a common vision for the historical centre a reality; 4. Inform the community about the plan and involve them in it, so they can understand what it is all about; 5. Decide what actions must be taken, and decide how, when, by whom and with what resources they will be taken; 6. Decide the degree to which actions should be prescriptive, taking into account their purpose and legal constraints; 7. Work out the chances of the management plan succeeding, and increase those chances by employing sustainable practices and increasing heritage awareness; and 8. Monitor the results of the management plan so that it can be adjusted, if necessary.

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can be used for maintenance and repair. Better disseminate knowledge about heritage and cultural issues among students, teachers and local communities. In the field of protection and conservation: Train specialists, in order to increase the quality of restoration work. Set standards for work on heritage structures that stipulate the materials, techniques and colours to be used (including a kind of “colour scheme” for the historical centre). Such work should properly address out-of-place things such as protruding air conditioners, fire fighting fixtures, extractor fan ducts, antennas and railings. Give grants, loans and technical support to owners of private property to renovate facades and roofs, and to improve shop fronts in the historical centre. Protect and enhance intangible heritage like oral traditions, language, literature, music, and other arts and crafts. This intangible heritage is what links the local community to the site. It expresses the local culture and could grow to be a driver of economic activity, to the benefit of all. In the field of infrastructure: Bury cables and wires. Beautify side streets by improving roadways, pavements, street furniture and signposting, and by planting trees.

Adapt or perish What follows is a list of actions taken successfully elsewhere which could be adapted for Macau’s management plan.

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In the field of research and knowledge: Work out what is most valuable about the urban land and seascape by making a morphological assessment, highlighting those features that make the area what it is, by drawing a dynamic perceptual map of the area, and by finding the most important views of the listed heritage – and not only those from the main streets. Study traditional building techniques and materials so they

DECEMBER 2011

•

In the field of tourism and culture promotion: Set standards for heritage signposting and commercial signs in the historical centre, with due regard to local characteristics and tradition. Teach tour guides and others in the tourism industry more about Macau’s culture and heritage.

We stand to gain handsomely from taking such actions. UNESCO’s request to Macau for a management plan is a heaven-sent opportunity to revitalise and enhance the wider historical centre of our city.

DECEMBER 2011

EXCLUSIVE CEO INTERVIEW

DECEMBER 2011

“WE CAN BRING MORE” MGM Resorts International will this month open its first mainland hotel but the company is keeping its eye on Macau, says MGM Resorts chairman and chief executive Jim Murren, who is also MGM China’s co-chairman. In an exclusive interview with Macau Business, Mr Murren reveals that MGM China wants more than just two casino-hotels in Macau and argues that his company is best positioned to deliver the kind of high-standard, non-gaming amenities wanted by the government

BY PAULO A. AZEVEDO IN LAS VEGAS ow anxious are you about government approval regarding MGM China Holdings Ltd.’s land application for Cotai?

Jim Murren – We are highly interested in getting the land as soon as possible because we do recognise that our position in the market is not the one we are accustomed to. We are typically the market leader. Certainly we are dominant in Las Vegas and we have the premium properties in the other markets where we operate, such as in Detroit and on the Mississippi Gulf Coast. MGM Macau is performing extremely well now, after a very slow start. It had a tremendous number of challenges. We have been able to overcome most of them. It is capacity-constrained. Ultimately, in a few years from now it will have reached its physical potential, given a few very important expansions that we intend to do. Cotai represents to us a very, very important opportunity to expand and to use our strengths in terms of portfolio brands, customer range, design and amenity diversity. We can bring a lot more to the market by having [a] Cotai [property]. We do not think Cotai will be the only future project for us in Macau. We have far broader aspirations in the long term than just a second property. DECEMBER 2011

EXCLUSIVE CEO INTERVIEW

The land in Cotai is not that big, is it?

The Cotai piece that we are looking at is about 18 acres [7 hectares]. Size is not determinative of success, either in Las Vegas or in Macau. The quality of the offering, the quality of the service, your location, all will speak to how you do financially. For example, MGM Macau is generating very strong returns right now. It’s not the largest property in Macau but it has one of the largest individual market shares. It even has a larger share than many properties that are far bigger in terms of square footage, slots or tables. That speaks to a variety of important factors: the quality of the resort, which I am extremely proud of; the quality of the service; our brand and brand awareness; and our marketing programmes, as we have been able to have a broader reach throughout China and throughout Asia. It also speaks to our tremendous partner, Pansy Ho Chiu King. She has brought a tremendous amount of knowledge to us from a standpoint of design, development, marketing and operations. And Grant Bowie is the best chief executive officer in the market. So size does not necessarily translate into financial success and I think the same will be true in Cotai. The land we hope to be able to conclude with the government is smaller than other parcels that other operators are trying to secure, but it is large enough to build everything that we would like to: a property that will be much bigger than MGM Macau and that will allow us to do more non-gaming development, which is what we are the best at in our industry. Is everything ready in terms of design, materials, contractors and so on?

Nothing is ever done here. We design and change throughout the process right up to the opening day. But we have determined the brand, the architects and the designers. We are very evolved in our design documents and have started our pre-opening marketing plans in terms of the customer reach that we are looking toward. We have also started talking

LEADING CHANGE J

im Murren joined MGM Grand Inc., a predecessor of MGM Resorts International, as chief financial officer in 1998, after spending more than a decade on Wall Street, where he was regarded as a leading analyst of the restaurant, hotel and gaming industries. He completed significant acquisitions over the next seven years, overseeing the transformation of MGM Resorts International into one of the world’s leading gaming companies. He was named chairman and chief executive in December 2008. Mr Murren graduated with a bachelor’s degree in art history and urban studies from Trinity College, Hartford in 1983. Along with his wife, he was a founder of Nevada’s official cancer research and treatment centre, the Nevada Cancer Institute, where he is a member of its board of directors. He is also a member of the boards of the American Gaming Association and of the University of Nevada, Las Vegas, and of several other institutions.

DECEMBER 2011

to some of our main partners in entertainment and in food and beverage. Any deals made yet?

I’m not allowed at this point in time to divulge those details but we have had a tremendous amount of work done at the MGM China board level. We are very excited. It will be a very different property than the one we have. It will be complementary to what is already there in Cotai and also to what we imagine other people might be doing.

MEASURED GROWTH Were you surprised with Melco Crown Entertainment’s move on Macau Studio City?

It’s a big piece of land. It’s well located and it has tremendous potential. Studio City has been the source of a tremendous amount of consternation for the government and for other operators. I think the Melco Crown takeover provides a solution to that. Were you surprised when secretary for economy and finance Francis Tam Pak Yuen announced the 3 percent cap on the growth of live gaming tables for the next 10 years starting in 2013?

I don’t think “surprise” is the right word. The government is taking great pains to be as transparent as possible, to be as clear to operators as possible. In my opinion, the Macau government is utterly determined that the industry will grow in a very meaningful but measured way. It will attempt at all costs to avoid the pitfalls of hyper-growth, of over-extension in infrastructure, of labour, of prices and of capacity. The government understands what it has. It literally has the world’s golden opportunity in what relates to gaming. It has only scratched the surface of what Macau can become in terms of the size of its gaming market. So the government is very focused on not going off track. That frustrates people because they want to know with great certainty every element. When are land concessions going to be granted? When are the gaming concessions going to be extended? For how long will they be extended? Etcetera. That loses the forest for those trees. The forest is to make Macau an even more vibrant and much larger hospitality market. So, I don’t get sidetracked, surprised or concerned about various interpretive intermediary comments by officials. I believe that I understand what the long-term vision is. We will be, hopefully, in a position to invest billions of dollars more into Macau in the form of infrastructure, which will employ thousands more people and that will continue to expand the tax revenues for the Macau government. I don’t think we will be restrained or impeded from doing that. But is 3 percent the right growth rate? Would 5 percent be better?

It’s a good idea right now to have a constraint or at least an understanding of what the total table pool will be over a period of time. It doesn’t mean the pool can’t change, that regulations don’t evolve over time. We won’t have all the answers; neither will investors; neither will lenders – they just won’t. It’s not the way it’s going to be. Investors, lenders and operators are going to have to evaluate the business risk.

83 One of the business risks to evaluate is whether or not the government will be a constructive partner and allow you to do what you think is needed to generate a good financial return on the investment you are willing to make. So far, has the government been a constructive partner?

Yes, we could say it has been a very good experience for us. Sheldon Adelson likes that the government is pushing gaming operators to have more non-gaming amenities. The same applies to MGM China in Cotai?

[That development path] is quite clear in Las Vegas. Let’s not make any mistake here. Macau is already more successful than Las Vegas has ever been. In terms of its gaming revenue and its growth potential, it is vastly better off in the long term than Las Vegas. But there are parallels that I think bear examination. Las Vegas in many regards did begin along the same lines. Initially, casinos represented a big percentage of each property’s revenue and investment. Over time, we evolved into the current business model. Las Vegas first became the entertainment capital with the Rat Pack, Siegfried and Roy, and several other entertainers. Now, it is legendary for its concerts, fights and other major events. It also became very resort-based, with Mirage and MGM Grand, plus all those resorts that stretched the envelope. Then it became the retail capital, with the Forum Shops at Caesars and the Via Bellagio fashion mall. Dining became very powerful, when it was all but nonexistent on a quality level as recently as 25 years ago. And, of course, we are taking all that now to spas, golf, nightlife, day life. All this speaks to the evolution of Macau over time and all this is perfectly aligned with who we are. There’s no one out here [in Las Vegas] that has the diversity of amenities that we do. We have the best shows, we own two arenas while our competitors have a grand total of zero, we have spas – all the right amenities. As a result of that, we have the largest market share of high-end gaming here.

“The Cotai land we hope to be able to conclude with the government is smaller than other parcels that other operators are trying to secure but it is large enough to build everything that we would like to: a property that will be much bigger than MGM Macau and that will allow us to do more nongaming development, which is what we are the best at in our industry”

“MGM Macau is generating very strong returns right now. It’s not the largest property in Macau but it has one of the largest individual market shares. It even has a larger share than many properties that are far bigger in terms of square footage, slots or tables” We have created, in the form of the City Center, the largest green project that has ever been built and we have evolved design, architecture and operations to a new level. Looking squarely within the future of Macau, the city will focus, emphasise and demand of its operators to extend the boundaries of what they do and not simply build windowless casinos with tables and slots. There has to be much more to it. Newer generations of casinos are doing that and I think we will be part of a generation that takes that further. In a U.S. government diplomatic cable released by Wikileaks, it is mentioned that MGM Resorts tried to sell its stake in MGM China during the 2008-2009 global financial crisis. Do you confirm that information?

We never looked at that once.

NO CHANGES POST-IPO After a long process, MGM China was finally publicly listed in Hong Kong in June. That also meant Ms Ho reduced her stake in the company to 29 percent from 50 percent, while MGM Resorts’ slice went up to 51 percent from 50 percent, gaining management control. Have there been any operational changes since this restructuring?

No change. We have expanded the board to accommodate the rules of the Hong Kong stock exchange but the executive committee remains the same size. The definition of duties between personnel is the same. Mr Bowie was the CEO before the change in ownership and he is still the CEO today. He has our full support. No changes whatsoever post-IPO, post the reorganisation of the ownership. And any major changes in the role of Ms Ho, either on the operational or on the strategic side?

None whatsoever. She is obviously still the managing director. She is a chairperson and she has the same level of responsibility in contributions as she had before the change. Were you surprised with Ms Ho’s decision to reduce her stake in MGM China Holdings Ltd.?

I was not surprised because I asked her to do it. From MGM Resorts’ perspective, it’s extraordinarily attractive to have 51 percent or the majority of MGM China because we can fully consolidate all of its results onto MGM Resorts’ financial statements. It has a profoundly positive impact on our financial performance. DECEMBER 2011

DECEMBER 2011

EXCLUSIVE CEO INTERVIEW Secondly, from a standpoint of why that would be interesting for Ms Ho, I asked her to consider selling down and look at if she would like to diversify her own holdings by investing in MGM Resorts, which she did. She took a significant portion of the proceeds she received from the IPO and invested it into MGM Resorts. I feel that this could only have happened at this time. It became a discussion of what would be in the best interest of MGM China and MGM Resorts, in which she is now a significant investor. The best interest for MGM China was to have a clear path, to have an ownership that is understood, to have governance that is quite clear and to really eliminate discussions that could occur. What would happen in an impasse? What if we, as equal partners, were to disagree? I feel that we have been able to resolve all that with great clarity. It has been great for us and I think it has been great for her. Volatility of gaming stocks continues and MGM China has not been immune to it. Are you worried about those ups and downs, some of them for no apparent reason?

We are a little battle-tested in this regard. I remember very vividly in the United States when gaming started expanding rapidly, when states started approving gaming and companies popped up. The volatility was unbelievable. Stocks are traded on rumours, on expectations, on nuances. You need to have a view on where China is going over the next couple of years, where Macau is going. The capital markets’ piece in the story is only relevant if you are using your stock as a currency to do something, whether you are a buyer or a seller. Right now, we are neither.

“I asked Pansy Ho to reduce her stake in MGM China. From MGM Resorts’ perspective, it’s extraordinarily attractive to have 51 percent or the majority of MGM China because we can fully consolidate all of its results onto MGM Resorts’ financial statements” Middle East, with several projects in Egypt, Jordan and the Emirates, and three in India. We believe that this is a great growth vehicle for the company to leverage our brands and some of our development and operational expertise. How is the Vietnam project going?

It is on track. We will be the operator of one of the hotels. There will be multiple hotels over time, but the first Ho Tram property is an MGM Grand. At the same time, the government is working very hard to improve the infrastructure and access to the beach. It seems like the construction schedules are still well aligned. The improvement to the infrastructure, the highway system, the port system to get conveniently to Ho Tram will be done at the time the MGM will open up.

MAINLAND DEBUT What is the most recent update on MGM Resorts International partnership with state-owned Diaoyutai State Guesthouse to manage more than 20 hotels in the mainland?

We are only [weeks] away from opening the first major resort, in Sanya. MGM Grand Sanya is a 675-room hotel that has been developed and will be managed by Diaoyutai MGM Hospitality. It’s a great location. Next year we will open a boutique hotel in Beijing. We have projects underway in Chengdu, Nanjing, Tianjin, Ningbo and we have many more on the horizon. Concurrently MGM Resorts is developing throughout the

“The Macau government is utterly determined that the industry will grow in a very meaningful but measured way. It will attempt at all costs to avoid the pitfalls of hyper-growth, of overextension in infrastructure, of labour, of prices and of capacity”

You are very keen on online poker. I suppose you expect legalisation in the U.S. soon. Does MGM want to be one of the first players entering this market?

Yes. It’s a very large commercial opportunity in the United States. We have been involved in Internet gaming in one form or another for over 10 years. We actually launched a site back in 2001, on the Isle of Man. Of course, it did not take bets from U.S. citizens or from people from other countries that did not permit gaming. It became a very good test case for us as to how to operate such a site. The time is now correct in the United States. There is bipartisan political support. There’s a tremendous amount of gaming that it’s going on right now illegally. A strong federal bill would create a much safer regulatory framework and I believe there’s good support for this. We will be ready to run out the door as soon as that is approved. A year ago, you were cautiously optimistic about MGM Resorts’ City Center, which opened in December 2009. What about now?

Much more so. We had a good year, a very solid year, with growth in every metric. It has become a very popular destination. Aria is one of the most popular resorts in Las Vegas today. It received its five-star recognition. [City Center] scores really well on travel websites. It’s financially quite profitable and building up all the time. DECEMBER 2011

Gaming | Billions Race

Slow and steady

Growth in casino gross gaming revenue has eased slightly, with the likelihood of further easing he runaway growth in gaming revenue taken by the city’s casinos slowed last month. It is a trend which is unsurprising, since the sector grew at a gallop towards the end of last year. The take by Macau’s casinos stood at a healthy MOP23.06 billion (US$2.88 billion) last month, according to data from the Gaming Inspection and Coordination Bureau. The increase was 32.9 percent year-on-year, the slowest rate of growth registered so far this year. Even so, last month’s result ex-

ceeded MOP22.2 billion – the average monthly result from the first 11 months of this year. Total casino gross gaming revenue to the end of November was up 44.1 percent year-on-year to MOP244.26 billion. Looking ahead to next year, growth is likely to cool further. The consensus among the city’s casino concessionaires is for decline to between 15 percent and 20 percent in gross gaming revenue growth, says JP Morgan, which sent a team of analysts to Macau last month. The estimates are in-line with the

Gaming Results: Gross Revenue

investment bank’s forecast. JP Morgan says the majority of management teams in Macau it contacted forecast growth in the first half would be “relatively muted given the staunch comparisons from 2011 but should accelerate throughout the year” given the opening of Sands Cotai Central in late March.

Liquidity bump There may be some surprises in store early this month after the People’s Bank of China unexpectedly cut the reserve

In Million MOP (1HKD:1.03MOP)

28,000 26,000

24,306

24,000 22,000 20,000 18,000

18,883

18,571

Dec 2010

Jan 2011

19,863

20,087

20,507

Feb 2011

Mar 2011

Apr 2011

24,212

26,851

24,769

23,058 21,244

20,792

17,354

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Nov 2010

DECEMBER 2011

May 2011

Jun 2011

Jul 2011

Aug 2011

Sep 2011

Oct 2011

Nov 2011

87 requirement ratio for commercial banks by 50-basis points. Union Gaming Research Macau says the loosening of monetary policy by the central bank will benefit casinos. The first cut in nearly three years will allow mainland banks to lend more, increasing liquidity in the system and hopefully prompting economic growth. Estimates say the move could free up to about US$62 billion in capital. Eventually, part of that is likely to end up on Macau’s baccarat tables. Union Gaming Research says even

bigger gains will be made in operators’ stock prices. The research firm says that when the reserve requirement ratios began tightening three years ago, there were concerns Macau gaming revenues would be hit. That was not the case. “With this in mind, we suspect that this reversal in policy could have a greater impact on sentiment than on market forces,” Union Gaming wrote in an investors’ note. “We suspect the positive sentiment could have a disproportionate impact for Macau operators with greater exposure to VIP customers.”

Some casino operators shuffled places on the monthly gross gaming revenue league table last month. SJM Holdings Ltd. led the market with a 27-percent market share, followed by Galaxy Entertainment Group Ltd. with a 20-percent share. Sands China Ltd. climbed one position, to a 16-percent market share, passing Melco Crown Entertainment Ltd. and Wynn Macau Ltd., both with about a 13-percent share, but with Wynn slightly ahead. MGM China Holdings Ltd. rounded the ranking with 11 percent of the market.

Gaming Results: Market Share Per Operator 2010

2011

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov *

SJM

31%

30%

31%

34%

30%

32%

29%

28%

27%

29%

26%

27%

Sands China

15%

17%

18%

16%

17%

16%

15%

14%

16%

Galaxy

10%

11%

13%

15%

19%

20%

21%

20%

Wynn

17%

14%

15%

14%

17%

13%

15%

13%

12%

13%

MPEL

15%

14%

17%

14%

16%

15%

16%

15%

13%

MGM

11%

12%

11%

12%

11%

10%

11%

TOTAL

100%

SJM

Sands China

Galaxy

Wynn

MPEL

MGM

Nov 2010

Dec 2010

Jan 2011

Feb 2011

Mar 2011

Apr 2011

May 2011

Jun 2011

Jul 2011

Aug 2011

Sep 2011

Nov 2011*

Oct 2011

* estimated

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

Bally announces new head for Asia-Pacific Cath Burns leaves the company after six years ally Technologies, Inc. announced that vice president Srini Raghavan has been assigned to oversee the company’s games and systems activities in the Asia-Pacific region. He will combine this new responsibility together with his continued role as managing director of Bally’s development centres in India and managing the systems operations in South Africa. Meanwhile, Kurt Gissane has been promoted to managing director of Asia-Pacific, headquartered in Macau, to manage the day-to-day

business operations and customer relationships. These changes follow the departure of Cath Burns, Bally’s managing director of Asia-Pacific, who recently left the company after six years of service. TCS John Huxley appointed Ms Burns as global chief executive officer, effective of March 2012. At Bally, Ms Burns established the company’s Asia Pacific head office in Macau for both its gaming and systems business operations. She managed large-scale systems installation projects for several of the city’s new casinos.

Srini Raghavan

Kurt Gissane

DECEMBER 2011

Gaming | Stock Watch

DECEMBER 2011

Rough ride

Gaming stocks had a tough November as the eurozone debt crisis flared and fears of a mainland economic slowdown persisted BY RAY CHAN

ll Macau gaming stocks underperformed the market last month as uncertainty in the West flared, fuelled by the eurozone debt crisis. Global economic problems continued to chip away at investor confidence, along with increasingly uncertain economic conditions in the mainland, which some fear may dampen mainland VIP gambler’s enthusiasm for Macau’s baccarat tables. There has been no sign that those fears are well founded. “Everyone is looking at the VIP market in particular. We haven’t seen any signs of slowing,” said Galaxy Entertainment Group Ltd.’s (0027.HK) chief financial officer, Robert Drake. “There is plenty of liquidity in the market and visitation remains strong,” he told last month’s Reuters China Investment Summit. A group of JP Morgan analysts who visited Macau last month said casino management they had met were “seeing no signs of slowing trends or cracks in demand, despite the recent negative headlines out of [the] mainland”. One of the few positive reports about gaming stocks last month was an announcement by Wynn Macau Ltd. (1128. HK) that it would declare a special dividend of HK$1.20 (US$0.15) a share. This is expected to be paid on December 19 and is the second special dividend from the casino operator, which declared a special dividend of HK$0.76 a share in

DECEMBER 2011

Photo: Luís Almoster

Gaming | Stock Watch

November last year. Apart from Wynn Macau, SJM Holdings Ltd. (0880.HK) is the only Macau casino operator to have ever paid a dividend. Wynn Macau told the Hong Kong Stock Exchange that its dividend is expected to use up more than 70 percent of its cash-in–hand. Wynn Macau had HK$8.6 billion in reserve at the end of the quarter and its debt stood at HK$4 billion. Goldman Sachs has lowered its target price for Wynn Macau to HK$20.20 from HK$20.60 and is keeping its “sell” rating as the special dividend could be a way to give Wynn Macau’s parent cash to fund its own dividend, and Goldman Sachs remains concerned about the decrease in its market share. Wynn Macau stock lost 15 percent over the month to November 25.

Melco leads losses NASDAQ-listed Melco Crown Entertainment Ltd (MPEL.NASDAQ) was the biggest loser of the month. Its shares fell by almost one-third over the month to November 25. The casino operator has set December 7 for the dual listing of its shares by introduction – in other words, by listing shares already issued, instead of issuing new ones – on the main board of the Hong Kong Stock Exchange. Shares in stock code 6883 are to be traded in board lots of 300. At press time, the listing had not yet won the final approval of the stock exchange and other relevant authorities. Credit Suisse (Hong Kong) Ltd. and Deutsche Bank AG, Hong Kong Branch, are the joint sponsors of the dual primary listing. Melco Crown co-chairman and chief executive officer Lawrence Ho said the listing would “not only put us on a par with our competitors but will also provide our existing shareholders with enhanced liquidity and enable local and Asian investors to directly access investment opportunities in our company, thus broadening our investor base”. He added that the company did not “intend to carry out any equity offering” on account of volatility in the market. Melco Crown was originally expected to raise between US$400 million (MOP3.2 billion) and US$600 million. Mr Ho said the company’s Studio City project is making progress. “We are nearing the final stages of our deDECEMBER 2011

sign plans, while working closely with the Macau government to complete the necessary approval process. We also continue to evaluate financing plans in relation to this project, including a bank loan and other debt financing.” Meanwhile, the company also announced that the shareholders’ loans initially provided in 2006 by whollyowned subsidiaries of the company’s major shareholders, Hong Kong-based Melco International Development Ltd. and Australian Crown Ltd., have been converted into ordinary shares.

Based on the conversion price, the transaction would dilute the value of shares held by existing shareholders by about 0.80 percent a share. Upon completion of the conversion, Melco and Crown will maintain their interests in the company in equal proportions, at 33.65 percent each. Melco Crown also announced that its third-quarter net profit rose to a record US$113.3 million this year from US$15.8 million a year before. Adjusted earnings before interest, taxes, depreciation and amortisation

91 Share price performance (HK$/US$)

Name

As of November 25, 2011

52-week high 52-week low

Change (%)

25/11/2011

Year-to-date Month-to-date

SJM Holdings Ltd.

21.00

10.22

11.70

-5.19

-14.47

Galaxy Entertainment Group

22.45

7.52

13.20

50.00

-18.22

Wynn Macau Ltd.

29.10

15.24

19.50

12.07

-12.36

Sands China Ltd.

26.60

14.90

20.15

17.97

-15.69

Melco International Develop.

10.76

4.18

5.56

25.23

-12.85

Melco Crown Entertainment

16.15

5.55

8.43

32.50

-26.53

MGM China Holdings Ltd.

18.20

8.05

9.99

-18.11

Shanghai SE Composite

3,067.46

2,307.15

2,380.22

-15.24

-3.57

Hang Seng Index

24,468.64

16,170.35

17,689.48

-23.21

-10.95

Hang Seng China Ent Index

13,770.73

8,058.58

9,395.91

-25.97

-10.63

Las Vegas Sands Corp.

52.08

36.05

42.40

-7.73

-9.69

MGM Resorts International

16.94

7.40

9.27

-37.58

-19.53

165.49

95.14

107.02

7.48

-15.96

44.29

31.68

33.96

-3.39

-5.67

12,876.00

10,404.49

11,231.78

-2.99

-6.05

1,370.58

1,074.77

1,158.67

-7.87

-7.55

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

Share price performance of Hong Kong-listed gaming stocks (Rebased as HK$100) 300 250 200 150 100 50 1-Jan 2011

1-Feb 2011

1-Mar 2011

1-Apr 2011

1-May 2011

1-Jun 2011

1-Jul 2011

1-Aug 2011

Sands China Ltd. SJM Holdings Ltd. Wynn Macau Ltd. Melco International Development Galaxy Entertainment Group Ltd.

1-Sep 2011

1-Oct 2011

1-Nov 2011

MGM China Holdings Ltd. Hang Seng Index As of November 25, 2011

Share price performance of U.S.-listed gaming stocks

(Rebased as US$100) 300 250 200 150 100 50 1-Jan 2011

1-Feb 2011

1-Mar 2011

Las Vegas Sands Corp. Penn National Gaming Inc.

1-Apr 2011

1-May 2011

1-Jun 2011

1-Jul 2011

1-Aug 2011

Wynn Resorts Ltd. Melco Crown Entertainment-ADR

1-Sep 2011

1-Oct 2011

1-Nov 2011

MGM Resorts International S&P 500 Index As of November 25, 2011

(EBITDA) were a record US$240.3 million, rising 76 percent. That net profit was a record was due mainly to “ongoing improvements in gaming and non-gaming operations across all operating segments, particularly at City of Dreams”, the company said.

Centre adds gravity At MGM China Holdings Ltd. (2282. HK) third-quarter net profit was US$36.9 million, reversing a loss of US$20.2 million a year before, its parent company, MGM Resorts International announced. MGM China’s adjusted EBITDA were US$139.3 million, rising 66.2 percent. MGM China says it has finished designing its Cotai development, which will have about 1,600 rooms, 500 gaming tables, 2,500 slot machines and several restaurants. The government has yet to grant MGM China the land to build it on but the company says it expected news on the matter in the next few months. JP Morgan says it believes Cotai is set to become the new centre of Macau’s gaming industry, benefiting in particular Sands China Ltd. (1928.HK). “Following the opening of [parcels] five and six, we believe the centre of gravity in Macau will continue to shift to the Cotai Strip, given the broader gaming and non-gaming offerings,” JP Morgan said in a note to clients. The development on parcels five and six will be called Sands Cotai Central and its opening is likely to benefit its sister property, the Venetian Macao, more than Galaxy Macau, JP Morgan predicts, as it is a much shorter walk to get there and there are plans to open a footbridge connecting Sands Cotai Central to the Four Seasons in 2013. Even so, Galaxy Macau’s owner, Galaxy Entertainment, aims to outperform its competitors next year. Mr Drake says the casino operator wants to beat the industry’s average growth rate of 15 to 20 percent. The prospect of good earnings in Macau is one of the reasons given by Moody’s Investors Service for raising its credit ratings for three United States casino operators with subsidiaries in the city. Moody’s raised its ratings for Las Vegas Sands Corp. (LVS.NYSE) and Wynn Resorts Ltd. (WYNN.NASDAQ) to Ba2, two levels below investment grade. Moody’s lifted its rating for MGM Resorts to B2, five notches below investment grade. DECEMBER 2011

Gaming

No shockers Policy address for next year brings little change for gaming BY MARTIN JOHN WILLIAMS*

acau will form a working group in 2012 to evaluate a break-up of the territory’s sports betting monopoly, the secretary for economy and finance, Francis Tam Pak Yuen, said last month. Possible movement on opening up Macau’s sports betting market is part of a wider agenda of government priorities for the gaming industry, announced by Mr Tam in the Legislative Assembly during the 2012 Policy Address delivery. The government agenda doesn’t include any groundbreaking initiatives for the sector, observers say.

DECEMBER 2011

“[The government will] continue to strengthen administrative work in relation to the sports lottery,” Mr Tam said. “[We will] accelerate research into opening up the sports gaming monopoly and, in 2012, establish a working group that will formulate an associated programme.” During a subsequent question-andanswer session with legislators, however, Mr Tam softened his wording on reform. That was after legislator Lee Chong Cheng suggested that forming the working group contradicted the government’s stance of “controlling

development of the gaming industry”. “This is not an opening up of sports gaming. Sports gaming is a world trend, and therefore at this time we have embarked on research and analysis. There is no plan to open up sports gaming,” Mr Tam replied. Macau Slot, a subsidiary of gambling tycoon Stanley Ho Hung Sun’s Sociedade de Turismo e Diversões de Macau S.A. (STDM), holds an effective monopoly on fixed-odds sports betting through its exclusive right to set odds. Since 2006, when Macau Slot lost

93 Macau Slot’s latest renewal expires on June 5, 2012. Most of the measures in the annual policy preview – such as enhanced monitoring of slot machine use, junket activity and cage operations – expanded on existing regulatory duties of the Gaming Inspection and Coordination Bureau, the city’s gaming regulator.

Expanded duties

The government will “strengthen monitoring of casino slots, and plans to have gaming data from 90 percent of casino slot machines routed to the Gaming Inspection and Coordination Bureau through a linking computer system,” the secretary for economy and finance, Francis Tam Pak Yuen, said last month

its full monopoly, some casino operators have been able to apply to offer fixed-odds betting services on their premises through a partner company. But without the freedom to set odds, operators and potential partners have balked at entering the market. Macau Slot restricts coverage to football and basketball and has enjoyed multiple renewals of its sports betting licence since the late 1990s. These have included three one-year renewals since 2009 as the government deferred a decision on what to do with the underperforming and uncompeti-

tive monopoly in the longer term. Reflecting unease in the legislature, Gaming Inspection and Coordination Bureau deputy director Anthony Leong told GamblingCompliance in September that ending the monopoly remained a sensitive matter. That was owing to public concern that “the gaming industry is developing too fast and this will affect some young people and cause problem gambling”. But Mr Leong added that the government was “studying the feasibility of enhancing the current operational module of the sports lottery”.

Mr Tam told the assembly the government will “strengthen monitoring of casino slots, and plans to have gaming data from 90 percent of casino slot machines routed to the Gaming Inspection and Coordination Bureau through a linking computer system”. It was not clear, however, whether the data routing system referred to an existing but incomplete network of data feeds to the bureau, or a long-flagged central monitoring system. Macau-based sources familiar with the gaming regulator monitoring practices said existing large casinos are already linked to the bureau via dedicated landlines with which the bureau can monitor gaming machine operations. The first system was installed at the Sands Macao casino, one source said, which opened in 2004. But many of the smaller casinos operated by SJM Holdings Ltd. are yet to install dedicated connections, he added. The source explained that the Gaming Inspection and Coordination Bureau has been considering the introduction of a broader monitoring network for at least the last five years. “The majority of, if not all, gaming machines in use in Macau would be able to be connected to a central monitoring system of some kind,” he said. “Over the last five or six years the Gaming Inspection and Coordination Bureau has hinted at some form of central monitoring system for gaming machines in Macau, but of late it seems to be more about making sure that all machines are connected to a gaming system of some sort that in turn the gaming regulator has access to,” explains the same source. Neither the gaming bureau nor Mr Tam’s office responded to a GamblingCompliance request for clarification at publication time. The source added that it is unlikely any changes to monitoring procedures will have an impact on new technical standards to be released within weeks. DECEMBER 2011

Gaming

The Gaming Inspection and Coordination Bureau is currently reviewing industry submissions on draft electronic gaming machine technical standards. The norms are due to be finalised this month and publicly announced in January. A second source familiar with the regulator’s existing monitoring system said that around 90 percent of the market’s slots are already likely being monitored given the smaller size of nonmonitored casinos. He however questioned whether the introduction of a new monitoring system covering 90 percent of the market by the end of 2012 is “a little ambitious”. The speed with which a new central monitoring system can come online involves the bureau’s reliance on product developers and detailed technical specifications and “depends on what the system is capable of doing,” he said, referring to basic accounting or more specific monitoring of individual machines.

Improve and improve The Gaming Inspection and Coordination Bureau is also working on an online application system that would replace paper applications for floor changes for electronic gaming machines and possibly traditional table games, the first source said. This would replace the time-consuming and paperwork-heavy application process that requires a file “up to four inches thick” containing detailed floor plans and timetables that need to be translated into Chinese and Portu-

GOVT SAYS NO TO IMPORTED CROUPIERS C

hief executive Fernando Chui Sai On pledged last month that Macau won’t have any imported croupiers as long as he is in-charge of the government. Currently only locals can work as croupiers in Macau’s casinos. Mr Chui made the pledge while answering questions from legislators during his 2012 Policy Address delivery. Mr Chui’s first five-year term will end in 2014 but he can still run for a second consecutive term. At the end of June, Macau had a total of 20,800 dealers, up by 11.4 percent year-on-year, according to the Statistics and Census Service. DECEMBER 2011

guese by a law firm, the source said. The file is then submitted to the Gaming Inspection and Coordination Bureau with a compliance report from a testing laboratory, he said. Other items in Mr Tam’s report included maintaining and enforcing the junket commission cap of 1.25 percent and retaining tax rates for gross revenue and profits. Auditing of concessionaire finances, including cash volume and bank deposits, is to be strengthened, along with completion of an audit of cage operations by the end of 2012. The government will also continue to promote improvements to casino internal control measures and video surveillance – chip transactions in particular. It will also increase monitoring of junket activities, establish a database covering junkets and their associates, revise the Minimum Internal Control Requirements and promote responsible gambling. Industry sources expressed scepticism that the bulk of the agenda did not amount to much. “There is nothing earth-shattering about the 2012 compliance programme

or areas of focus for the Gaming Inspection and Coordination Bureau,” said a source with knowledge of government activities. Gaming regulator officials “have no way of doing all these with the resources they have,” said Ben Lee, managing partner of Macau-based gaming consultancy IGamiX Management and Consulting Ltd. Meanwhile, Mr Tam warned reporters last month that slots clubs operating within or relocated to newly approved areas of Macau could be shut down if they are deemed to have had a “big impact” on the community. He did not elaborate on how excessive impact would be gauged. Mr Tam was responding to a sustained campaign by civic groups and sympathetic politicians against clubs that operate near or within residential areas. In October, Mr Tam said the government would require that slots clubs be located within 500 metres of casinos, and that clubs outside this perimeter would have to move or cease trading. * EXCLUSIVE GAMBLINGCOMPLIANCE/MACAU BUSINESS

CASINO EXECUTIVE GORE SHOT IN BANGKOK Case of mistaken identity, police say Veteran Asia casino executive and consultant Michael Gore and a colleague are recovering from wounds suffered in a drive-by shooting in Bangkok that police call a case of mistaken identity. Mr Gore, a former executive with Genting Group in Malaysia and Singapore and at small casinos in Cambodia, arrived in Bangkok from India early on November 1. Mr Gore held a series of meetings that day with a Malaysian business partner, seeking investors for a luxury casino liner to be based in Mumbai. After a meeting ending at around 9pm local time, the men accepted the offer of a limousine ride back to their hotel. The vehicle, a late model BMW 7 Series with heavily tinted windows, is a

common sight on the streets of Bangkok. While the car was stopped in traffic near Lumpini Park in central Bangkok, a series of shots blew out the driver’s side window, killing the driver as the limo rolled into another vehicle. Police say the shootings were a case of mistaken identity, and Mr Gore, a former police detective in the U.S. state of New Jersey, agreed. “I have not been in Thailand for a long time and am not currently doing business there,” he said. “Few people knew I was going to Bangkok on this date.” He added that his partner has even less recent contact with Thailand. M.C.

GAMING SPENDING MORE Gaming sector spending reached MOP91.27 billion (US$11.4 billion) in 2010, up by 44 percent year-on-year, according to data from the Statistics and Census Service. Although impressive, that growth was surpassed by the increase in total revenue, which stood at MOP190.67 billion, up by 57 percent. The gaming sector’s gross value added, which measures the sectoral contribution to the economy, soared by 58 percent to MOP113.34 billion. However, gross fixed capital formation shrank significantly by 63 percent from 2009 to MOP1.10 billion, following the completion of several tourism and gaming facilities.

CAESARS RESTARTS IPO

APPT MACAU SETS NEW ATTENDANCE RECORD The 2011 PokerStars.net Asia-Pacific Poker Tour Macau main event attracted 575 players from around the world, setting a new attendance record for the tour, in its fifth season. The previous record was set back in 2007 at the Season 1 APPT Sydney grand final (561 players). Randy ‘nanonoko’ Lew, 26 years-old, won the main event.

Caesars Entertainment Corp., one of the world’s biggest casino companies, is restarting its initial public offering plans. The announcement comes one year after the company cancelled its previous IPO citing market conditions. The Las Vegas-based company, which owns Caesars Golf Macau, said last month it seeks to raise up to US$50 million (MOP400 million). Caesars owns or operates more than 50 casinos in the United States and abroad.

DECEMBER 2011

Gaming

Making managers Casino culture is altering the city’s academic landscape with the University of Macau launching a master’s degree in resort management he University of Macau will introduce a master’s degree programme next year that meets the demand for managers in Southeast Asia’s casino-led resorts. Domestically, it is hoped that the two-year course will cultivate more talented executives who will climb to senior posts. Classes begin in August and will be held in English. The programme coordinator of the Master of Science in International Integrated Resort Management Amy So Siu Ian, told Macau Business the course is a response to changes in the labour market and society’s needs. “In the past, gaming development was more about casinos. Nowadays the trend isn’t to manage one casino only but an integrated resort,” says Ms So, who also leads the university’s bachelor programme in hospitality and gaming man-

DECEMBER 2011

agement. “Therefore we feel it’s time to open a higher level programme to help develop Macau.” Planning for the new course began two years ago, according to the director of the university’s Institute for the Study of Commercial Gaming, Davis Fong Ka Chio. With Macau poised to shape itself as an international leisure destination, Mr Fong says his academics knew that integrated resorts would be one component of the city’s overall offering. “A master’s degree is important to boost a person’s managerial capabilities and help them move upwards in a company,” he says.

Filling gaps Mr Fong says the building of integrated resorts is a global trend, one that is on the rise throughout Asia. It is also an era of full-on competition for talent from

every corner of the world. Macau must have an “international horizon”, with the ambition that the course’s graduates “can go beyond Asia”. “In a broader sense, we hope to foster more talents for Macau in order to become a world travel and leisure hub,” he says. Course graduates will have the capability to “think in an integrative way” and manage a business with a high degree of quality and efficiency. Ms So says the course should produce senior managers, helping middle management move ahead and filling gaps where “personnel lack high-level training”. “The graduates have to have the basic knowledge of how to run an entire integrated resort, instead of just one particular area of management,” she says. Macau Gaming Industry Employ-

97 times each week to meet executives’ intense work schedules. In addition, the school has been contacting “renowned” professors from abroad, including the United States, and senior executives in resorts here to lecture to the students. Their response has so far been very supportive, Ms So says. The programme will include a study trip that will take the students to visit resorts overseas, get to know their management models and gain access to their senior executives. Courses will cover human resources, strategic management, integrated resort introduction, hotel management, gaming management, food and beverage, events, and meetings, incentives, conventions and exhibitions (MICE).

Strong interest

ees Association president João Bosco Cheang Hong Lok welcomes the university’s approach. He says the master’s course will be a stepping stone for employees to win promotions to middle and senior management roles. The benefit will be felt city-wide.

Far and wide Course applications open at the end of January and just 30 places will be offered, with the majority reserved for Macau residents. Ms So says her ideal students are mid-level managerial executives, preferably employed by hotels, resorts or casinos in Macau. Candidates with industry experience, sound academic qualifications and outstanding English language skills may be given priority. Classes will be conducted at night and no more than four

While the syllabus covers a range of traditional hospitality topics, Mr Fong emphasises that the focus will be on the resort setting. “For example, hotel management is a very traditional course subject on its own but from the perspective of integrated resorts, we will no longer look at how much a customer spends on a room per night but their overall consumption at the resort as well as their lifetime total value for the property, because people are likely to visit the same integrated resort more than one time in their lives. From there, different marketing, MICE and gaming planning can be laid out,” he says. Reluctant to disclose the tuition fee, Mr Fong says it will be “close” to the cost of other master’s courses at the university’s Faculty of Business Administration, “or just a little bit higher because a lot of resources have been put into it”. The university charges a minimum of MOP68,000 (US$8,500) for courses at the business school, according to the university website. Both Mr Fong and Ms So predict an overwhelming response when applications open. “We keep receiving enquiries about the course and have even got calls from very senior executives asking if we can reserve a place for them,” Mr Fong says. Mr Cheang says he wants companies to give local graduates the opportunities to execute what they have learnt and to support the government’s policy to gradually reduce reliance on non-local skilled labourers. “Training is pointless if no one is willing to use the talents afterwards,” he says.

STEPPING STONES TO SUCCESS T

he Macau government has been urging the six gaming operators to use as many resident employees as possible and has enforced several measures to reduce the number of imported workers on casino floors. The president of the Macau Gaming Industry Employees Association, João Bosco Cheang Hong Lok, believes companies are acting in response to the call and have shown their willingness to promote home-grown talent. “Each employee has their own score based on their work performance and if the score reaches a certain level a pay rise or job promotion will be offered,” Mr Cheang tells Macau Business. “If you’re in the company for two years and still have no progress, you can also go to check with the office to find out the reasons and thus improve accordingly.” According to Mr Cheang, who was a directly-elected legislator between 2001 and 2005, there are currently no overseas casino supervisors working in Macau since the government’s decision to cease renewing their work permits starting from 2009. Work permits for foreign pit managers are not being renewed, starting this year, he says. Mr Cheang’s association trains about 300 croupiers every three and a half months and provides a variety of certification courses to casino workers that are fully subsidised by the government. He says people are keen to upgrade their skills and they understand the more skills and knowledge they possess, the higher work appraisal scores they will be given. Language classes in Mandarin, English and Japanese are the most popular among the courses offered. Mr Cheang wants gaming operators to share the responsibility of training workers but says his experience is that their company-focused internal training does not produce high-quality employees. DECEMBER 2011

Gaming

Resorting to the whip After years of losing business to the casinos, the Hong Kong Jockey Club is raising its game ong Kongers are betting more money in Macau casinos than at the Hong Kong Jockey Club. The club announced it will make it a priority to channel the money bet by its gamblers back home, and is preparing a lot of changes to achieve its aim. The Hong Kong Jockey Club’s latest estimate is that Hong Kong gamblers lost nearly HK$26 billion (US$3.35 billion) in Macau last year. This is almost triple the figure in 2005 and is higher than the club’s gross revenue of HK$23.7 billion last season from betting on horse racing, football and the Mark Six lottery combined. “Competition from Macau casinos, and especially junket operators targeting Hong Kong customers, is increasing rapidly,” the club’s chief executive, Winfried Engelbrecht-Bresges, told Macau

DECEMBER 2011

Business in a written interview. “While the club remains strongly committed to responsible gambling practices, Macau junket operators are freely able to solicit the club’s high-value customers with generous credit loans.” Illegal and offshore Internet betting has also damaged the club’s revenue. “Although the club’s turnover and duty payments have both shown healthy increases, the market environment is changing rapidly both locally and globally. Gambling as an entertainment is a growth industry worldwide. Many other gaming opportunities are now being opened up to local residents elsewhere in the Asian region or online which is leading to the erosion of Hong Kong’s betting revenue,” Mr Engelbrecht-Bresges says. “It is very important that we should

channel the demand for gaming back to our regulated betting services and keep the revenue in Hong Kong.”

Vital weapons So the club has rolled up its sleeves to attract Hong Kong punters back to Hong Kong. It is working on customer segmentation – meaning that it wishes to tap the corporate market, young professionals and high value individuals. It has pushed forward a racecourse master plan. And it is pursuing channel, product and service innovation. “Our plans have been formulated in line with comprehensive customer surveys and research over recent seasons to understand the lifestyle and gaming preference of both current and potential customers,” says Mr EngelbrechtBresges.

99 The master plan will revamp the club’s two racecourses, in Sha Tin and Happy Valley. The goal is to enhance the customer experience to attract more of them and so give the club new sources of revenue. Happy Valley will be marketed as a night-time venue for corporate entertainment, and will focus on young customers and attracting new racegoers. Sha Tin’s position as a weekend destination will be reinforced. The master plan has three phases. The first, entailing expenditure of HK$700 million on facelifts, is finished. “Our surveys showed strong increases in customer satisfaction and raceday utilisation,” says Mr Engelbrecht-Bresges. The second, a HK$3.1-billion investment to improve racecourse facilities, has begun and is expected to be finished by 2014. Detailed plans for the third phase will be made from 2015 onwards. “By ensuring that we can continue to offer our customers world-class facilities and dedicated services, the racecourse master plan will be a vital weapon in helping the club secure the long-term sustainability of horse racing in Hong Kong,” says Mr EngelbrechtBresges. The club is also introducing new technology to make things easier for customers. In July, it launched an iPhone app which was downloaded about 200,000 times in the first week.

Come mingle The club’s managers have also been angling for a kinder tax regime. Hong Kong’s rates of betting duty are said to be among the world’s highest. The club is the city’s biggest taxpayer, as well as the largest private donor of charity funds, and employs 26,000 full-time or part-time staff. Club officials are also lobbying for the authorisation of “commingling”, which allows bets placed on one country’s horse races with a betting operator in another country to be funnelled into the “home” betting pool. Bets placed abroad would be commingled with the pool in Hong Kong and the earnings shared with the overseas gambling operator. Mr Engelbrecht-Bresges says “because of the high quality of Hong Kong’s horse racing and our attractive betting pools, other jurisdictions around the world are almost beating down our door to commingle their pools into ours.

Yet our high tax rates and in some cases the double taxation problem make most overseas commingling arrangements unviable.” Growth in the jockey club’s revenue this season is expected to be much slower than the growth in Macau’s casino revenue. Mr Engelbrecht-Bresges has forecast growth in racing betting turnover in the range of 3 percent to 3.5 percent this season. The club had a good start to the new season, which began three months ago.

Attendance on the opening day at Sha Tin was 28.5 percent higher than a year before and turnover rose by 18.8 percent to HK$928 million – the highest since 2001. Turnover on the opening day at Happy Valley rose 9 percent to HK$723 million, the highest for 10 years. Racing is Hong Kong’s number one spectator sport, and its racecourses are visited by 2 million people during the course of the 80-plus race meetings a year. The city’s betting pools are the world’s biggest.

“While the club remains strongly committed to responsible gambling practices, Macau junket operators are freely able to solicit the club’s highvalue customers with generous credit loans,” says Hong Kong Jockey Club chief executive, Winfried EngelbrechtBresges

DECEMBER 2011

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Gaming

Winning ticket Mainland lottery market to hit MOP800 billion by 2015 BY MARTIN JOHN WILLIAMS*

he mainland’s lottery duopoly is set to triple its revenue by 2015 and eclipse the United States as the world’s No. 1 lottery market as the authorities seek to extend use of imported technology and expertise, a consultant to the Chinese government said last month. Su Guojing, an adviser to China’s Ministry of Civil Affairs, told the Asian Sports and Welfare Lottery Summit in Singapore that annual lottery revenue will hit US$100 billion (MOP800 billion) in four years, three times the estimated US$33 billion for 2011. The United States, currently the leading lottery market by revenue, posted US$58.8 billion in sales in 2010, according to the North American Association of State and Provincial Lotteries. Current growth would see the mainland surpass that figure in 2014. Mr Su’s estimate implies sustained yearly growth of 32 percent over four years, slightly less than the mainland’s year-on-year growth rate for 2011. Revenue in 2010 amounted to RMB166.25 billion. Mr Su co-founded the Asian Responsible Gaming Alliance and China Lottery Industry Salon and is a Beijingbased committee member of the China National Democratic Construction Association, an entrepreneur-driven political party that is permitted to function as a satellite to the Chinese Communist Party.

He has also worked closely with Peking University’s China Centre for Lottery Studies, the nation’s leading academic organisation covering gaming issues.

Opportunities for investors Mr Su said the industry is trending toward paperless technology and applications. “With the application of the latest technology, China is actually at the cutting edge of high-tech lottery development, including innovation over traditional paper scratch-based lotteries, mobile phone technology, the Internet and call centres,” he said. “Another important developmental

trend in Chinese lotteries is the ‘productisation’ and ‘bundlisation’ of lottery segments,” Mr Su added. “For instance, bundling lottery segments with insurance industry products when you buy insurance, or bundling with your airline tickets.” “We don’t just look at the lottery itself; we actually have to borrow concepts from the latest developments [overseas], including casinos,” he said. “We take the best concepts and try to incorporate them into a ‘lottery with Chinese characteristics’.” Mr Su identified opportunities for foreign investors in mobile phone and

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101 online applications, consultancy work, data gathering and analysis, training, development of technical standards and lottery products. He added that indirect opportunities would also be available through non-profit and non-government charitable organisations linked to the industry. “Although the industry is some two decades old, the government does not have a clear standard, so it is listening to other experts on how to establish such a standard,” Mr Su said. A recent beneficiary in the mainland’s liberalising market is online sales, which were effectively legalised when the government issued the Temporary Management Regulation for Online Lottery Sales in September 2010. Mr Su hoped that the government would clarify the parameters of the terse regulation.

Fast growth The Ministry of Finance said that September lottery revenue grew 40.8 percent year-on-year to RMB19.64 billion, an all-time record and the biggest yearon-year jump in monthly revenue since

The Ministry of Finance said that September lottery revenue grew 40.8 percent year-on-year to RMB19.64 billion, an all-time record and the biggest year-on-year jump in monthly revenue since March’s 43.5 percent March’s 43.5 percent. Of this figure, Welfare Lottery revenue rose 34.7 percent to RMB10.87 billion, while the less popular Sports Lottery continued to improve its market share with a leap of 49.1 percent to RMB8.78 billion. Accumulated sales of the two lotteries for the year to September hit RMB157.77 billion, up 33.7 percent on the same period for 2010.

The last two months of revenue figures are notable for Jiangsu province overtaking the traditional market leader by sales, Guangdong province. In September, Jiangsu province alone notched up 105.4 percent year-on-year growth to RMB2.76 billion, taking its 2011 haul to RMB17.7 billion. When asked by GamblingCompliance what would account for such a sudden change, Mr Su said a combination of fluctuating provincial government dedication to lottery sales, new market penetration in provinces such as Jiangsu and market saturation in Guangdong were likely responsible. Guangdong reported 26 percent year-on-year growth for the same month. A colleague of Mr Su who originated from Jiangsu added that police crackdowns on illegal gambling may also have driven business to the legal lotteries. Mr Su said that lower sales per capita in other provinces might be attributed to their governments opting for “social harmony” measures over aggressive lottery growth. * EXCLUSIVE GAMBLINGCOMPLIANCE/MACAU BUSINESS

DECEMBER 2011

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Gaming

Cristino Naguiat

Pretender to the throne

Entertainment City Manila will eclipse Las Vegas and Singapore, possibly with Melco Crown onboard, says the chairman of the Philippines state-owned gaming company BY MAX V. DE LEON IN MANILA

espite the imposition of strict requirements by the new faces in charge at the Philippine Amusement and Gaming Corp. (Pagcor), its Entertainment City Manila project continues to attract interest from foreign investors, including Lawrence Ho’s Melco Crown Entertainment Ltd. Cristino Naguiat, the chairman and chief executive of Pagcor, the stateowned gaming company and regulator, says that during a visit to Macau about three months ago Mr Ho invited him to lunch to enquire personally about the

DECEMBER 2011

progress of the 120-hectare resort-cumcasino project, also known as Pagcor City. “They want to know what is happening here,” Mr Naguiat told Macau Business. “Basically we are in the stage of getting to know each other.” Mr Naguiat says it appears that Mr Ho is seriously considering investment in the Pagcor City project, judging by the visits made by Melco Crown executives. “I think they are interested because there have been two visits already in the Philippines by top management

of Melco. They are looking into it and studying their options.” Pagcor City is the brainchild of the former managers of Pagcor, led by chairman Efraim Genuino. They approved proposals by four groups: the SM Group of Filipino mall magnate Henry Sy; Resorts World Manila, a joint venture by Alliance Global Group Inc. of the Philippines and Genting Malaysia Bhd; Filipino port magnate Enrique Razon’s Bloombury Investments Holding Inc.; and Japan’s Universal Entertainment Corp. (formerly Aruze Corp.), headed by

103 Kazuo Okada, which owns 19.7 percent of Wynn Resorts Ltd., the parent company of Wynn Macau Ltd.

New broom When President Benigno Aquino took office last year, he replaced Mr Genuino with Mr Naguiat. Investors in Pagcor City had already been required to pour at least US$1 billion (MOP8 billion) into their projects but the new Pagcor managers decided to spell out more clearly how much money investors had to put in, what they had to develop and how long they had to develop it. “Prior to opening, they should have already invested US$650 million and developed an area of 250,000 square meters, excluding parking spaces. There should also be the thematic attractions already. And before they open, we need them to have 800 rooms. The number of slot machines and tables is dependent on the number of rooms,” Mr Naguiat says. After opening, the investors have another three years to complete their whole contribution. “In the previous contract, there was no timeframe. They could complete the full investment even after 50 years and so it would just be a useless project. We discussed [the new requirements] with them and they agreed.”

The changes have not stopped other investors from knocking on Pagcor’s door. Mr Naguiat says he has received calls from several interested parties. Although he would not name them, he says some are Macau companies. “This is a huge venture. There are talks about joint ventures and management contracts but nothing is final yet,” he says.

All inclusive The interest displayed by potential investors, Mr Naguiat says, is buoyed by predictions by some experts that the Philippines will be the next big thing in global gaming. Pagcor is hoping tourist attractions will prove as much of a lure as casino resorts. Mr Naguiat says that while Macau is mainly a casino destination, the Philippines has beaches, beautiful scenery and great entertainers. “If we focus on the casinos only, we will not win against Macau. So instead of just the integrated resorts, we will market the Philippines as a whole because that is where our advantage is compared to Singapore and Macau.” The plan, he says, is for casino operators at Pagcor City to tie-up with resorts and other attractions in other parts of the Philippines. They would create

package tours arriving in Pagcor City, moving to different attractions before returning to their hotels in Pagcor City and then flying out. Mr Naguiat says these packages would mean that Pagcor City could attract more than one million tourists a year and claim at least a 10 percent slice of the estimated US$120 billion-a-year global casino industry. “Las Vegas is doing US$6 billion. Singapore is US$5 billion to US$6 billion. Definitely we will overtake them. That is how optimistic we are once everything is completed,” he says. Pagcor City is progressing as scheduled, Mr Naguiat says. Two investors, Bloombury and the SM Group, have already begun construction work.

Fair but firm Bloombury, Mr Naguiat says, has just signed a management contract with Las Vegas’s Global Gaming Asset Management LLC. The chief executive of Global Gaming Asset Management is William Weidner, who was previously president and chief operating officer of Las Vegas Sands Corp. Also involved are Bradley Stone, who used to be connected with Las Vegas Sands; Garry Saunders, a former executive of Las

“Las Vegas is doing US$6 billion. Singapore is US$5 billion to US$6 billion. Definitely we will overtake them,” says Cristino Naguiat, the chairman of Pagcor

DECEMBER 2011

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Vegas Sands and Melco Crown; and Dennis Andreaci, until recently senior vice-president for gaming operations of Galaxy Entertainment Group Ltd.’s Galaxy Macau, and also a former Las Vegas Sands executive. Bloombury is expected to open its facility by the end of next year or in the first quarter of 2013, Mr Naguiat says. The SM Group is negotiating with parties outside the Philippines for the management of its facility, which is due to open in 2013. Asia Pacific Gaming, a Macau gaming consultancy and management services company, has already been selected to co-manage the gaming areas. “The Universal Entertainment Corp. is in the final stages of its design, the same with Resorts World Manila. Hopefully, the two will have their ground-breaking by the first quarter of next year. They were telling me they will finish by 2014,” Mr Naguiat says. As the regulator, Pagcor will be fair to everybody and see to it that everything is in order, he says. During the development of Pagcor City, Pagcor will not grant new licenses for casinos in metropolitan Manila, Mr Naguiat assures. He has scrapped the plan of the previous Pagcor managers to have its own casino in Pagcor City. “We will not be competing with them [the casino licensees] inside the Entertainment City. We will wear our hat as regulator and not as an operator.”

Five-to-one bet Mr Naguiat says that while there will always be some opposition to the project, notably from the Catholic church, if the development is run the right way, it will win more supporters than opponents. He says the project will easily create 50,000 jobs. Pagcor requires investors to ensure that 90 percent of all furniture and fixtures is Philippine-made. And every tourist visiting the country is expected to generate five jobs in various services, Mr Naguiat says. One of the requirements for investors is that all their dealers and housekeepers must be Filipinos. “We are targeting one million tourists, so that means [an] additional five million jobs. And these are higher-profile tourists, not just the backpackers. We expect them to spend in the country at least US$3,000 per visit.” He says Pagcor City casino operators are likely to head-hunt employees DECEMBER 2011

“We are targeting one million tourists, so that means [an] additional five million jobs. And these are higher-profile tourists, not just the backpackers. We expect them to spend in the country at least US$3,000 per visit,” says Mr Naguiat from Macau that are knowledgeable about gaming, ranging from executives to interpreters. Mr Naguiat is no stranger to gaming. From 1987 to 2001 he held various positions in Pagcor. He served as the corporation’s chief finance officer and was appointed chairman and chief executive in July 2010.

Less out, more in Mr Naguiat began by cutting costs. The “unnecessary spending” he cut included expenditure on Asia’s Gaming and Entertainment plus Leisure Expo, known as GEM, which was the Philippine an-

nual conference and exhibition for the gaming industry. He says Pagcor spent heavily on the event but that attendance was low, since gaming suppliers have only one major customer in the Philippines – Pagcor. “Right now, we are a very small market and most of the suppliers go to Macau. So as of now, we will just ride with the Macau expo [G2E Asia] until such time we are ready to compete,” he says. While reducing its costs, Pagcor has increased revenue, setting new records for five consecutive months since May. Revenue in the first nine months of this year was 26.78 billion pesos (MOP5.03 billion), about 14 percent more than in the corresponding period of last year. It is on course to hit 35 billion pesos for the whole year, the highest ever. Next year’s target is at least 42 billion pesos. “About 25 percent of our income comes from foreign players. Basically they are driving it, and it has a huge potential because right now they are not that many. Our foreign players for the year increased by 10 percent,” Mr Naguiat says. Pagcor is spending more on improving the 13 casinos it runs in the Philippines, in part by buying new equipment. The casinos are also being linked electronically so all can take part in national events.

105 105

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DECEMBER 2011

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Gaming

Exhibitionist tendencies Museums in Singaporeâ&#x20AC;&#x2122;s casino resorts give tourists a wider choice of attractions and please the government, even if they do not directly add to the bottom line BY MUHAMMAD COHEN IN SINGAPORE

DECEMBER 2011

107 ingapore’s Maritime Experiential Museum and Aquarium opened at Resorts World Sentosa on October 15. It joins the ArtScience Museum at Marina Bay Sands on the menu of non-gaming attractions Singapore won in exchange for licensing what have become, in less than two years, arguably the world’s two most successful casino resorts, or integrated resorts, as Singaporean authorities prefer to call them. “The concept of the integrated resort is that of an integrated, holistic product with a compelling mix of key elements, enhancing Singapore’s appeal as an exciting and must-see destination for business and leisure visitors,” Singapore Tourism Board executive director for integrated resorts Carrie Kwik says. “While museums were not a requirement for the integrated resorts in Singapore, both Marina Bay Sands and Resorts World Sentosa chose to include museums as part of the overall visitor experience.” Although Singapore already boasts five government-run museums and at least a dozen more public and private ones, the casinos’ museums seem to have benefitted the city and the resorts themselves. Resorts World Sentosa central zone operations director Jason Horkin was not always sure if a museum and casino resort were complementary. “If you had asked me five years ago, I would have said ‘no’. Now, I would do it again at another resort.” Mr Horkin says the resort’s museum has attracted new customers. “The Maritime Experiential Museum and Aquarium is an important piece in our vision for Resorts World Sentosa,” Genting Singapore Plc executive chairman Tan Sri Lim Kok Thay declared at its opening. “It not only adds to our existing offerings and extends the length of stay for visitors to the resort, it also provides a place for the community to come together and reconnect with Singapore’s illustrious history as a major port city.”

Quality experiences

ArtScience Museum

“This museum is part of an entertainment and cultural component of Marina Bay Sands,” ArtScience Museum director Tom Zaller says. His goal is to create a museum-going culture in Singapore. “We have shown people another perspective of exhibitions using the latest design and technology to deliver content in a richer way than previously done inside museums.” DECEMBER 2011

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ArtScience’s current feature attraction, called “Titanic: The Artifact Exhibition”, demonstrates the versatility of the 6,000-squaremetre museum, shaped like a lotus leaf, which hosts mainly touring exhibitions. Covering 2,500 square metres, the Titanic exhibition is the largest to feature at the museum since it opened in February, and will run for nearly six months until the April 2012 centennial of the loss of the liner on its maiden voyage. Galleries have been transformed into reproductions of parts of the ship, including its grand staircase, which takes full advantage of the museum’s 7 metre-high ceilings. Visitors can smell shipboard aromas and, in the reproduction of the third-class bunkroom, hear the rumbling of the engine room that was adjacent to the original. The museum’s curators set up the exhibition in collaboration with the exhibition owner. It presents a memorable, seamless, high-quality experience – albeit with a S$28 (MOP173) price tag. DECEMBER 2011

SINGAPORE’S NEW EVENT HORIZON T

he opening of the Maritime Experiential Museum and Aquarium marked the beginning of the end of construction at Singapore’s Resorts World Sentosa. By the end of next year, the final pieces of the S$6.59 billion (MOP40.8 billion) casino resort will be in place. The museum’s yet-to-be completed aquarium will be connected to the world’s biggest oceanarium, Marine Life Park. The park will offer dry and wet experiences, says Resorts World Sentosa central zone operations director Jason Horkin, from watching sea creatures in tanks to swimming with them. ESPA, a spa and wellness retreat, will have treatments including seaweed and dolphin therapies. Nearby, the 200-room Equarius Hotel and a couple of dozen beach villas will have luxury accommodation, raising the number of rooms in the resort above 1,800. Singapore’s other casino resort, Marina Bay Sands, is nearly complete, a flagship Louis Vuitton and branches of United States nightspots Avalon and Pangaea having opened this year in crystal pavilions that seemingly float in the bay. The next big thing for Marina Bay Sands will be the opening of Bayfront Station in the middle of next year, linking it with the rest of the city by train, and probably adding to the bottom line of what is already the world’s most profitable casino resort.

109

ArtScience Museum

Resorts World Sentosa’s Maritime Experiential Museum and Aquarium features wrecks of its own, both real and virtual. The museum traces more than 1,000 years of traffic along the maritime equivalent of the Silk Road between China and Middle East. “There are a lot of maritime museums in Asia. Just about every country with a coastline has one,” Mr Horkin says. “What’s different is that few talk about the international scope of maritime history. This museum looks at Southeast Asia and beyond, China to Africa. “These are not traditional galleries in a museum. The way it’s designed, the way we operate it, guests have to go through it the way I want them to.”

Field trips Visitors are first introduced to early 15th century Chinese admiral Zheng He, or Cheng Ho in Cantonese, on the bow of

a full-size replica of his treasure vessel, the Bao Chuan. The Jewel of Muscat, a replica of a ninth century Arab dhow presented by Oman to Singapore, leads to the Typhoon Theatre, recreating a voyage from China to Oman through a storm. Designed by Super 78, which makes attractions for theme parks, the US$15 million (MOP120 million) show with special effects brings visitors through the storm and drops them on the ocean floor. “The Singapore government is involved down to the smallest detail to ensure these companies deliver,” Super 78 principal and director Brent Young says. “The government is making sure that there’s something local residents can be proud of.” Having survived the storm, visitors move on to a display of items from an early 15th century wreck off Bakau DECEMBER 2011

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Gaming

island, in the South China Sea near Singapore. The 8,600-square-metre museum will eventually be connected to an aquarium, part of the Marine Life Park due to open next year. Both casino resort museums endeavour to meet the stringent demands of the Singapore education system, which mandates that field trips relate directly to studies. “The good news is that Singapore is in the midst of reviewing [its] curriculum, so they will have a number of modules that tie in with our exhibitions,” Mr Horkin says. He says that schools are also cost sensitive, so special admission rates are as low as S$2, compared with the usual admission price of S$5.

Gaming camouflage Mr Horkin says the government’s wish to shield Singaporeans from the perils of gambling creates something of a dilemma. “In Singapore, there’s so much political posturing associated with the casinos. There are questions about the museum’s relationship with the casino,” he says. “On one hand, we’re saying we want schoolchildren to come here. On the other hand, you have the government saying that Singaporeans shouldn’t come here.” Mr Horkin stresses that the museum is run independently of the casino. “Every business unit here is run as a business. I’m not in a position to say the casino can pay our bills. In the museum context, that’s rare. Most are governmentsupported,” he says. “My team, many from the [Singapore] National Museum, has to think differently here.” As components of casino resorts, the museums have access to streams of visitors, averaging more than 53,000 a day at Marina Bay Sands and 35,600 a day at Resorts World Sentosa. The ArtScience Museum said 18,500 people visited its Titanic exhibition in its first 10 days, about one in every 30 visitors to Marina Bay Sands. No visitor figures are yet available for Resorts World Sentosa’s Maritime Experiential Museum and Aquarium but there appear to be hundreds every day. “We opened in the dead season on purpose, to give us a chance to work the kinks out,” says Mr Horkin. “Maritime museums usually get low visitation but I think we can do pretty well.” Both museums have set a course for smooth sailing ahead. DECEMBER 2011

Maritime Experiential Museum and Aquarium

AWASH WITH FISH T

he Maritime Experiential Museum and Aquarium at Resorts World Sentosa will get its aquarium, part of the Marine Life Park, next year. The park will include the world’s largest oceanarium, covering 80,000 square metres and containing 55 million litres of water, inhabited by more than 700,000 sea creatures. Visitors can feed sharks by hand, interact with dolphins, and swim with thousands of tropical reef fish. It sounds like a winner for Resorts World Sentosa and Singapore – except that Marine Life Park’s neighbour is Underwater World, where visitors already swim with dolphins, dive with sharks, and encounter thousands of fish and other denizens of the deep. Owned by Haw Par Corp, Underwater World opened in 1991 and attracts more than one million visitors per year. It is rare enough to have two worldclass aquariums in one city, let alone cheek-by-jowl on Sentosa, an island off southeastern Singapore. Genting Group, which owns Resorts World Sentosa, and Kerzner International Holdings Ltd, developer of the Atlantis resorts in the Bahamas and Dubai, both had oceanariums in the

proposals they made in 2006 for casino resorts in Singapore. So the tidal wave of watery attractions was not unplanned. For years, it seemed inevitable that Underwater World would somehow be absorbed by the new aquarium but that is not the way the tide is flowing now. Resorts World Sentosa officials shrug when asked about consolidating the attractions. Underwater World underwent extensive renovations last year so it could compete and seemingly has no plans to abandon ship. “Bearing in mind Singapore’s robust inbound tourism market, both attractions have their own appeal and should be able to develop their own market segments effectively,” says Chan Mun Wei, the director of the corporate planning division of Sentosa Leisure Group, which runs the island for the government. “Furthermore, more options would benefit local and foreign guests coming to Sentosa.” Industry experts predict that rival aquariums on Sentosa will mean aggressive marketing and heavy discounting. Perhaps it will take a rising tide of red ink to bring the oceanariums together.

111

MJ GALLERY: THIS IS IT T

o reach the heavens, hitch your wagon to a star. For Ponte 16, a joint venture between SJM Holdings Ltd. and Success Universe Group Ltd., the star is Michael Jackson and its MJ Gallery is the closest thing to a museum at any casino hotel in Macau. This memorial to the King of Pop opened in February last year, featuring Jackson’s rhinestone glove and sequined socks. “It brought a local player to the international level,” says Ponte 16’s deputy chief executive, Hoffman Ma Ho Man, who is also deputy chairman of Success Universe. “We get a lot of international media coverage. It’s a variety element for Ponte 16, another tourist destination for the city.” Mr Ma had always believed a museum focusing on something musical could benefit Ponte 16. “The cultural background of Macau is East meets West. Even our design was in that concept. We wanted to bring that cultural concept to music.” Jackson was an obvious choice. “He’s probably the most legendary musician of recent history.”

Stars attract

The rhinestone glove was worn at the 1983 Motown 25th anniversary event, where Jackson introduced the public to his moonwalk. Purchasing it for US$350,000 (MOP2.8 million) was just the start. “The gallery is a long-term commitment. It takes continuous effort to make it work,” Mr Ma says. He estimates that it cost MOP20 million to create the freeadmission gallery and buy the 40 or more items of memorabilia

in it. MJ Café, serving drinks and snacks, opened in August 2010. Mr Ma’s original vision also included a link with Julien’s Auctions, the seller of the Jackson glove, to build interest in this part of the world in auctions of celebrity memorabilia. This year, Ponte 16 and Julien’s teamed up with New World Department Store China Ltd. to show more than 100 pieces from its October auction in five mainland cities before selling them at Ponte 16. The exhibition included items connected with Princess Diana, Marilyn Monroe and Bruce Lee, among others. “In order for this culture to grow, we wanted to bring the items to the mainland,” Mr Ma says. “We tailor-made this exhibition with Julien’s for the mainland audience.” He says music, Michael Jackson and sports are the most popular themes there. But no matter how carefully you put together a museum, do not expect to profit from it, Mr Ma warns. “We’re lucky if it breaks even,” he says. MJ Gallery’s only proceeds come from its café and gift shop. The gallery gets an average of about 700 visitors a day, with spikes in numbers on dates significant in Jackson’s life or when he is in the news, such as during the trial of his physician, Conrad Murray. Macau has a lot of fine art and artefacts in its casino hotels, and some hold temporary exhibitions. Mr Ma would like to see casino operators or the government create more attractions. What kind does not matter. “A tourist attraction is a tourist attraction,” he says. “It’s the variety that helps Macau.” DECEMBER 2011

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GETTING THE WORD OUT THERE

Photos: Carmo Correia

native from the United Kingdom, the general manager of Banyan Tree Macau Rudy Oretti has made his hospitality career in the Asia-Pacific. Mr Oretti joined the pre-opening team of Banyan Tree Macau in June last year. He was previously general manager at Banyan Tree Ungasan in Bali, having also been part of its pre-opening team in 2007. His career began in 1987 with Sheraton Hotels in Australia and Hong Kong. He has also worked in Thailand, the Philippines and India. Mr Oretti is a graduate of the Ealing Hotel School in London. He subsequently attained an MBA and post-graduate diploma in marketing from Cardiff University Business School. A lover of travelling, golf and deep-sea fishing, the Briton admits he was positively surprised by Macau. “There is much more to do than I thought when I arrived. It is a big surprise,” he says. He stresses that Macau must fight the international perception that it is just a gambling destination. “That is the message we need to take out. You have got everything here: heritage, glamour and world-class hotel facilities.” DECEMBER 2011

Rudy Oretti

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Urban paradise

Known throughout Asia for its luxury beach resorts, the Banyan Tree Group has brought the idea of the urban resort to Macau anyan Tree Macau does not want to be just another five-star hotel. The property at Galaxy Macau is presenting itself as an urban resort, in the hope of attracting guests to stay longer. The idea of an urban resort is still relatively new to the Banyan Tree Group. It opened its first such property in Bangkok in 2002. “The urban resort concept is borne out of almost a necessity for international travellers who are time-poor and don’t have an opportunity to enjoy the usual five to 10 days holiday in Phuket or Bali but are looking for aspects of a popular holiday in a resort destination in a city,” says Banyan Tree Macau general manager, Rudy Oretti. “We believe we have enough resort facilities and services here to have guests wanting to stay more than just the traditional one day in Macau.” He says there are several characteristics of the property that add to the resort feel.

Bright results The Banyan Tree Macau comprises 227 suites and 29 villas. The resort is the first in Macau to feature private relaxation pools in all rooms, as well as two signature restaurants, a lounge and pool bar. Another lure is the Banyan Tree Spa. “All of our therapists are graduates of our Banyan Tree Spa Academy in Phuket, which is a big draw,” Mr Oretti says. “Since Galaxy Macau is such a destination in itself, an iconic building with its own resort features, including the largest sky-wave pool in Asia and its own sand beach, it completes Banyan Tree’s proposition.” Starting this month, Galaxy Macau will also add a Cineplex to the facilities and soon after, will open China Rouge,

a hybrid private membership club, performance theatre, bar and restaurant. So far, the formula is working, attracting longer staying guests, less than half of which are gamblers, says Mr Oretti. “We are experiencing guests that stay for a number of days,” he says, adding that the property is already “getting a strong repeat factor”. The strength of the public’s response to the resort’s opening caught management by surprise. Occupancies are over 90 percent, he says. “We are doing higher occupancies than we had budgeted, which is a wonderful problem to have. We were full for the first five days” of the National Day Golden Week. “Looking at the first few months of the next year, demand looks very strong and encouraging.” The general manager admits Macau “is not a typical destination for Banyan Tree,” which doesn’t operate in any other casino destination. “What was appalling for Banyan Tree was its proximity to Hong Kong, which is a very strong market for us, and the mainland itself,” he says. The presence in Macau works for the company as a springboard into the mainland, where the Banyan Tree Group is expanding fast. It is all about exposing the millions of Chinese tourists that are expected to flock to Cotai every year to the brand. “It is an opportune time to be on the doorstep of China,” says Mr Oretti. “Mainland Chinese outbound tourists are the number one geographical guests throughout the whole of Banyan Tree Group.” The group is expected to open 13 new properties in the mainland by the end of next year. The Banyan Tree Macau has been in operation since May 15 but officially DECEMBER 2011

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Hospitality

opened in September. But development on the site has continued throughout. Next to open is the presidential suite. It occupies two levels and includes a private gaming room. Nine additional spa treatment rooms are also set to open next year, bringing the total to 21. Mr Oretti says those extra spa rooms are a necessity because demand has been overwhelming. The company is famous for its spa services, which are part of the company’s DNA; it has more than 60 spas in its portfolio, double the number of resorts and hotels.

Unique product The villas came on stream in September and have received a good response from the market, the general manager says. “Occupancies are very buoyant; we DECEMBER 2011

“We are doing higher occupancies than we had budgeted, which is a wonderful problem to have,” says Banyan Tree Macau general manager, Rudy Oretti

have very high demand, particularly on the weekends. Most are taken by free independent travellers, most just from Hong Kong,” Mr Oretti says. Despite the good initial results, Banyan Tree is not planning to open a second property in Macau in the short term, but expansion of the hotel is possible in the second phase of Galaxy Macau, owned by the Galaxy Entertainment Group. “We will concentrate on this property for the time being,” he says. The resort is not without competition. Questioned about the potential impact on the bottom line by the opening of Sands Cotai Central next year, Mr Oretti says there is room for both. “The additional proposition makes people sharper and ultimately the customer will benefit from that. We have a very distinct property in Macau. I don’t think the products that are coming are too close to our space,” he says. “I think from a product differentiation point-of-view we are one of a kind in Macau.” Sands Cotai Central will feature more than 5,800 hotel rooms once complete, but competition for customers begins much closer to home for Banyan Tree. The Galaxy Macau complex has two other hotels, the Galaxy Hotel and Hotel Okura Macau. “We feel that we are complementary and each one being very strong,” Mr Oretti says. A bigger concern is human resources. Banyan Tree has a 500-strong workforce and Mr Oretti is happy with that number for now. He says the resort is seen as an employer of choice in Macau and adds the company is putting “a lot of effort” into employee relations and employee retention. But the hotel manager acknowledges the labour market “is a little tight” and things are expected to worsen as new properties open. He explains the main challenges for Banyan Tree Macau in the short term are to solidify its position and fine-tune all of the services and facilities. “We have to build the market,” he says. “We are already achieving our targets, but we can always work on the margins.” The biggest test for Banyan Tree will be to work towards a longer length of stay of guests throughout its urban resort concept. “We are not really designed for that [one night stay],” Mr Oretti says, adding that it is also negative to the growth of the in-house food and beverage business.

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TOP SPENDERS Per-capita spending of tourists increased by 7 percent year-on-year in the third quarter

The total spending (excluding gaming expenses) of tourists reached MOP12.1 billion (1.5 billion) in the third quarter of 2011, up by 25 percent from a year earlier, the Statistics and Census Service said. Per-capita spending of visitors amounted to MOP1,633, an increase of 7 percent year-on-year. Analyzed by place of residence, per-capita spending of

mainland tourists was the highest, at MOP2,026, but down 3.7 percent year-on-year. In the third quarter, per-capita non-shopping spending of visitors amounted to MOP823, up by 15 percent compared with a year earlier, of which expenses on accommodation and food and beverage accounted for 46 percent and 36 percent respectively. Per-capita shopping spending of visitors was similar to the third quarter of 2010, at MOP810, with local food products (22 percent), jewellery and watches (22 percent) and clothing (18 percent) being the more popular shopping items. Total spending and per-capita spending of visitors for the third quarter were extrapolated from 47,300 effective questionnaires collected.

VENETIAN OFFERS “MEET-FOR-FREE” PACKAGE Until January 15, meeting groups who book their accommodation for two consecutive nights or more at the Venetian Macao can enjoy their meeting facilities for free. The special “Meetfor-Free” package is valid for meetings held between April 1 and August 31, 2012, according to the Venetian Macao. The promotion comes at a time when Macau’s meeting and convention industry is contracting. Official data shows that in the second quarter of 2011, Macau played host to 258 MICE events, 29 percent fewer than a year before. The number of participants fell by around 9 percent to 119,000.

MAINLAND VISITORS ‘NEUTRAL’ ON MACAU TOURIST ARRIVALS SOAR The total visitor arrivals increased by 13.6 percent year-on-year to 2.38 million in October, the Statistics and Census Service said. The number was boosted by the National Day Golden Week. Same-day visitors accounted for 56.1 percent of the total. Analyzed by place of residence, visitors from the mainland surged by 30.5 percent year-on-year to 1.47 million, mostly from Guangdong province (755,000), Fujian province (88,000) and Hunan province (51,000). Total visitor arrivals reached 23.04 million in the first ten months of 2011, up by 11.4 percent year-on-year.

Mainland tourists still don’t see visiting Macau as a very memorable experience, according to a University of Macau survey released last month. When asked about the memories of their trip to Macau, about 400 mainland tourists gave the territory an average mark of 3.4 points out of five, Macau Daily Times reported. Mainland visitors ranked local casinos at the top of a list of the city’s attractions and services, with 4.3 points. At the bottom was transportation, with less than 3.1 points.

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Getting down

The hospitality sector is providing more accommodation options for budget travellers in an effort to maximise revenues BY SARA FARR

t is a well-known fact that few visitors choose to stay more than a day or two in Macau. Experts and industry players say that would change if there were more budget accommodation offerings. The number of licensed guesthouses and inns stands at 32, with 616 rooms, after the government issued a license to a new 40-room guesthouse on the peninsula last month. Still, five-star hotel rooms account for almost two-thirds of supply, with more than 14,000 rooms. The Macau Government Tourism Office says it “will continue to support investors in building budget hotels and guesthouses”, with the aim of diversifying “accommodation options to meet the different demands of visitors”. That is critical to the development of the industry because much more needs to be done, says Leonardo Dioko, director of the International Tourism Research Centre at the Institute for Tourism Studies. “Development of budget accommodation in Macau has lagged behind compared to the higher-end accommodation sector, effectively ignoring the needs of visitors with a tighter travel budget,” he says.

forced tourists to “avoid visiting Macau altogether”. Having more licensed guesthouses could lead to increased tourist numbers and an increase in tourist satisfaction, according to Mr Dioko. Value for money is an important part of determining

satisfaction, and satisfaction levels tend to increase if tourists find that a city is more affordable. “Accommodation costs comprise one of the biggest components of visitors’ overall expenses,” Mr Dioko says, adding that budget lodging alone does not

Small opportunities The lack of more affordable places to stay could also see Macau restricted to a certain number and profile of tourists. Mr Dioko says it has already convinced many visitors to “avoid staying the night and instead cross the border or go to Hong Kong”. In the most extreme cases, he says it has helped drive the number of illegal inns and guesthouses or

Five-star hotel rooms account for almost two-thirds of supply, with more than 14,000 rooms DECEMBER 2011

Renascenca guesthouse was licensed last month

117 guarantee satisfaction. Service is also a major factor that comes into play. “We don’t want to fix this simply by adding more budget accommodation rooms. It is imperative that we develop the software along with the hardware,” Mr Dioko says, calling for rigorous training at both frontline and managerial levels. Budget accommodation is where small and medium-sized enterprises could lend a helping hand. The government only needs to encourage them with “appropriate incentives,” he says. SMEs could build and run guesthouses, bed and breakfast inns and smaller, family-run hotels. Mr Dioko argues the move would “address not only economic advancement” but also the current imbalance between budget and luxury accommodation. SMEs in the hospitality industry have not received as much attention as the big operators, resulting in “skewed development and abnormal proportions” in the type of rooms on offer, he says. Developing more guesthouses and cheaper accommodation would also improve the diversity and uniqueness of the city’s offering. That is particularly true of boutique or family-run hotels that “exude a lot of the local character,” Mr Dioko says.

Turning the tables Gaming operators too are looking at ways to introduce three-star rooms to their offering. SJM Holdings Ltd. is one of them, targeting middle-class Chinese gamblers, hoping they will stay longer. The company’s director of opera-

tions development at the Grand Lisboa, Niall Sean Murray, was quoted in media reports last month saying that “there should be a larger portion of two- and three-star options if you want people to stay and play. There is an over-abundance of four and five-star rooms in Macau.” Mr Murray praised Galaxy Entertainment Group for Galaxy Macau, which although includes three five-star hotels, are actually targeting different customers, including middle-class mainland gamblers. “I don’t see this from a lot of the rest of the competitors but we firmly have it in mind,” Mr Murray was quoted as saying. “Kudos to them [Galaxy] if they recognise a segment of visitors whose needs are not being met,” Mr Dioko says, adding that he admires the gaming operator’s vision. The scholar adds it is only a matter of time before American-run gaming operators also realise the importance of satisfying the needs of the lower-end of the market. “But it’s also understandable that they have and are promoting an established brand image of luxury and premium,” he says. While Mr Dioko admits there may be concerns about the mixed signals that could be generated if American-run hotels were to offer budget accommodation, there are ways around it, he says. “There are, of course, famous American budget hotel brands that can easily partner without having to compromise the upper-end image they [American-run casino operators] have cultivated.”

VACANCIES HIT ALARMING HIGH

acau’s hotels had more than 5,200 job vacancies at the end of September, data from the Statistics and Census Service shows. The figure has more than doubled since the end of March. Hotels have one of the highest employee recruitment rates, 10.4 percent, and job vacancy rates, 12.3 percent, in Macau. The sector employed about 38,200 paid workers by the end of September – a 19.2 percent increase over the same time last year. In September, the average monthly earnings of a full-time hotel employee had increased by 4.7 percent year-on-year to MOP12,320 (US$1,540). Waiters earned an average of MOP7,310 and housekeeping staff pocketed MOP6,760.

GOVT PLANS MEETING ON TOUR DISPUTES

he Macau Government Tourist Office is worried by recent disputes over discrepancies in the itineraries of tours co-organised by mainland and Macau tour operators. At the heart of the issue is whether accommodation is included in the tours’ costs. The bureau announced it would meet with representatives from the tourism sector and notify the mainland tourism authorities. The most recent incident in a litany of disputes took place last month. A mainland tour group of 19 people accused their Macau tour guide of not providing them with accommodation. Their tour guide claimed it was not included in the package but the group maintained they had been informed by their mainland tourist agency it was. DECEMBER 2011

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

Letter to Santa DEAR SANTA, I HAVE BEEN A GOOD CUSTOMER OF MACAU’S HOSPITALITY INDUSTRY THIS YEAR, SO I THINK I’M ENTITLED TO A COUPLE OF WISHES ear Santa, what a year this was. It is hard to believe it is already December, the time for people to look back and assess the year passed. Some will use this opportunity to correct errors and get back on track towards their goals. Others will rest on their laurels without even thinking for a second about ways to improve. It is a pity. Sound familiar, Macau? Dear Santa, since Christmas is the season for giving, I would like to take this opportunity to use my wish list for the good of Macau. I know I am entitled to some comps, as I have been a faithful customer of Macau this year. I am one of the city’s best patrons. I have stayed in all the hotels, eaten in many of the restaurants and enjoyed some of the other attractions Macau has to offer. Unfortunately, as a hospitality evaluator, I cannot close my eyes to the city’s weaknesses and flaws. It is not my wish to criticise but to highlight unfulfilled potential, so that the reality may match the government’s aspirations to make Macau an international tourist destination.

to continue. I hold them partly responsible for the burlesque act that Macau’s hospitality sector has become: “The City of Swinging Employees”. I do not see hoteliers, with a few exceptions, committed to giving their employees proper training. They have their house training manuals, full of their hotel brand’s know-how, but it is not enough. Most hoteliers do not understand the Macau way. This lack of awareness of local idiosyncrasies is amazing. Granted, it is not easy to deal with workers that are compulsive quitters. Nevertheless, the inability of hotel managers to create adequate retention programmes and proper systems for assessing and rewarding, contributes to their problems. Where are their internal marketing programmes? Dear Santa, I wish for all Macau hoteliers more wisdom and creativity. Last but not least, please, Santa, grant my biggest wish. All those above are important, but without this one last wish being granted, they are meaningless.

Texting times ahead

Labour hope

So my first wish, dear Santa, is a huge alarm clock to shake and wake up Macau’s workforce. I really would like to be able to walk into any of the wonderful five-star hotels in town and see employees full of vitality, not numbed creatures working only for a monthly pay cheque. People, now is the time to get extra education and more qualifications. It is time to look for a brighter future. It is time to acknowledge the great opportunities further on down the road. Unfortunately, most hospitality workers are still fast asleep. Do they have any idea of how lucky they are to be working in a city where tourist arrivals are counted by the millions and where hotel occupancy rates reach or surpass 90 percent almost all year round? Is it that difficult for hospitality workers to understand that the only thing tourists want from them is a smile, respect and some real customer service? If, for a hotel employee, checking text messages while on duty at the front desk is more important than attending to a waiting guest, then we do have a lot of work ahead of us next year.

My last wish is for the government. The hospitality industry in Macau has experienced phenomenal growth over the past decade since the gambling industry was liberalised. That boom has also created challenges such as the labour crunch. Nowadays it is impossible to find enough qualified residents to fill jobs. This is happening as the local casinos face new competition from neighbouring countries – and not just Singapore. When this happens, patrons usually destined for Macau will have greater choice. They will choose those places offering exceptional customer service both in gaming and in hospitality – something which is hard to find in Macau. It is time for the government to increase the supply of labour. The city needs to import skilled workers to raise its competitiveness and it needs regulations to prevent jobhopping. The government has to help the workforce understand that importing labour will lessen their workload and give them opportunities to learn from experienced workers. Having more imported workers would also increase job competition. This would not significantly reduce the overall career opportunities for locals, but instead force them to become more responsible in their attitudes towards their work and their employers, which would be a good thing. So, Santa, I hope the government can find the inspiration to use common sense in its labour policy. I thank you in advance for making my Christmas a blast. I was not too greedy, making just three wishes. Please do not disappoint me.

Creative staffing Dear Santa, I have saved one of my wishes for the city’s hoteliers, hotel owners, directors and managers. I understand they are stuck in the eye of the storm. They have to deal with a government that appears ineffective in handling labour matters, while managing employees who are ready to jump to the next hotel for just a few hundred more patacas, without taking into consideration the effort and cost of their training. Nevertheless, those in charge of Macau’s hotels must take a huge amount of blame for allowing this state of affairs DECEMBER 2011

P.S.: Could you please give me the Tooth Fairy’s email address? I am owed a ton of money.

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December Date: Event:

5th - 6th

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

Hilton Alexandria Mark Center, Washington D.C. P.O. Box 16899, Clayton, MO, USA 63105 (1) 314 685 8965 www.bvmediagroup.com/ info@bvmediagroup.com

Date: Event:

7th

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

The Grange Hotel, Tower Hill, London Terrapinn Ltd Wren House, 43 Hatton Garden, London, EC1N 8EL (44) 20 7092 1000 (44) 20 7242 1508 enquiry.uk@terrapinn.com

DGLP – Digital Gaming and Lottery Policy Summit

Social Gaming and Virtual Goods World

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

23rd

International Gaming Awards

Sheraton Park Lane, London Clever Duck Media Suite 105 Park Plaza, Point South, Hayes Way, Cannock, WS12 2DB, UK (44) 0 1543 57 86 89 www.gaming-awards.com colin@gaming-awards.com 24th - 26th

ICE Totally Gaming

Earls Court Exhibition Centre Clarion Events Warwick Road, London, SW5 9TA, UK (44) 20 7370 8200 (44) 20 7370 8344 www.icetotallygaming.com charlotte.cowdrey@clarionevents.com

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

14th - 17th

5th Anti-Corruption Asia Congress

Renaissance Harbour View Hotel Beacon Events 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong (852) 2531 6107 (852) 2586 1999 www.beaconevents.com cs@BeaconEvents.com

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

21st - 23rd

Gaming Executive Summit LatAm

Panama City, Panama Terrapinn 96 Spring Street, 4th Floor, New York, NY 10012 (1) 212 379 6322 (1) 212 379 6319 www.terrapinn.com enquiry.us@terrapinn.com

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

6th - 8th

iGaming Asia Congress | Macau Grand Hyatt, City of Dreams, Macau Beacon Events 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong Kong (852) 2531 6107 (852) 2586 1999 www.beaconevents.com cs@BeaconEvents.com 16th - 19 th

ENADA Spring Rimini Expo Centre Rimini Fiera Via Emilia, 155, 47921 Rimini - Italy (39) 0541 744 214 (39) 0541 744 454 en.enadaprimavera.it g.zoni@riminifiera.it 29 th - 31st

2012 Macao International Environmental Co-operation Exhibition and Forum (MIECF)

Venue: The Venetian Macao-Resort-Hotel Organiser: Macao Trade and Investment Promotion Institute (IPIM) Address: World Trade Centre Building, 1st & 4th Floors, 918, Avenida da Amizade, Macao Tel: (853) 2871 0300 Fax: (853) 2859 0309 Website: www.ipim.gov.mo E-mail: ipim@ipim.gov.mo

If you know of an event that you believe should be listed with Macau Business, please drop us an e-mail: calendar@macaubusiness.com. In the subject bar, type in “List me as an event”. TBA : To be advised |

: A Macau Business partner event

DECEMBER 2011

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Technically challenged The almost 50 percent of Macau businesses who are on the information superhighway are hampered by shortages of specialist information technology skills BY HELDER BEJA

usiness is still unsure about computerisation and technology, with about half of Macau companies having zero information technology deployed in their operations. The 2010 Usage of Information Technology report released by the Statistics and Census Service last month does indicate a marginal improvement in uptake. The rate of IT usage by local companies increased to 48.7 percent last year from 46.3 percent in 2009, the survey found. The gaming industry is the business sector using information technology in a more comprehensive way. It is the only area where IT roll-out has been complete. All surveyed companies have made use of computerised systems at least since 2007, the first year when data was available. At the other end of the spectrum, restaurants continue to lag, with less than one-third using IT. Usage also falls below 50 percent in the wholesale and retail sectors, although posting a significant increase in 2010. Restaurants, and wholesale and retail businesses represent over three-quarters of the cityâ&#x20AC;&#x2122;s companies. The study shows that the rate of IT use increases in line with company size and turnover. Computers find the widest deployment in word processing, 23.4 percent; archives, 19.1 percent; and sales, 17.3 percent. Last year, one-fifth of companies engaged in IT usage renewed or upgraded their equipment. The gaming sector had the highest rate of upgrading and installing additional gear, both at 80 percent. Four out of each five enterprises using IT had an Internet connection last year, which they used mainly for online searches (35.6 percent), purchasing (18 percent) and sales (16.3 percent).

Staff shortages For the companies making the most of the cityâ&#x20AC;&#x2122;s IT infrastructure, there is the problem of recruiting skilled workers. In October, the Macau New Technologies Incubator Centre, together with the Macau Polytechnic Institute and the Macau Computer Society released the most recent edition of the Macau IT Skill Set Demand Survey, conducted in June and July. Of the 121 companies and government bureaus surveyed, 39 percent had found it difficult to recruit IT professionals in DECEMBER 2011

Technology

the past 12 months. The number is 12 percentage points lower than last year’s edition of this ongoing study. Managers found it especially hard to hire people for positions such as system administrators, programmers, business analysts or software engineers. Gaming, wholesale, retail and banking were the sectors facing more difficulties in hiring new staff. “Experience” and “tight labour market” were the major problems in finding the right staff, followed by “specialised skills”. “The supply of IT people still runs short of the demand,” says Patrick Lee Chang Boon, associate professor of Business Information Systems at the University of Macau. “This could be because people are not attracted to a career in the IT industry and that the educational institutions are not producing enough IT graduates.” Salaries in IT were above average, the survey found. For operations staff, about one-third of organisations were offering monthly salaries above MOP15,000 (US$1,875), with a ceiling at about MOP20,000. For specialists, salaries increased up to MOP25,000 in one-quarter of the companies surveyed.

Changing mindsets Brenda Chan Wing Han, an assistant professor of Business Information Systems at the University of Macau, sees education as the place where people should find answers to the

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lack of IT workers. “Most of the students tell me IT is a hardworking degree and they prefer something easier,” she says. “They really don’t want to put in that much effort in front of a computer.” “They believe that if they are able to take a job in accounting, they will be safer,” she adds. That’s one of the reasons why enrolment in IT degrees is “much lower” than expected. Ms Chan says changing perceptions would show students that IT requires effort but also is a developing field that offers opportunities. “Increasing the pool of IT graduates, however, takes time,” Mr Lee says. “If the pool of IT people is not increased, the problem will persist.” The survey found that more than half of respondents planned to recruit IT professionals in the next 12 months; network and telecommunications engineers, software engineers and system administrators are particularly sought after. To solve day-to-day staffing shortages, up to 60 percent of companies said they were planning to outsource their IT services. Mr Lee said this was a “potential solution” to mitigate shortages. Another would be to hire imported, skilled workers. “It could be a temporary solution for employers but in the long-term Macau really needs to develop its own IT staff,” Ms Chan says.

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Human Resources Important customers and partners may also resist changes in leadership. As business and personal relations are closely intertwined in Chinese culture, trusting a new face may not come easily.

Yes sir, no sir

One day, my son Family firms are the norm in Macau. Experts advise the older generation to prepare the succession carefully and in good time BY SARA SILVA MOREIRA

he year now coming to a close was marked by the family feud over control of Stanley Ho Hung Sun’s business empire. After a very public argument, all parties eventually settled, with Mr Ho apparently opting to parcel out his assets instead of nominating one clear successor. While Macau’s highest profile tycoon was dealing with a peculiar situation – having four different families to satisfy – experts advise heads of family firms to start grooming their successors right away. Mr Ho’s case demonstrated the kind of conflict that can arise from a lack of succession planning. In many cases, it leads either to poor choices of successors or to the need to break up a business empire among competing parties. Worldwide, one in three family firms is successfully passed from one generation to another, studies by ac-

DECEMBER 2011

countancy and business advisory firm BDO indicate. Other research goes even further, concluding that only around 5 percent of family firms continue generating shareholder value beyond the third generation. In Macau, family firms are common, especially among small and medium enterprises. Many have grown swiftly as the economy has boomed. As the generation in charge ages, succession planning becomes crucial, no matter what the size of the business. In many cases, the subject of succession planning is taboo, as it is associated with death. Heads of family firms may also be reluctant to relax their grip on power after years of hard work to build their businesses. They continue to focus on expansion and increasing profits, while neglecting to draw up a succession plan.

University of Macau associate professor of management Kong Siew Huat says heads of family firms in Macau are more aware of the need for succession planning than their counterparts in the mainland. He believes the difference lies in the level of trust; Macau entrepreneurs are more willing to entrust responsibilities within the enterprise to their heirs and employees and relinquish some of their power to make the handover smoother. Kevin Au, associate professor of management at the Chinese University of Hong Kong, says mainland entrepreneurs have not yet even started to consider the problems that succession may cause, or ways to preserve the integrity of their enterprises and the wealth of their families. Management experts advise entrepreneurs to start planning ahead - up to a decade, if possible. The later they start, the more likely it is that the handover will encounter difficulties. In Western enterprises, grooming the next generation for leadership has become common practice. Succession planning is done well in advance and involves the entire management. Chinese businesses, however, have a different structure, reflecting a different culture and tradition. The founder of a Chinese family firm is “the patriarch of the family and the business”, says Mr Au. The founder prefers to stay at the helm of the enterprise and have the final say on most matters. Even a unanimous executive board avoids overriding the founder’s decisions, fearing that it would be seen as an insult.

Kids in charge Even mentioning succession planning is often misinterpreted as an implication that the entrepreneur is no longer up to the task of leading. This means the initiative must usually come from the entrepreneur themself. It should begin with passing some power to an executive board, allowing it to assess the talent within the company and set development tasks. Another option is to hire an independent assessment

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Stanley Ho’s case demonstrated the kind of conflict that can arise from a lack of succession planning company, which would be free of emotion and able to evaluate more rationally a potential successor, whether or not the offspring of the entrepreneur. A survey in 2005 by the journal China Perspectives indicated that nine out of 10 mainland entrepreneurs intended their children to take over their businesses. But if parents fail to invest in training their children, they may end up handing over their businesses to people who are not up to the job. Mr Kong says Macau entrepreneurs do invest in training their heirs. Some even demand that their heirs work abroad or in other companies or another field altogether to acquire experience and diversify their abilities. The same can be said of entrepre-

neurs in Hong Kong, where the second generation often “has a Western education and access to more modern management ideas and technologies,” says Mr Au. When relatives disagree among themselves about who should take over, deciding early on who should do what in managing a business can prevent disagreement from becoming conflict. It also gives more time for training.

Going pro Mr Au says it is important to establish a family council, “with someone in charge to initiate, strengthen and facilitate communication between family members”. Many enterprises in Hong Kong that followed this model and selected the

best talent from within the family have passed successfully from one generation to another. In the mainland, however, it is more likely there will be only one heir, a result of the one-child policy. If he or she is unprepared or unwilling to head the enterprise, there is always the option of hiring professional managers from outside or bringing in another relative, if he or she is better prepared. Mr Kong says Macau entrepreneurs are more willing than their mainland peers to look for outside talent. Mr Au says mainland entrepreneurs have been watching and learning from the success of Hong Kong and Macau businesses, and are starting to introduce imported management ideas. These include bringing in more foreign professional managers – as in the case at internet services company Tencent Holdings Ltd., which has two foreign senior executives. Grooming talent for the top serves a company as a whole, allowing it to survive and grow, experts stress. Macau family firms seem to be on the right track but the ability of the second generation will soon be tested.

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Business

Photos: Gonçalo Lobo Pinheiro

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Art for money’s sake In the creative and cultural sector, Macau Creations is the belle of the ball – albeit in a ballroom of wallflowers BY LIA CARVALHO

he need to diversify the economy by nurturing creative and cultural industries has long been a staple of the government’s rhetoric but not much has been done so far. Amidst this hive of inactivity, one company stands out: Macau Creations Ltd., which probably has the largest privately-owned portfolio of creative brands in town. Macau Creations designs custommade products using artworks by local artists as motifs. It opened its first shop in July last year and has been expanding ever since. Its sales are now growing at double-digit rates. The company’s chief executive and creative director, Wilson Lam Chi Ian, is the man behind this success. After more than 25 years in Canada, the graphic designer returned home to Macau in

DECEMBER 2011

2009 and set up Macau Creations. The enterprise opened its first shop-cumart gallery near the Ruins of St Paul’s. It opened its second last September, the Cunha Bazaar, a collaborative effort with Choi Heong Yuen Bakery, a company which has been making almond cakes here since 1935. “We are both Macau creative. We both have our products. We are both local companies and we both produce local goods,” says Mr Lam. Like the flagship store, the Cunha Bazaar is in one of the busiest tourist areas in town – in this case on Rua do Cunha in Taipa. Visitors are the company’s main market. The four-storey building is hard to miss, since its exterior wall is covered with hand-painted cartoons. Choi Heong

Yuen Bakery occupies the ground floor and Macau Creations the other three. Macau Creations also has a partnership with the Venetian Macao, where its products have been available in the souvenir shops since last December. Its merchandise is similarly on sale at the gift shop at the Mandarin’s House and at the Art Museum shop, beside the Portuguese Bookshop. It also has an online store.

Edgy humour The company owns eight brands, ranging from Goolu Goolu mugs to O Moon T T-shirts. The most successful brand is probably Soda Panda. Macau Creations exploited the panda craze whipped up by the arrival last year of Hoi Hoi and Sam Sam, the pandas given to the city by

125 Beijing, creating a line of panda-theme goods with an amusing Macau twist. Macau Creations also creates or manages brands for other enterprises. With the Venetian, it rejuvenated the Gino and Dino brand of children’s wear. “The brand existed but I felt that it needed to be upgraded,” Mr Lam says. “We also accept organisations [and] government [agencies] who want to create gifts. We can do it for them.” The business model is straightforward. The company takes artworks by local artists and reproduces them on objects such as mugs, bags, notebooks, soap and T-shirts. The design, quality and edgy humour distinguish its products from those of its competitors. “We feature, produce and manufacture souvenirs. But we use mainly local Macau artists and this is Macau Creations,” Mr Lam says. The company also sells prints of paintings, made using the Hahnemühle micro-jet printing technique, which integrates traditional papermaking with modern technology. This is a technique used by the souvenir shops in several important museums around the world. Its reproduction is up to 95 percent accurate.

Power of veto Everything starts with a first contact between Mr Lam and the artists. They show him their artworks and, if he likes them, they are added to the company’s database. The company does not buy the artworks. It keeps digital copies and in due course incorporates them in its product design. Artists are paid a commission on the products sold that bear their work. The copyrights remain with the artists, who also have a say over how their work is used. They are shown all product pro-

“We feature, produce and manufacture souvenirs. But we use mainly local Macau artists and this is Macau Creations,” says the company’s chief executive and creative director, Wilson Lam

PATRON OF THE ARTS W

ith more than 30 years of experience in design, Wilson Lam Chi Ian had already established a career in Canada and Macau before founding Macau Creations Ltd. He has led projects for entrepreneur and television personality Donald Trump, Air Macau Co Ltd., Bank of China Ltd. and Coca-Cola Co., and acted as a design consultant for the University of Macau. He has been involved in designing stamps in Canada and Macau. Mr Lam started working in advertising when just a teenager. In 1980, he set up his own advertising agency, leaving for Canada three years later. There, he attended the Ontario College of Art and Design for Corporate Design and in 1993 established his own design firm in Toronto. Now back in his home town, Mr Lam says he wants to show to the world there is more to Macau than gambling. “Thirty years ago, when I asked people [if they knew Macau, they] would say it was near Hong Kong. Thirty years later, they only know casinos. We have something else. We have a lot of artists.”

totypes. “If they don’t like it, we don’t produce it and that is the deal,” Mr Lam says. “We always show [them]. That is called respect.” Macau Creations has partnerships with over 30 artists. Among them are some of the city’s best, such as Konstantin Bessmertny, Carlos Marreiros and Mio Pang Fei. The company’s shops are also a way for artists to promote their work, with several products including a small introduction to the artist. Mr Lam says that, as time goes by, he is becoming smarter about which products have potential and which will be flops. His ultimate goal is to take the Macau Creations brand to a global audience. Its products are already available at the Seventh Art Centre in the eastern mainland city of Wenzhou. The company has participated in fairs in the mainland and, for the past two years, in the Macau International Trade and Investment Fair. This year it even displayed some of its clothing at a fashion show during the event. “The Macau International Trade and Investment Fair is a great opportunity to show us to the public,” says Mr Lam.

No easy money Setting up Macau Creations was hard, demanding a lot of investment in the design office and in product design and manufacturing – all without cash flow. Mr Lam was lucky to have the financial support of his brother. “It is not a small investment and we know that the return is very slow, takes time,” he says. Asked if the government is doing enough to help creative and cultural industries to thrive, Mr Lam replies that it is trying but that you have to know what kind of help it can give. He highlights the establishment in March of the Macao Creative Pavilion, in front of the Ruins of St Paul’s. There, creative companies can show and sell their products without paying any rent, Mr Lam says. Macau Creations is among them. Mr Lam says the government “should do a little bit more financially” to help but stresses that he is not asking it to shower creative and cultural industries with easy money. He says success is there for the taking – at a price. “It is difficult. The cost is high and everything is very expensive in Macau. But if you want it, you have to fight for it.” DECEMBER 2011

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Arts & Culture

CRACKING BALLET

A CHRISTMAS TRADITION REINTERPRETED AND DELIVERED AT CHINESE NEW YEAR, “FIRECRACKER” IS A LIGHT-HEARTED AND ENTERTAINING ROMP ur sister territory across the delta delivers the gift of nostalgia to the Macau Cultural Centre this Chinese New Year with the Hong Kong Ballet’s performance of “Firecracker”. This 105-minute piece is adapted from the Christmas-time staple “The Nutcracker”, matched to the full score created by Pyotr Ilyich Tchaikovsky. Where the “Firecracker” deviates from that more well-known script is with a nostalgic storyline of Hong Kong in the 1960s, including riots, movie stars, royal visits and glamour. Acclaimed choreographer Yuri Ng produces an engaging, energetic and colourful story that pays homage to the era’s film scene, exploring its stereotypes and imagery.

The bittersweet title takes its inspiration from 1967, a tumultuous year not only in Macau following the December 1966’s “1-2-3” clash, but also in Hong Kong, where the territory was wracked by deadly Leftist riots in support of the Cultural Revolution in the mainland. Bombs – both fake and real – were hidden across the city so the colonial government banned any explosive device without a permit. That ban included firecrackers, traditionally set off as part of Chinese New Year celebrations to ward off evil spirits. The adaptation spices up the famous Christmas fable with likely events from the era, in mix of East and West, past

127 and present. Ng Yuri has reinvented and transplanted the characters from their European roots and placed them in a new setting inspired by Chinese popular culture, traditional tales and history. The visually dazzling production depicts Lunar New Year celebrations and misses none of the holiday’s traditional elements such as peach blossoms, spring couplets, lion dances, mahjong games, red packets and firecrackers.

Present past The ballet’s first act begins during a New Year reunion, replacing Christmas. Our lead character is Uncle Tak, who is more akin to Uncle Drosselmeyer from “The Nutcracker” and no longer Clara in the Christmas fable. Tak is an old hand from the movie industry, more familiar with a Hong Kong before firecrackers were banned. The ballet weaves its way through his memories of the 1960s. Instead of the battle between the toy soldiers and mice, we are presented with police and rioters. In the artful reinterpretation of the snow scene, Uncle Tak takes us through a spell in hospital where he is attended to by nurses rather than the corps de ballet of snowflakes. The second act stays true to the original formula of lively, creative dance, but weaves traditional themes and humorous vignettes. It serves as a tribute to Hong Kong’s golden age of cinema and is filled with expressive choreography. We witness a recreation of a visit to Hong Kong by Britain’s royal family,

a parade of sword fighters, a gong fu cat woman, and a saucy starlet – perhaps porn star – surrounded by her many male admirers. The grand ‘pas de deux’ sees the Sugar Plum Fairy and Nutcracker Prince danced by the lead stars in the course of shooting a film. It is light, full of comedy and immensely enjoyable to watch. The “Firecracker” has been a staple of Hong Kong’s performing arts troupes since 1997, one that has won many plaudits along the way. The South China Morning Post described the choreography as “lively, expressive and organic”. The Financial Times thought the performance “showed off the Hong Kong Ballet dancers at their best”. The troupe’s artistic director Madeleine Onne is rightly proud of the home-grown work. “Building an original repertoire for the Hong Kong Ballet is one of our on-going goals. ‘Firecracker’ is a celebration of Hong Kong as well as a fanfare for the impending Chinese New Year,” she writes in the programme notes. While “Firecracker” is cleverly pieced together, it is also timed masterfully to run in Macau on January 20 and 21 – on the brink of Chinese New Year. The cast is set to make full use of the scale of the stage in the Cultural Centre’s Small Auditorium, while giving the audience an up-close experience that the usual ballet audience doesn’t enjoy.

FIRECRACKER THE HONG KONG BALLET DATE January 20 and 21 TIME 8pm VENUE Small Auditorium, Macao Cultural Centre TICKETS MOP180, with discounts for seniors, students, group buys, early birds nd friends of the Cultural Centre. Available at the box office and Kong Seng outlets TICKETING ENQUIRIES www.macauticket.com or dial (853) 2870 0699 MORE INFORMATION email enquiry@ccm.gov.mo or visit www.ccm.gov.mo

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Arts & Culture Baie du Mont-Saint-Michel, France

Historic Centre of Brugge, Belgium

Frontiers of the Roman Empire - Hadrian’s Wall, UK

Historic Centre of the Island of Pátmos, Greece

HERITAGE GRANDEUR

A PHOTO EXHIBITION BRINGS IMAGES OF SEVERAL OF EUROPE’S UNESCO-LISTED HERITAGE SITES TO MACAU s the birthplace of Western culture filled with a rich and colourful history, Europe has the highest concentration of cultural and natural heritage that the United Nations Educational, Scientific and Cultural Organisation (UNESCO) considers as having “outstanding universal value”. However, not everybody is likely to have the opportunity to admire all the UNESCO World Heritage Sites scattered throughout the continent. An alternative therefore has been brought to the people of Macau until the end of January: a photo exhibition showcasing dozens of heritage sites in 14 European Union Member States. Titled “European Splendour: Photo Exhibition of DECEMBER 2011

UNESCO World Heritage Sites in the European Union”, the two-month event features a total of 42 photos of some of the preserved sites that are considered by UNESCO as having special cultural or physical significance to the common heritage of mankind. Organised by the Cultural Affairs Bureau, the Consulate General of the Republic of Poland and the Office of the European Union to Hong Kong and Macau, and co-organised by the consulates of the European Union Member States in Hong Kong and Macau, the exhibition is held on the occasion of the Polish presidency of the European Union. Photos being displayed in the public corridor outside the Macao Museum on the Mount Fortress include La Grand-

129 City of Graz - Historic Centre, Austria

Place in Brussels, the historic centre of Prague, the Cathedral of Santiago de Compostela in Spain and the cultural landscape of Sintra in Portugal, just to name a few.

Heritage blend There is much more to see. Austria’s Graz historic centre, also presented in the exhibition, is a fine example of the living heritage of a central European urban complex that was under Habsburg rule for many centuries. The old city is a blend of architectural styles and artistic movements that have succeeded each other from the Middle Ages until the 18th century, together with cultural influences from the neighbouring regions of Central and Mediterranean Europe. The sanctuary of Wies designed in the late 1740s is a pilgrimage church preserved in the beautiful setting of an Alpine valley in Bavaria, Germany. It is a perfect masterpiece of Rococo art. Meanwhile, the archaeological site of Delphi is one of the most important ancient relics of Greece. Blending with the superb landscape and charged with sacred meaning, in the 6th century B.C. Delphi was the religious centre and symbol of unity of the ancient Greek world. The city of Rauma is one of the oldest harbours in

Fortress of Suomenlinna, Finland

Finland first mentioned in 1441. Built around a Franciscan monastery, where the mid-15th-century Holy Cross Church still stands, Rauma integrates traditional wooden architecture and urbanism. Another world heritage site highlighted in the exhibition is Stonehenge, Avebury and associated sites. They are among the most famous groups of megaliths in the world and the two sanctuaries consist of circles of menhirs arranged in a pattern whose astronomical significance is still being explored. The exhibition also displays images of the rock carvings in Tanum, in the north of Bohuslän, Sweden. Their range of motifs – including depictions of humans and animals, weapons, boats and other subjects –, techniques and compositions provide exceptional evidence of many aspects of life in the European Bronze Age. According to UNESCO, the World Heritage List includes 936 sites to date: 725 cultural, 183 natural and 28 mixed properties in 153 countries. As of November, 188 states had ratified UNESCO’s World Heritage Convention. Italy is currently home to the largest number of world heritage sites with 47 places inscribed on the list. DECEMBER 2011

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Corporate Social Responsibility

Charity play Cheque presentation luncheon wraps up the fifth running of the Annual Macau Business Charity Golf Tournament cheque presentation luncheon held last month at Aurora restaurant, in Altira, brought together the beneficiaries, sponsors, winners and event organisers of the fifth Annual Macau Business Charity Golf Tournament. Team Greatest Caesars, made up of Eason Lee, Chris Connell and Bo Lai Ao, was the net score tournament winner. They won the right to nominate a charity to forward their HK$100,000 winnings to and chose the Macau Special Olympics. The gross score tournament winners were Ben Toh, Siu Bing Cheung and Zhi Hang Guo, from the Sands China Team II. They nominated Caritas’ Lar de Nossa Senhora da Penha as the beneficiary of their HK$100,000 winnings. The institution, which takes care of abandoned children and those at risk from physical or psychological abuse, was already one of last year’s recipients. Main event sponsors of the fifth Annual Macau Business Charity Golf Tournament & Gala Dinner included Melco Crown Entertainment, Australian casino The Star, Caesars Golf Macau and The Westin Resort. Among the special fifth anniversary edition supporters were Sands China, Galaxy Entertainment Group and Wynn Macau. Other major sponsors

A record number of 33 three-member teams representing the cream of Macau’s socially responsible corporate citizens took part in the two-day tournament

Photo: Gonçalo Lobo Pinheiro

included SJM Holdings and MGM China Holdings. The success of the event was as much a result of the patronage of the golf outing itself, as it was of the charity gala dinner, where a traditional charity auction helped to further raise extra money for social projects in Macau and the region. Generous bidding patrons included long time event supporter The Roadhouse Macau. A record number of 33 three-member teams representing the cream of Macau’s socially responsible corporate citizens took part in the two-day tournament, with one round held at Caesars Golf Macau and the other taking place at the Macau Golf and Country Club.

From left to right: Event organisers Luis Pereira and Stefan Kuehn, Li Wei (Caesars Golf Macau), Gunther Hatt (Sands China), Catherine Iu (Galaxy Entertainment Group), Stephan Winkler (The Westin Resort Macau), Xenia Choi (MGM China Holdings), Paul Pun (Caritas Macau), Sharon Cheong (Melco Crown Entertainment), Siu Yu Hong (Macau Special Olympics), Karen Lam (MGM China Holdings), Lindsay Stewart (SJM Holdings), Katharine Liu (Wynn Macau) and Paulo A. Azevedo (Macau Business) DECEMBER 2011

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A YEAR TO REMEMBER Last month’s 58th Macau Grand Prix will be remembered for a long time, for several reasons. For starters, it rained on the first couple of days, something unusual! Michael Rutter finally overtook Ron Haslam’s record, becoming the first rider to win the Macau Motorcycle Grand Prix seven times. The Guia Race was once again decisive for the FIA World Touring Car Championship drivers’ title: reigning champion Yvan Muller had to wait for the last race to grab his third WTCC title, although runner-up Robert Huff did put up a fight, winning

DECEMBER 2011

Photos by Greg Mansfield

both Macau legs. And in Formula 3, there was a surprise champion: Spaniard Daniel Juncadella. The Grand Prix attracted 65,000 spectators, setting a new record for ticket revenues of MOP10 million (US$1.25 million). Some challenges now lie ahead, as the man responsible for bringing some of the world’s greatest road racers to Macau for almost three decades, Mike Trimby, announced he would not return in 2012, allegedly due to clashes with a member of the organising committee.

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134 ROBERT J. SHILLER PROFESSOR OF ECONOMICS, YALE UNIVERSITY

The neuroeconomics revolution IT IS LIKELY THAT ONE DAY WE WILL KNOW MUCH MORE ABOUT HOW ECONOMIES WORK – OR FAIL TO WORK – BY UNDERSTANDING BETTER THE PHYSICAL STRUCTURES THAT UNDERLIE BRAIN FUNCTIONING conomics is at the start of a revolution that is traceable to an unexpected source: medical schools and their research facilities. Neuroscience – the science of how the brain, that physical organ inside one’s head, really works – is beginning to change the way we think about how people make decisions. These findings will inevitably change the way we think about how economies function. In short, we are at the dawn of “neuroeconomics”. Efforts to link neuroscience to economics have occurred mostly in just the last few years, and the growth of neuroeconomics is still in its early stages. But its nascence follows a pattern: revolutions in science tend to come from completely unexpected places. A field of science can turn barren if no fundamentally new approaches to research are on the horizon. Scholars can become so trapped in their methods – in the language and assumptions of the accepted approach to their discipline – that their research becomes repetitive or trivial. Then something exciting comes along from someone who was never involved with these methods – some new idea that attracts young scholars and a few iconoclastic old scholars, who are willing to learn a different science and its different research methods. At a certain moment in this process, a scientific revolution is born. The neuroeconomic revolution has passed some key milestones quite recently, notably the publication last year of neuroscientist Paul Glimcher’s book “Foundations of Neuroeconomic Analysis” – a pointed variation on the title of Paul Samuelson’s 1947 classic work, “Foundations of Economic Analysis”, which helped to launch an earlier revolution in economic theory. And Mr Glimcher himself now holds an appointment at New York University’s economics department (he also works at New York University’s Centre for Neural Science).

All in your head To most economists, however, Mr Glimcher might as well have come from outer space. After all, his doctorate is from the University of Pennsylvania School of Medicine’s neuroscience department. Moreover, neuroeconomists like him conduct research that is well beyond their conventional colleagues’ intellectual comfort zone, for they seek to advance some of the core concepts of economics by linking them to specific brain structures. Much of modern economic and financial theory is based on the assumption that people are rational, and thus that they systematically maximize their own happiness, or as economists call

The brain, the computer and the economy: all three are devices whose purpose is to solve fundamental information problems in coordinating the activities of individual units – the neurons, the transistors or individual people DECEMBER 2011

it, their “utility”. When Mr Samuelson took on the subject in his 1947 book, he did not look into the brain, but relied instead on “revealed preference”. People’s objectives are revealed only by observing their economic activities. Under Mr Samuelson’s guidance, generations of economists have based their research not on any physical structure underlying thought and behaviour, but only on the assumption of rationality. As a result, Mr Glimcher is sceptical of prevailing economic theory, and is seeking a physical basis for it in the brain. He wants to transform “soft” utility theory into “hard” utility theory by discovering the brain mechanisms that underlie it. In particular, Mr Glimcher wants to identify brain structures that process key elements of utility theory when people face uncertainty: “(1) subjective value, (2) probability, (3) the product of subjective value and probability (expected subjective value), and (4) a neurocomputational mechanism that selects the element from the choice set that has the highest ‘expected subjective value…’” While Glimcher and his colleagues have uncovered tantalizing evidence, they have yet to find most of the fundamental brain structures. Maybe that is because such structures simply do not exist, and the whole utility-maximization theory is wrong, or at least in need of fundamental revision. If so, that finding alone would shake economics to its foundations. Brain, computer and economy Another direction that excites neuroscientists is how the brain deals with ambiguous situations, when probabilities are not known, and when other highly relevant information is not available. It has already been discovered that the brain regions used to deal with problems when probabilities are clear are different from those used when probabilities are unknown. This research might help us to understand how people handle uncertainty and risk in, say, financial markets at a time of crisis. John Maynard Keynes thought that most economic decisionmaking occurs in ambiguous situations in which probabilities are not known. He concluded that much of our business cycle is driven by fluctuations in “animal spirits”, something in the mind – and not understood by economists. Of course, the problem with economics is that there are often as many interpretations of any crisis as there are economists. An economy is a remarkably complex structure, and fathoming it depends on understanding its laws, regulations, business practices and customs, and balance sheets, among many other details. Yet it is likely that one day we will know much more about how economies work – or fail to work – by understanding better the physical structures that underlie brain functioning. Those structures – networks of neurons that communicate with each other via axons and dendrites – underlie the familiar analogy of the brain to a computer – networks of transistors that communicate with each other via electric wires. The economy is the next analogy: a network of people who communicate with each other via electronic and other connections. The brain, the computer and the economy: all three are devices whose purpose is to solve fundamental information problems in coordinating the activities of individual units – the neurons, the transistors or individual people. As we improve our understanding of the problems that any one of these devices solves – and how it overcomes obstacles in doing so – we learn something valuable about all three.

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AN ‘F’ FOR BUDGET CALCULUS Dear reader, prepare for the unexpected. The budget to build the new campus of the University of Macau on Hengqin Island has soared by 50 percent to MOP9.8 billion (US$1.2 billion), the government announced last month. You must be asking yourself how that could be possible. After all, the government is world famous for its accuracy in budgeting for public works. Or is it? The budget for the first phase of the long-promised light rail transit system is currently expected to reach MOP11 billion, up 47 percent from the previous 2009 estimate. Worse still is the new ferry terminal in Taipa, whose initial 2005 cost has at least doubled. Why are our officials so bad with numbers? Maybe Santa could provide them with a calculator.

SHAKE-UP REQUIRED Frozen Spy believes in treating animals with respect and supports People for the Ethical Treatment of Animals. What is not to like about an organisation that uses barely clothed models to attract people’s attention to important issues. PETA held its second ever protest in Macau last month, in Leal Senado Square. The goal was to alert shoppers to the use of exotic animal skins in fashion. Frozen Spy applauds PETA’s protest but thinks the organisation might have some way to go in Macau. Sales of exotic leather goods have been increasing at double-digit rates, shark fin is still widely available and every year dozens of greyhounds are put down once they are deemed unable to continue racing at the canidrome. These questionable practices are only possible due to a lack of concern from the government about animal rights. Highlighting that fact, there is still no deadline to establish an animal welfare law in Macau. PETA people, it is time to adopt a targeted approach. Next time, flash Fernando Chui Sai On.

QUESTIONS REMAIN AFTER BAILOUT Christmas came early at Air Macau. The government handed the carrier MOP700 million (US$87.5 million) in a cash-for-shares deal that increased its holding, but by far less than should be expected. The deal is unsurprisingly convoluted. The airline’s equity was raised to MOP442 million from MOP400 million, involving the issue of 420,420 new ordinary shares, each with a nominal value of MOP100. The newly created shares were offered exclusively to the government but with an additional – and unexplained – premium of MOP658 million, about MOP1,565 a share. While the deal boosts the government’s stake in Air Macau to 21.5 percent from 5 percent, making it the airline’s second-biggest shareholder, it does not accurately reflect the real size of the investment. The government would be the majority shareholder under normal circumstances. Frozen Spy knows things at Air Macau are bad and is pleased to see action being taken, but the deal is one of the most bizarre the government has made. There is a question mark over why it threw money at Air Macau but would not discuss a bailout for either low-cost carrier Viva Macau or budget ferry operator Macao Dragon. Air Macau is the city’s flagship carrier but that does not mean it should be favoured by sweet deals such as this, even if it is majority controlled by state-owned Air China.

THE HAND THAT FEEDS Macau residents rightfully complain about inflation. Food prices are increasing, as are the costs of housing and transport. However, the city’s tourists have more to complain about. The latest Tourist Price Index released by the Statistics and Census Service shows goods and services typically purchased by visitors are becoming more expensive at an even faster rate than the typical basket of goods and services bought by residents. Since the second quarter of last year, the Tourist Price Index has posted double-digit increases over the same period a year before. By the end of September, accommodation costs for tourists had soared by almost 50 percent year-on-year. With visitor arrivals destined to increase for at least the short term, it is easy for companies to continue pushing prices of tourism-related goods and services to unreasonable heights. But the stories of businessmen chasing a fast buck seldom have a happy ending.

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Galaxy Entertainment Group

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MGM Macau

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MGTO

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Morton’s The Steakhouse

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PokerStars Macau

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Sands China

Page 09, 56-59 and 75

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SJM

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Spielo

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Sofitel

Page 41

www.sofitel.com

WH Consulting

Page 43

www.wh-consulting.net

Wynn Macau

Page 77

www.wynnmacau.com

Zung Fu Motors – Mercedes

Page 05

www.zungfu.com.mo

To advertise call 28331258 or email us at pub@macaubusiness.com Go to www.macaubusiness.com/advertising for media kit DECEMBER 2011