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Photo: Carmo Correia
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Pedro Cardoso
Transport 26 Clear skies ahead Air Macau’s chairman says things are turning around for the airline
Politics 32 No future Young people are apathetic about public affairs 35 Closing sentence Ao Man Long to spend a total of 29 years in jail
Greater China 36 No simple answers Chen Guangcheng’s case is unlikely to set a precedent 38 Richer but not happier Money is not bringing more happiness to the mainland
Property 40 Inside jobs The interior design industry is expanding fast 44 Manhattan transfer A group of investors find a way to bypass the special stamp duty 46 School of cynical design Macau is an expression of casino urbanism, says American architect Jonathan Solomon
JUNE 2012
CEO Interview 52 Get set for growth BNU chief executive Pedro Cardoso unveils the bank’s strategic plan to boost growth
Gaming 58 Playing for big bucks Maiden survey sheds light on visitors’ average casino gambling spending 62 Pushing upwards A wave of new resort development may indicate a shift in policy 68 Wielding a brand As more casino resorts open in Cotai, good marketing is becoming increasingly important 72 Coming of age Croupiers and analysts alike applaud raising the minimum age for employment in casinos 76 The false shuffle Grand Lisboa the victim in a shuffler scam 78 Russia’s rising Vegas Vladivostok is setting itself up to be a leading gaming player in Asia
Special 81 G2E Asia A comprehensive report on last month’s event
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Photo: Luís Almoster
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Tourism 106 Commanding comfort Pousada de São Tiago is the city’s only heritage hotel
MB Report 110 Outside the law Macau lags behind other countries in protecting animals
Human resources 116 Let’s talk business Macau’s workforce is not proficient enough in English
Arts & Culture 120 Dark places Macau Cultural Centre welcomes the Danish physical theatre company Mute Comp
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Opinion 11 From the publisher’s desk Paulo A. Azevedo 13 Editorial Emanuel Graça 25 The myth of Chinese meritocracy Minxin Pei 34 Reform sophistry Bill Kwok-ping Chou 39 Back to basics José I. Duarte 51 Shock-proofing Asia’s economies Noeleen Heyzer 75 A game changer Gustavo Cavaliere 80 Power to Asia’s women Astrid S. Tuminez & Vishakha N. Desai 104 Feed the mind, mind the belly Keith Morrison
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Editorial Council Paulo A. Azevedo, Tiago Azevedo, Duncan Davidson, Emanuel Graça, Cris Jiang Founder and Publisher Paulo A. Azevedo VOL.1 Nº98
pazevedo@macaubusiness.com
Editor-in-Chief Emanuel Graça emanuel.graca@macaubusiness.com
Assistant Editor-in-Chief Sara Farr sarafarr@macaubusiness.com
Art Directors Connie Chong, Luis Almoster design@macaubusiness.com
Senior Analyst José I. Duarte jid@macaubusiness.com
Hong Kong Bureau Michael Hoare (Chief), Anil Stephen michael.hoare@macaubusiness.com
Special Correspondent Muhammad Cohen
Contributing Editors Alexandra Lages, Christina Yang Ting Yan, Dennis Ferreira, Derek Proctor (Bangkok), Filipa Queiroz, Helder Beja, Joana Freitas, João Ferreira da Silva, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lia Carvalho, Lois Iwase, Luciana Leitão, Sara Silva Moreira, Sofia Jesus, Xi Chen Regular Contributors Bill Kwok-Ping Chou, 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
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Beijing Correspondent Maria João Belchior
bina@macaubusiness.com
José Reis
maria_belchior@yahoo.com.br
jreis@macaubusiness.com
Manila Correspondent Max V. de Leon
Media Relations GRIFFIN Consultoria de Media Limitada
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Assistant to the Publisher Laurentina da Silva ltinas@macaubusiness.com
Office Manager Elsa Vong elsavong@macaubusiness.com
Photography António Mil-Homens, Carmo Correia, Greg Mansfield, Gonçalo Lobo Pinheiro, John Si, Manuel Cardoso, MSP Agency, Agencies Illustration G. Fox, Rui Rasquinho
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Translations PROMPT Editorial Services, Poema Language Services Ltd, TLS Translation and Language Services Agencies AFP, Lusa Exclusives Gambling Compliance, Project Syndicate Printed in Macau by Welfare Ltd Published every month in Macau. All Rights Reserved. Macau Business magazine is a media product of De Ficção - Multimedia Projects
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Disclaimer: In Macau Business magazine, the translation of MOP amounts into US$ amounts (and vice-versa) is made at the rate of MOP 8 to US$1 for the purposes of illustration only.
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 JUNE 2012
Blinded WE CONTINUE TO IGNORE OUR INABILITY TO ANTICIPATE the medium and long-term impacts of development on Macau’s fabric. That would be fine if it was unavoidable and not the product of the city’s leadership being too proud to ask for the support of international experts, which is what happens in nearly every country once it realises it lacks the proper expertise. A blatant example of our lack of foresight is environmental protection –a trendy subject. To grow “greener” is one of the topics of the day worldwide and promoting the use of clean energy is considered politically correct. As such, Macau has decided to show how it keeps up with the latest trends when it comes to boosting quality of life. While we praise the officials’ effort to bring international eco-fairs and other environment-related events to the city, that is not enough. The problem is, when it is time to put into practice the transformations dictated by the winds of change, the city faces public bodies filled with people lacking in courage and initiative. The most recent and shameful example was the decision to move a traffic safety information centre in Taipa to the wetland nearby the Taipa-Houses Museum. Only a bunch of blind, ignorant or clueless civil servants would suggest that move, which disregards the government’s responsibility to promote balanced development. Moving the infrastructure to its proposed new location would jeopardise the balance of an area that has served for centuries as a nesting ground for rare species of birds and as a place for rest during their migrations. Destructive policies of this calibre have already brought the Pearl River Delta’s Chinese white dolphins to the brink of extinction. Only an online petition with thousands of signatures opposing the traffic centre’s move prompted a public body, the Environmental Protection Bureau, to acknowledge the obvious. One month after the announcement, the bureau said the environmental impact
At a time when Macau’s development has reached a level never before imagined, it is fundamental to have policies that anticipate the effects that growth will have on society and the city. Only with such policies can the government ensure that economic growth does not impair quality of life
of the move had to be studied by an independent party. Is there really a need to study the obvious? Only a natural-born ignoramus could be so keen to spend public money on a needless study. A recent article in the Portuguese-language daily Jornal Tribuna de Macau correctly pointed out “when it comes to environmental policies, nearly every topic is currently under study”. The government is studying everything from what should be the maximum legally allowed concentrations for several pollutants to the most adequate eco-vehicle. Also subject to a study is the 2010-2020 environmental protection blueprint – never mind that we are already midway through 2012. It is embarrassing that these sorts of important decisions take so long. At a time when Macau’s development has reached a level never before imagined, it is fundamental to have policies that anticipate the effects that growth will have on society and the city. Only with such policies can the government ensure that economic growth does not impair quality of life. Not an easy task, but far from impossible. What is urgent is the perception and humility to understand that Macau’s officials – particularly within the environmental bureau – are not up to the task. That is further highlighted by last year’s statistics, which highlight the city has seen a surge in car numbers and marine pollution, and a decrease in green zones. Do the city’s officials really need a study to understand that the outcome of moving the traffic centre can only be negative? One sometimes wonders if these brainiacs should be allowed out of their homes.
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Emanuel Graça Editor-in-Chief
emanuel.graca@macaubusiness.com
Getting their way, any way WHERE IS MACAU’S POLITICAL SYSTEM HEADED? SEVERAL recent episodes make one wonder. Instead of upholding the territory’s unique “second system”, authorities are increasingly showing autocratic tendencies in their decision-making. The first such episode took place on May 1 when South China Morning Post photographer Felix Wong Chi-keung was denied entry to Macau. Although he was coming to cover the Labour Day demonstrations for his newspaper, authorities labelled him as someone who could jeopardise public security. Asked to elaborate on their decision, the security forces merely told reporters the case was handled “according to the law”. It was not the first time common people have been arbitrarily barred from entering Macau but the practice seemed to have been suspended. Mr Wong himself had already been barred twice from entering the city in 2009. That was thought to be connected to his brief detention by Beijing police after he inadvertently hurt an officer while covering a chaotic queue for tickets for the 2008 Olympic Games. However, Mr Wong has not had problems entering the mainland since. After being barred twice in 2009, he had entered Macau on four occasions since, twice for work. Mr Wong has no criminal record in Macau. The authorities are entitled to stop anyone they deem “dangerous” from entering the city. But when they do so, they are morally obliged to provide a proper explanation. It is not enough to say authorities complied with the law. That is what they are supposed to do, right? Otherwise, we face a discretionary use of power.
Wide-ranging talks
Another worrying episode concerns the way the government handled opinions gathered in the second public consultation on political reform, which ended on April 23. Although there were more than 160,000 opinions offered, most of them delivered on the last day, officials were able to process them at an amazing speed. Apparently officials read each of the opinions, analysed them, prepared two bills and had them approved by the Executive Council all within less than 10 days, including a weekend and one public holiday – an astonishing feat by Macau standards. Not surprisingly, the majority of the opinions collected were said to be in line with the government’s take on reform – that is, to raise the number of members of the chief executive’s election committee from 300 to
There is a recent trend of the government deciding things without accountability. Officials push ahead without providing proper public reasoning on their choices, or use public consultations to legitimise decisions that appear to have been made beforehand
400 and to increase the strength of both the directly and indirectly elected legislators by two seats each. It is likely the public consultation process was tainted. There were reports of tourists and even children signing forms handed out by pro-establishment associations. Even officials admitted they had no way of verifying the identities of those who filed opinions — “Barack Obama” and “Aung San Suu Kyi” are reported to have been among them. When questioned, Secretary for Public Administration and Justice Florinda Chan downplayed the importance of the public consultation. Even so, she used the same public consultation to prove that most residents were supportive of the government-proposed legislative and electoral changes and that a wide consensus had been reached on the matter. The process raises several questions, starting with its legitimacy, once it was obvious that some of the opinions collected should have been considered invalid. It was also questionable as to how serious the government was in reviewing the valid opinions that were submitted, since it took it so little time to complete its analysis. Officials gave an impression that all was ready and decided a long time ago, and that the public consultation was a mere show. Do note here that we are not discussing if the government proposals for Macau’s political reform were the best. We are drawing attention to the methods used to legitimise them in the public eye. There have been other disturbing episodes too. For instance, the government’s decision to withdraw the Tax Code bill from the Legislative Assembly without providing a reason. We could go on adding to the list but the point is that there is a recent trend of the government deciding things without accountability. Officials push ahead without providing proper public reasoning on their choices, or use public consultations to legitimise decisions that appear to have been made beforehand. This is usually the first step towards less democratic political systems. We hope that will not be the case in the long term. JUNE 2012
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MACAU AMONG TOP ASIAN EU HOPES FOR CITIES FOR EXPATS MORE DEMOCRACY
Macau ranks as the seventh most liveable city for expats in Asia in this year’s ECA International report. Although the territory remains at the same rank as last year, neighbouring Hong Kong moved up two places from fifth in 2011 to third this year, the consulting firm’s ranking shows. Globally, Macau was ranked the 63rd most liveable city for expats in 2012. Singapore remains number one worldwide. ECA International’s annual survey is based on categories such as climate, air quality, health services, housing and utilities, social network and leisure facilities, infrastructure, personal safety and political tension.
The European Commission “hopes to see further progress towards greater democracy in Macau,” according to its latest annual report on the territory, released last month. The report also highlights that “diversification of the economy remains a key challenge” for Macau. Even so, the European Commission admits that “some improvements were made” in non-gaming sectors such as meetings and conventions, and creative and cultural industries. However, “most efforts to diversify Macau’s economy were governmentled, including the organisation of several largescale trade fairs and forums.” The European Commission report praises Macau for its “notable progress in extending its network of agreements on exchange of information for tax purposes.”
STRONG PERFORMANCE The city’s economy posted 18.4 percent growth in the first three months of the year
Macau’s gross domestic product grew by 18.4 percent in real terms in the first quarter of 2012 in comparison with one year before. The increase in gaming revenue and investment, as well as the low comparison base, spurred on the stellar performance, the Statistics and Census Service said last month. The data shows Macau’s economic growth went up by 0.9 percentage points quarter-onquarter, as the city’s GDP had expanded by 17.5 percent in the final three months of last year. But on a year-on-year basis, the GDP growth rate in the first quarter of 2012 was down by 2.4 percentage points. Not surprisingly, the biggest net contributor to GDP growth was the export of services, including gaming, which soared by 19.2 percent year-on-year. Note that as gaming and accommodation services reflect expenditure made by non-residents in the domestic market, they are officially considered an export although the services are rendered in Macau. The city’s vigorous job market, coupled with an increase in both total employment and working income, encouraged private consumption expenditure to grow by 5.4 percent yearon-year. As a gauge of investment, the increase in gross fixed capital formation widened to expand by 43.8 percent year-on-year, far higher than the 15.8 percent rise in the preceding quarter.
JUNE 2012
CORRECTION
In last month’s issue of Macau Business magazine, in the piece “Cotai Revolution”, Wynn Macau Ltd’s chairman and chief executive officer Steve Wynn explained the details of a one-time, US$50-million (MOP400 million) payment the company needed to make to Macau-incorporated Tien Chiao Entertainment and Investment Company Ltd, in order for it to relinquish its rights to any development on what is now Wynn Macau’s Cotai land. In the story, it is mentioned that Mr Wynn said the U.S. Securities and Exchange Commission probed the deal under the U.S. Foreign Corrupt Practices Act, which prohibits American companies from bribing foreign officials. That is not correct: the U.S. Securities and Exchange Commission did not vet the deal, as it doesn’t review business relationships prospectively. Instead, it was Wynn Resorts Ltd’s compliance committee that vetted the deal under the U.S. Foreign Corrupt Practices Act. We offer our sincere apologies to Mr Wynn, Wynn Macau Ltd and to our readers.
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MILLIONS LOST IN AFFORDABLE HOUSING
COTAI HOSPITAL FACES DELAY
The construction of the public hospital in Cotai will be delayed by three years The first phase of the public hospital in Cotai, which was initially scheduled to be completed by 2014, will now only be ready by 2017. According to health authorities, the three-year delay is because the government had “underestimated” the time needed to plan the project, which will now be built in two phases instead of the three initially announced. According to the Health Bureau, the emergency ward planned for phase one is to include 100 beds, while another 400 are planned for the in-patient ward. Phase two of the project is expected to have an additional 100 beds for rehabilitation.
The Housing Bureau has lost as much as MOP21.6 million (US$2.7 million) in the sale of affordable housing units. According to a statement released by the local authorities last month, between 2006 and 2010, 317 units at a housing complex in the northern area of the Macau peninsula were each sold for MOP68,200 less than the recommended price set by the government. This left the government with a MOP21.6 million loss. The error was allegedly found only in 2010. According to Tam Kuong Man, the head of the Housing Bureau, this is an isolated incident. He said the government is still studying whether the buyers will have to pay the difference in price.
CAM APPROVES CAPITAL INJECTION The Macau International Airport Company Ltd – CAM announced last month it would issue MOP1.9 billion (US$238 million) worth of new shares to repay loans. The move was approved during an extraordinary general assembly meeting. The shareholders approved a reduction of the company’s share capital motivated by losses and a simultaneous increase of the share capital by issuing redeemable preference shares with a total nominal value of MOP1.9 billion to the company’s shareholders. CAM is the public concessionaire of Macau International Airport. The government is the major shareholder in CAM, with a 55.4 percent stake, followed by STDM with 33.03 percent. The remaining shares are held by a number of mainland and Macau businesses and institutions.
FERRY TERMINAL EXPANSION READY BY 2013-END The government plans to complete expansion works at the Outer Harbour Ferry Terminal by the end of 2013. However, authorities are still working on the details for the open tender, which should be carried out in the
JUNE 2012
third quarter of this year, according to media reports. The government is investing as much as MOP50 million (US$6.25 million) in upgrading the terminal’s facilities. Renovation works will include the addition of a baggage
carousel, relocation of the ticket offices and the creation of a special check-in and embarkation zone for vessels heading to the Hong Kong International Airport, among other changes.
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GOV’T WITHDRAWS TAX CODE BILL After almost a year of getting nowhere, the government has now decided to withdraw the Tax Code bill from the Legislative Assembly. The Financial Services Bureau said that the decision to withdraw the Tax Code bill had been made only “after serious consideration.” However, no reason was given for the bill having remained in the assembly for almost a year. The new Tax Code would have introduced standards set by the Organisation for Economic Cooperation and Development, brought together current laws and defined principles for the development of the tax system. The government had spent 10 years drafting this bill.
TAIWAN BANK OPENS DOORS Taiwan’s Hua Nan Commercial Bank opened its first Macau branch last month. The branch will concentrate on corporate loans. The bank’s efforts to commence operations in Macau began three years ago, and got the go-ahead from the Monetary Authority of Macau last August. With more than 90 years of history, Hua Nan has 185 branches in Taiwan. Its overseas network includes branches in Hong Kong, Shenzhen and Sydney.
SHOW ME THE MONEY
CTM SERVICES DOWN... AGAIN
The government allocated an initial MOP99 billion (US$12.4 billion) to the city’s new fiscal reserve system. The funds were allocated on February 13 and are managed by the monetary authority. The law regulating Macau’s reserve system came into effect on January 1 and the government had 45 days to allocate the funds.
The telecommunications operator’s network failed again last month
CTM’s mobile telecommunications system crashed again last month, less than 100 days after a first major blackout. The outage lasted for at least two hours. In a company statement, CTM said “the incident was caused by improper operation by CTM’s staff during a maintenance procedure” on one of the networks. According to the company, 17,000 mobile customers were left unable to make and receive calls. The Secretary for Transport and Public Works, Lau Si Io, has urged CTM to assure the stability of its service. CTM was fined MOP800,000 (US$100,000) by the government following its six-hour service blackout in February. CTM has announced it plans to invest MOP1.2 billion (US$150 million) in the coming three years in network enhancement, further development of cloud computing services and exploitation of the 4G network. The company is also preparing to launch a multimedia video service, but is still waiting for the government to regulate this segment of the market first. In 2011, CTM raked in revenue of MOP3.98 billion, posting a profit of MOP934 million, up by 44.4 percent and 14.7 percent respectively.
JUNE 2012
THAT’S A FIRST Bus operator Reolian has been fined MOP50,000 (US$6,250) for failing to meet the government standard bus frequency of 10 to 15 minutes. This is the first time the government has ever fined a bus company for such reasons. Lou Ngai Wa from the Transport Bureau was quoted by local media as saying that the fine was due to delays in bus frequency of up to 45 minutes. There are three other cases the Transport Bureau is looking into, involving delays in bus frequency from Reolian.
Sponsored Feature
Green initiatives “Before Galaxy Macau ™ opened, Galaxy Entertainment Group (‘GEG’) was looking for business partners that could meet the company’s ‘World Class, Asian Heart’ philosophy – to deliver an exceptional customer experience with a very local, authentic, Asian service style,” says Ken Vong, Assistant Vice President of Customer Services, Information System and Technology, at Galaxy Entertainment Group. “In the case of Canon and its uniFlow system, it was about genuine care for the Macau community and GEG’s environmental concern about paper consumption. “With UniFlow, not only can we manage our print volume, but we can also take advantage of a new kind of printing experience.” The uniFLOW system allows Galaxy Macau to set all of Canon’s MultiFunction Devices (MFD) by default to black & white, and even allows for the selection of ‘full duplex’ and ‘secure print’ options to reduce paper usage. It also provides the tools to track the print volume and cost of every single department across various categories. For example, how many prints are being made in black & white or color, or how many copies are being made – as well as who is accountable for the printing costs. It also generates a “Print Health Report” on a regular basis, giving Galaxy Macau up-to-date oversight of their print output. This system provides a universal print experience with a secured function, which requires an employee to swipe their staff card to print, and a redundancy function, which allows users to send their documents to any of the company’s Canon MFDs, even when there are out-of-service machines. This means staff can print securely anywhere Canon MFDs are located – on different floors, or even in different buildings and properties. “Just imagine the MFD nearest to you isn’t operational for some reason, you don’t need to call anyone to help or assist – just go to any other MFD to print your job by swiping your staff card,” explains Mr. Vong. Galaxy Macau saves up to 3.0 Kw per week with one MFD, or an average of around 23,000 Kw per year. In terms of
KEN VONG: Assistant Vice President of Customer Services, Information System and Technology, at Galaxy Entertainment Group
cost savings, that’s around MOP$23,000 per year. “Galaxy Macau is concerned about energy conservation, and so is Canon,” Mr. Vong adds.
Seeking Service Excellence “Another reason for Galaxy Macau to choose Canon is that they are the only company to proactively propose using a toner cartridge recycling program,” says Mr. Vong. “We print a lot of paper every month, and that means a lot of cartridges. Some companies just put them in the recycle or trash bin, but Canon tries to recycle all toner cartridges into basic materials that can be reused for other purposes. This totally fits our concept of what green initiatives should do.” Galaxy Macau has 144 Canon imageRUNNER ADVANCE MFDs: 64 iR-ADV C5045 models and 80 iR-ADV C5035 models for general
printing, and one more imageRUNNER ADVANCE for cards, leaflets and brochures for guest rooms. “We hold a monthly meeting with Canon’s representatives and different department users to review the print volumes, incidents, distribution of MFDs and so on in order to optimize the numbers and utilization of MFDs to meet our operational needs,” explains Mr. Vong. “During the meeting we analyze why some MFDs are over- or under-utilized. Those figures can tell us if we have to upgrade the machines, for example, or relocate some to more proper locations. In addition, Canon’s monthly incident report can tell us how many issues, such as low toner, paper jams and component errors, have been resolved through their proactive and reactive actions and system alerts. The report figures drive us to keep improving the service and run our operations even more smoothly.”
Canon imageRUNNER ADVANCE C5051
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MORE MONEY, WORSE ENVIRONMENT
Macau’s economic boom continues to be a major cause of environmental degradation, according to official data released last month. The city is producing more garbage, air pollution complaints continue soaring and biodiversity is going down. Alarming signs?
9.3%
The year-on-year increase in garbage collected by the Macau Waste Systems Co Ltd from the business sector last year. It reached a total of 98,000 tonnes
166,000
Tonnes of domestic garbage collected in Macau last year. The amount was up slightly by 0.5 percent from one year before
78.7%
The year-on-year increase in the volume of garbage collected from the surrounding sea last year, mostly water lettuce and dead fish. It totalled over 1,600 cubic metres or 176 tonnes
411
The number of air pollution complaints reported to the Environmental Protection Bureau last year, up by 15.1 percent from 2010. Most were related to the emission of exhaust fumes and smells from eateries and factories
96
The number of migratory and resident bird species recorded in Macau last year. Two years earlier, the figure was almost double. The Statistics and Census Service says economic development and rising population levels are largely to blame for the drop
447
Tonnes of paper collected for recycling last year by the Civic and Municipal Affairs Bureau and the Environmental Protection Bureau, up by 60 percent over 2010. There was also a twodigit growth in plastic materials collected for recycling
INCREASINGLY INC.
The number of new companies incorporated in Macau in the first quarter of 2012 was up by 14.7 percent year-on-year to 881. According to figures released by the Statistics and Census Service, the total value of registered capital soared by 151 percent to MOP199 million (US$24.9 million). The majority of new incorporations were operating in wholesale and retail (327), business services (156) and real estate (82). Meanwhile, 130 companies were dissolved, seven less than one year ago.
SALARIES SOAR FOR BANK TELLERS
Macau’s banks tellers have good reasons to smile. In March, their average earnings (excluding bonuses and allowances) stood at MOP12,060 (US$1,508), up by 12.1 percent year-on-year. That clearly outpaced the inflation rate for the same period, which stood at 6.12 percent. Information from the Statistics and Census Service indicates that Macau’s banks had a total of 5,200 employees at the end of the first quarter, up by 7.5 percent year-on-year. In March, average earnings of full-time employees in the local banking industry amounted to MOP20,810, up by 5.9 percent year-on-year.
SLOW DEATH FOR INDUSTRIAL SECTOR
SOURCE: STATISTICS AND CENSUS SERVICE
Once a manufacturing hub, Macau continues to see the secondary sector of the economy losing steam. The city’s Index of Industrial Production decreased by 4.6 percent quarter-to-quarter in the first quarter of 2012. Compared with the first quarter of last year, the Index of Industrial Production went down by 38.0 percent, data released by the Statistics and Census Service shows. The index indicates the status of production in the industrial sector.
JUNE 2012
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Economic Trends by José I. Duarte Decade of sky-high growth
GRAPH 1 - GDP at current prices and in chained dollars (MOP million)
GDP at current prices
GDP in chained (2010) dollars
300,000
As concerns about economic growth have recently come to the fore, it is appropriate to look back at the past 10 extraordinary years. GRAPH 1
Macau’s gross domestic product increased 5.6-fold at current prices between 2001 and last year. The economy was 3.5 times bigger in real terms at the end of last year than it was one decade before – in average annual terms that is equivalent to a 13.5-percent growth. At that rate, the economy doubles in size once every five years. Graph 1 illustrates the point clearly, displaying the figures for GDP at current prices and in chained dollars.
250,000
200,000
150,000
100,000
GRAPH 2
50,000 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
GRAPH 2 - Per capita GDP at current prices and in chained dollars Per capita GDP at current prices
Per capita GDP in chained (2010) dollars
(MOP)
600,000
GRAPH 3
Graph 3 gives the essence of Macau’s profound economic change over the past 10 years. The economy is fast moving away from manufacturing, as shown by the drop of merchandise exports, which are reaching the point of irrelevance, representing today just 3 percent of GDP. Instead, Macau is specialising ever more in services exports, which have become bigger than GDP itself. This is due to the city’s gambling industry. Exports of services have risen at an average annual rate of 25 percent during the past decade.
500,000 400,000 300,000 200,000 100,000 0 2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
GRAPH 3 - Merchandise and services exports at current prices (MOP million)
Merchandise exports
Services exports
350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2001
With a growing population, but one that is increasing at a much lower rate than economic output, per capita GDP has increased significantly over the past decade. On average and in real terms, a Macau resident is today almost three times richer than just a decade ago. Of course, this figure conceals noticeable asymmetries in the distribution of the wealth created. But it is, in any case, a remarkable feat.
2002
2003
JUNE 2012
2004
2005
2006
2007
2008
2009
2010
2011
23
GDP components
GRAPH 4 - Major GDP components in chained (2010) dollars 2005 Q1
(MOP million)
2012 Q1
60,000 50,000 40,000
Looking in more detail at the major components of GDP, one conclusion is obvious: while services exports have been increasing in relative weight, all the other components have seen their contribution to economic output drop. GRAPH 4
30,000 20,000 10,000 0 -10,000 -20,000 Private consumption Government final expenditure consumption expenditure
Gross fixed capital formation
Net merchandise exports
Net services exports
GRAPH 5 - Selected GDP components in chained (2010) dollars Private consumption expenditure Gross fixed capital formation Government final consumption expenditure GDP
(MOP million)
90,000
The structural changes in Macau’s economy accelerated after 2004. Those changes are clear in Graph 4, where we compare the size of the major GDP components in the first quarter of 2005 and in the first three months of this year. All the components related to domestic demand grew significantly. Investment (as measured by gross fixed capital formation), private consumption and government consumption expenditure expanded by 47 percent, 56 percent and 60 percent respectively during that period. They were dwarfed, however, by the 3.66fold increase in net services exports. The negative evolution in this picture is represented by net merchandise exports. The deficit almost tripled in size between the first quarter of 2005 and the first three months of this year, cancelling, in a way, the gains made by the components of domestic demand. This evolution makes it clear that services exports are the engine of the city’s economic structural change. GRAPH 5
80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
GRAPH 6 - GDP and net exports in chained (2010) dollars GDP
(MOP million)
Net merchandise exports
Net services exports
80,000 70,000 60,000 50,000 40,000 30,000 20,000
Graph 5 shows in more detail the behaviour of the constituents of GDP related to domestic demand. All show neat annual cyclical elements, none more so than government consumption expenditure; in this case, the fourth quarter of each year is usually a spending fest. In relative terms, government consumption expenditure represented 9 percent of GDP in the first quarter of 2005. It has meanwhile dropped to 6 percent during the first three months of this year. Private consumption expenditure has risen steadily but not dramatically. However, in terms of its relative weight to GDP, it posted a marked decrease of 22 percentage points from 32 percent in the first three months of 2005 to 10 percent of GDP in the first quarter of this year. Investment is the most irregular of the three expenditure components. GRAPH 6
This graph shows in quarterly figures the overall trends in external trade. It essentially confirms what was already obvious from the annual data, with net services exports rising by 27 percentage points from the first three months of 2005 to the end of the first quarter, to account for 85 percent of GDP. Graph 6 also highlights the relationship between GDP and its most dynamic component, the net services exports. The plot graphically suggests a close correlation between the two variables.
10,000 0 -10,000 -20,000 Q1 2005
Q3 2005
Q1 2006
Q3 2006
Q1 2007
Q3 2007
Q1 2008
Q3 2008
Q1 2009
Q3 2009
Q1 2010
Q3 2010
Q1 2011
Q3 2011
Q1 2012
JUNE 2012
Statistical Digest
Economic output
Year-on-year change (%)
2011 GDP at current prices
MOP 292.1 billion
GDP in chained prices
MOP 273.1 billion
GDP per capita at current prices
MOP 531,723
GDP per capita in chained prices
MOP 497,219
Employment 2011 Median monthly employment earnings
MOP 10,000
11.1 5.5 percentage 1.5 points
Labour force participation
339,800 72.9%
Non-resident workers (end-balance)
94,028
2011
2.0%
Feb-Apr 2012
MOP 11,000
14.6 5.9 percentage 0.8 points
Q1 2012
338,300 72.4% 99,503
Apr 2012
Year-on-year change (%)
Notes
MOP 23.1 billion
- MOP 55.3 billion 2011
Year-on-year change (%)
MOP 7.0 billion
Imports
MOP 62.3 billion
Public accounts MOP 112.7 billion
MOP 164.2 billion MOP 303.8 billion MOP 128.8 billion
MOP 2.6 billion
- MOP 20.5 billion
Total expenditure
MOP 49.0 billion
Balance
MOP 63.7 billion
2011
Year-on-year change (%)
MOP 99.7 billion
Utility consumption 70.5 million m3 3,857 million kWh 81.7 million L 42,908 tons 73.6 million m3
Latest
19.6 29.0 -Year-on-year change (%)
MOP 29.7 billion
21.1 26.3 -2.7 --
Latest
Year-on-year change (%)
MOP 40.1 billion
41.5 44.9 29.7 --
Natural Gas
Feb-Apr 2012
0.2 41.2 --
5.8%
Exports
Liquefied Petroleum Gas
Feb-Apr 2012
20.3
Latest
27.7 22.7 43.2 2.5 percentage points
2011
Gasoline
Notes
-0.7 percentage points
Year-on-year change (%)
External merchandise trade
Electricity
Year-on-year change (%)
Latest
Year-on-year change (%)
MOP 272.4 billion
Water
--
Latest
Foreign exchange reserves
- Tax revenue from gaming
--
Year-on-year change (%)
MOP 291.6 billion
Total revenue
Q1 2012
6.8%
MOP 161.9 billion
Resident deposits
Trade balance
Q1 2012
20.9 20.2 -1.9 percentage points
Domestic loans to private sector
Inflation rate (full year)
---
24.0
Money and prices
Notes
27.5 18.4 ---
MOP 70.5 billion
Year-on-year change (%)
2.1% Employed population
MOP 78.9 billion
29.1 20.7 26.2 18.0
-0.6 percentage points
Year-on-year change (%)
Latest
MOP 37.2 billion MOP 10.4 billion
23.1 million m3 6.5 million kWh 821 11.5 20.1 million L 8.1 12,746 tons 2.6 -- million m3 -100
5.1 5.5 9.3 5.3 -52.4
Mar 2012 Mar 2012 Mar 2012 Mar 2012
Notes Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012
Notes Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012
Notes Jan-Apr 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012
Transport and communications 2011 Licensed vehicles - Automobiles - Motorcycles Mobile telephone users Internet services subscribers JUNE 2012
206,349 95,151 111,198 1,353,194 209,223
Year-on-year change (%)
4.9 5.5 4.5 20.6 22.7
Latest
208,663 96,723 111,940 1,428,568 214,928
Year-on-year change (%)
5.1 5.9 4.4 15.1 17.7
Notes Apr 2012 Apr 2012 Apr 2012 Apr 2012 Apr 2012
Source: Statistics and Census Service
24
25 MINXIN PEI PROFESSOR OF GOVERNMENT, CLAREMONT MCKENNA COLLEGE
The myth of Chinese meritocracy FEW CHINESE CITIZENS BELIEVE THAT THEY ARE GOVERNED BY THE BEST AND THE BRIGHTEST. BUT ASTONISHINGLY, THE MYTH OF A CHINESE MERITOCRACY REMAINS VERY MUCH ALIVE AMONG WESTERNERS olitical scandals sometimes perform a valuable function in cleansing governments. They destroy the political careers of individuals of dubious character. More importantly, they can debunk political myths central to the legitimacy of some regimes. That appears to be the case with the Bo Xilai affair in the mainland. One enduring political myth that went down with Mr Bo, the former Communist Party boss of Chongqing municipality, is the notion that the party’s rule is based on meritocracy. In many ways, Mr Bo personified the Chinese concept of “meritocracy” – well-educated, intelligent, sophisticated and charming (mainly to Western executives). But, after his fall, a very different picture emerged. Aside from his alleged involvement in assorted crimes, Mr Bo was said to be a ruthless apparatchik, endowed with an outsize ego but no real talent. His record as a local administrator was mediocre. Mr Bo’s rise to power owed much to his pedigree (his father was a vice premier), his political patrons and his manipulation of the rules of the game. For example, visitors to Chongqing marvel at the soaring skyscrapers and modern infrastructure built during Mr Bo’s tenure there. But do they know that Mr Bo’s administration borrowed the equivalent of more than 50 percent of local gross domestic product to finance the construction binge, and that a large portion of the debt will go unpaid? Unfortunately, Mr Bo’s case is not the exception in the mainland but the rule. Contrary to the prevailing perception in the West (especially among business leaders), the current Chinese government is riddled with clever apparatchiks like Mr Bo who have acquired their positions through cheating, corruption, patronage and manipulation.
P
Dubious academic degrees One of the most obvious signs of systemic cheating is that many Chinese officials use fake or dubiously acquired academic credentials to burnish their resumes. Because educational attainment is considered a measure of merit, officials scramble to obtain advanced degrees in order to gain an advantage in the competition for power. The overwhelming majority of these officials end up receiving doctorates (a master’s degree won’t do anymore in this political arms race) granted through part-time programmes or in the Communist Party’s training schools. Of the 250 members of provincial Communist Party standing committees, an elite group including party chiefs and governors, 60 claim to have earned PhDs.
Many Chinese officials use fake or dubiously acquired academic credentials to burnish their resumes
Tellingly, only 10 of them completed their doctoral studies before becoming government officials. The rest received their doctorates (mostly in economics, management, law and industrial engineering) through part-time programmes while performing their duties as busy government officials. One managed to complete his degree in a mere 21 months, an improbable feat, given that course work alone, without the dissertation, normally requires at least two years in most countries’ doctoral programs. If so many senior Chinese officials openly flaunt fraudulent or dubious academic degrees without consequences, one can imagine how widespread other forms of corruption must be. Another common measure used to judge a Chinese official’s “merit” is his ability to deliver economic growth. On the surface, this may appear to be an objective yardstick. In reality, GDP growth is as malleable as an official’s academic credentials. Inflating local growth numbers is so endemic that reported provincial GDP growth data, when added up, are always higher than the national growth data, a mathematical impossibility. And, even when they do not doctor the numbers, local officials can game the system in another way.
Bad growth Because of their relatively short tenure in one position before promotion (less than three years, on average, for local mayors), Chinese officials are under enormous pressure to demonstrate their ability to produce economic results quickly. One sure way of doing so is to use financial leverage, typically by selling land or using land as collateral to borrow large sums of money from often-obliging state-owned banks, to finance massive infrastructure projects, as Mr Bo did in Chongqing. The result is promotion for such officials, because they have delivered quick GDP growth. But the economic and social costs are very high. Local governments are saddled with a mountain of debt and wasted investments, banks accumulate risky loans and farmers lose their land. Worse, as competition for promotion within the Chinese bureaucracy has escalated, even fake academic credentials and GDP growth records have become insufficient to advance one’s career. What increasingly determines an official’s prospects for promotion is his ‘guanxi’, or connections. Based on surveys of local officials, patronage, not merit, has become the most critical factor in the appointment process. For those without ‘guanxi’, the only recourse is to purchase appointments and promotions through bribes. In the Chinese parlance, the practice is called ‘maiguan’, literally “buying office.” The official Chinese press is full of corruption scandals of this type. Given such systemic debasement of merit, few Chinese citizens believe that they are governed by the best and the brightest. But astonishingly, the myth of a Chinese meritocracy remains very much alive among Westerners who have encountered impressively credentialed officials like Mr Bo. The time has come to bury it. JUNE 2012
26
Transport
Zheng Yan JUNE 2012
27 ir Macau Co Ltd has had its fair share of turbulence, the flag carrier having gone through financial troubles, problems with pilots, and untoward incidents in the air and on the ground. But things are turning around, the company’s chairman Zheng Yan tells Macau Business. The company made a profit of MOP231.9 million (US$29 million) in 2010, breaking a five-year losing streak. It made a profit of around MOP250 million last year. “With this we had enough to cover all the losses accumulated since 2005,” Mr Zheng says. The company had accumulated losses of almost MOP600 million by the end of 2008, giving it a net asset value of minus MOP107.3 million. The accumulated losses led to a capital injection in 2009, which was controversial. Some shareholders declined to take part, allowing Air China Ltd to reinforce its position as the controlling shareholder. Even then, Air Macau made a loss of MOP257 million in 2009. Mr Zheng says one of the company’s goals now is to attract more overseas passengers, while consolidating its performance. It is considering ways to do more business electronically, which may include an application for smart phones for passengers to buy tickets. The expectation for this year is of more profit, even though Mr Zheng admits this will be a challenge, given that the “overall aviation industry is not very good”. In the mainland, where economic growth is forecast to slow this year, things still look better than in Europe, he says. Air Macau was among the airlines hit hardest by the commencement of direct flights across the Taiwan Strait in 2008. Previ-
A
CLEAR SKIES AHEAD It has been a bumpy trip for Air Macau but its chairman says the future looks promising
Photo: Carmo Correia
BY SARA FARR
ously, those travelling from the mainland to Taiwan and vice versa had to first stop in Macau or Hong Kong. The creation of direct, regularly-scheduled flights, which came in the midst of the global financial crisis, was seen as a blow to Air Macau, as it used to derive most of its revenue from these highly profitable semi-direct connections.
A little rusty To help turn itself around, Air Macau raised MOP700 million in cash in November by issuing new shares to the government. This increased the government’s stake from 5 percent to 21.5-percent and made it the second-biggest shareholder. Air China still controls the company, with a stake of 66.9 percent. The government said the money was for the carrier to improve the quality of its service, with better aircrafts, better ground facilities and more staff training. But Mr Zheng says the MOP700 million is enough to buy only two new aircrafts. An Airbus A321 can cost around MOP480 million. “We still have to use our own funds,” he says. The airline is refurbishing the cabins of its current aircrafts to make them more comfortable. “We are doing all this now, step by step.” Air Macau operates 14 aircrafts, the average age for which is over 10 years, so constant maintenance is required. “I’m not saying they are not safe. They are. But you use more money to maintain this quality, on-time departures and safety,” Mr Zheng says. Given that Macau is a coastal city, the airline needs to control salt-water corrosion of its aircrafts, especially in winter. This adds to regular maintenance costs. Air Macau wet-leased several planes to Air China in 2008 because the global JUNE 2012
28 financial crisis meant it could not fill them, and because it could not afford to run them only partly-full or have them standing idle. Wet-leasing is the leasing of an aircraft along with crew, maintenance and insurance, usually for only a short period. Once business began to pick up, Air Macau began taking back its leased planes one by one, and intends to take back the last two by next year. “Right now we are still discussing with Air China. We have no decision on which is the last date but, if Air Macau demands, Air China will release those planes to Macau,” Mr Zheng says.
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Air Macau has recently cancelled leases on two cargo aircraft in response to plummeting freight volumes. In the first four months of this year the volume of freight handled at Macau International Airport dropped by 26 percent from a year before to less than 8,900 tonnes. Mr Zheng says some of the government’s MOP700 million cash injection is going towards
special training for all staff. “We continuously invest to keep our people’s qualifications up to the standard of operational demand.” The government’s cash injection raised eyebrows, with some analysts regarding it as an informal bailout. The restructuring meant the issue of 420,420 new ordinary shares with a face value of MOP100 each, all bought by the government, which paid another MOP1,565 per share on top. Shortly after the cash injection was first mentioned, the airline bought two Mercedes Benz cars worth at least MOP1.3 million each. Mr Zheng says the two things were not connected. He says the cost incurred for the cars was “normal expenses” and that the money came from the airline’s own funds, not the government. “All our cars were more than 10 years old. Some were 15 years old.” Air Macau has made the news several times in the past two years, but for the wrong reasons. Several pilots left the airline amid criticism over its
29 internal procedures. There were reports of pilots complaining that some first officers were being promoted to captain unfairly, with insufficient experience and without having logged the necessary flying hours. These caught the attention of the regulator, which last December stopped the company from promoting pilots.
New to the job A spokesperson for the Civil Aviation Authority says the company has adopted new promotion procedures, which are being tried out for six months. “Individual captain promotion must be proposed to, and accepted by, our authority,” the spokesperson said. Since the trial began in February, six pilots have become captains. A string of untoward incidents troubled the airline last year. There was a bit of everything: a fuel spill during a takeoff; an engine fire in an Airbus A321 undergoing maintenance; and loss of
contact with a wet-leased aircraft due to crew negligence. Mr Zheng plays down these incidents and the complaints of the pilots. “We are monitoring all of this,” he says. He points out that civil aviation has more procedures and regulations that must be followed than other industries. “We definitely had pilots who had bigger job offers with other companies for better salaries,” he says by way of explanation of the high turnover of pilots. To counter the outflow, the company offered more competitive pay, he says. As for the number of untoward incidents, Mr Zheng blames them on the company taking on “more newcomers” last year. “If pilots make mistakes, we analyse our system and make a new training system for them. And we might take disciplinary action for those who make big mistakes.” The number of passengers Air Macau carried increased by 1.6 percent last year to 1.39 million, but the
MONOPOLY? US? A
ir Macau has an exclusive, 25-year concession to serve the city, which expires in 2020. Asked if the flag carrier would welcome competition from a second Macau airline, Air Macau chairman Zheng Yan replies: “The sky is open.” “There are other airlines that fly from here,” Mr Zheng says. For example, Air Macau and low-cost carrier AirAsia both fly to Bangkok daily. “In this case there is competition.” There is also competition on routes to mainland cities, he says. More people are choosing to fly to and from Macau on low-cost carriers. According to reports in other news media, low-cost carriers carry 30 percent of passengers that use Macau International Airport. Thai AirAsia inaugurated flights from Chiang Mai in northern Thailand last month. Next month, Thai Smile will begin flying in from Bangkok. Both are low-cost carriers. “This market cannot be [served by] just one carrier. We need to have more competition,” Mr Zheng says. “People say we have a monopoly because we have the exclusive licence, but Viva Macau was still there,” he says. Air Macau gave out three sub-concessions in 2006. Viva Macau was the only sub-concessionaire to take off. The company went bankrupt in 2010. The sub-concession was one of Viva Macau’s fatal handicaps, according to some industry insiders. They say the airline could not add new services without Air Macau’s approval, and that Air Macau kept Viva Macau out of the most profitable markets, such as the mainland. The other two sub-concessionaires lost their licences after they failed to get off the ground. One was Macau Asia Express, a joint venture between Air Macau, China National Aviation Co Ltd and Shun Tak Holdings Ltd. The other was Golden Dragon Air, part of Hong Kong’s Dragonair.
Air Macau’s chairman Zheng Yan says one of the company’s goals now is to attract more overseas passengers, while consolidating its performance
JUNE 2012
30
Transport
airline filled on average only 65.8 percent of its seats, according to Air China’s annual report. This figure is lower than that of the Air China group generally, which filled 81.5 percent of its seats, and that of all the world’s airlines together, which filled 78.1 percent of their seats. “We encounter this situation due to visa issues,” Mr Zheng says, referring to the need for mainland visitors to have a visa to enter Macau. He says some flights are full, notably flights to big cities in the mainland such as Beijing, Shanghai and Nanning. “In April, it was good. We were up to 70 percent. In the mainland, we were 80 and 90 per-
cent,” he says. A five-year plan envisages Air Macau concentrating on the Asia-Pacific region. The airline aims to have more services to northern China, but is still doing market research. For now the airline wants to take the opportunities the mainland market offers. “People prefer the point-topoint market, but they also want to use Macau as a transition point to other places, and this is also good for us. It lets us balance our routes,” Mr Zheng says. The airline keeps in mind that many transit passengers and passengers starting their journeys in Macau wish to go
to Southeast Asia. The airline has regular flights to Bangkok and Singapore, and charter flights to the Philippines. “We will see how this market grows,” Mr Zheng says. New services to Thailand, Vietnam, Cambodia, Malaysia and Indonesia may be considered. With four airports close to Macau – in Zhuhai, Guangzhou, Shenzhen and Hong Kong – and with the Hong Kong-Zhuhai-Macau Bridge eventually bringing two of them even closer, Macau International Airport faces significant challenges in the coming years. “There is definitely competition. But we found that
Photo: Carmo Correia
A five-year plan envisages Air Macau concentrating on the Asia-Pacific region. The airline aims to have more services to northern China, but is still doing market research
JUNE 2012
there is also opportunity for Macau,” Mr Zheng says. “People might say the casino [industry] is too big, but this is attractive and this is why people come,” he says. “They want to use a short holiday here.” He says many mainland tourists, especially those coming to Macau as individuals rather than as members of tour groups, fly in.
Just out of reach Mr Zheng says the new bridge will make it easier for visitors to Hong Kong to visit Macau and vice-versa, adding to rather than subtracting from the number of airline passengers. Air Macau and Macau International Airport can lure passengers away from Hong Kong’s congested airport, he says. “We feel the pressure, but I think we are already thinking of a solution, so that at least we can survive.” Last year’s earthquake and tsunami in Japan meant fewer Japanese passengers and so fewer Air Macau flights to and from Japan. This year flights are back to normal again and the number of passengers on them has increased. Next month the airline will begin flying to Tokyo daily, instead of four times a week. It said in March that more than 80 percent of passengers on this route are Japanese visitors to Macau. A source of tourists that the government has shown interest in exploring is India. In the first quarter of this year 29,230 Indians visited Macau, 6.8 percent more than a year before. But Air Macau has difficulty exploiting this market. “Our A321 cannot reach that far a distance,” Mr Zheng says. The airline would need longer-range aircraft. And Mr Zheng doubts that there would be enough passengers to make flying to India worthwhile.
31
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32
Politics
No future The political reform process showed that younger adults are apathetic about public affairs, analysts say BY LUCIANA LEITÃO
he second round of public consultations on political reform, which ended in April, collected more than 160,000 opinions. How many of these belonged to young people? Not many, analysts believe. The introduction of changes in the electoral system was the main topic on the city’s political agenda for some months. The government-inspired proposals to raise the number of members of the committee that elects the chief executive from 300 to 400, and to add two directly elected and two indirectly elected seats to the Legislative Assembly, got the final nod from the assembly earlier this month. Wei Wei is 21 years old. She has no clue whatsoever about the reform
T
process. Asked whether she heard about it, she replies with a simple “no”. As far as she is concerned, politics is a “boring” topic. As for 27-year-old Tony Kuok, he says he did hear something about the political reform process but did not follow it very closely. Mr Kuok says residents have no voice whatsoever when it comes to government decisions, so he has been disengaged from public affairs for some time. However, he says some of his friends followed the topic with more interest. Some, he says, “are starting to care about politics”. If this is the general pattern, then 25-year-old Jason Chao Teng Hei is exceptional. Mr Chao is president of the outspoken New Macau Association. He stood for direct election to the Legislative Assembly in 2009, as number two to legislator Au Kam San, but failed to win a seat.
Mature debate Mr Chao and two other members of the New Macau Association led last month what was probably the rowdiest audience protest that a plenary session of the Legislative Assembly has yet witnessed. During the introduction of the government’s political reform bills, the trio punctuated Secretary for Administration and Justice Florinda Chan’s attempts to speak with slogans, whistle blasts and paper darts. The session was suspended while Mr Chao and his companions were ejected. Mr Chao says people in Macau are generally not very politically active. “Most see politics as detached from their lives.” Young adults are no different, he says. The New Macau Association commissioned a survey to the University of Hong Kong during the second round of consultations on political reform, which found that only 47 percent of the population were aware of the process. Only 3 percent had taken part in it. Participation by young adults in the political reform process depends on several factors, Mr Chao says. “It is a matter of how well young people understand the process,” he says. “Another part is whether people speak out for their rights.” Residents are still reluctant to fight for the common good, he says. He blames the education system for this detachment. “There should be better knowledge about the political system, and it’s not sufficient [for it simply] to be in the school curricula. Schools should also be open to different political opinions.” He also says parents encourage their children to find jobs in the government as soon as they can, and to avoid rocking the boat.
Set us free
A lot of the city’s young adults are oblivious to politics, says scholar Eilo Yu JUNE 2012
“Most of my peers don’t present any interest in social affairs,” Mr Chao says. He says something else is needed to encourage engagement with politics by young people. That something is more open-minded officials and a political system free of the control of traditional, pro-government interest groups. Eilo Yu Wing Yat, a political analyst and specialist in public administration at the University of Macau, says he
33 cannot see a significant growth in our young people participating in politics.” Mr Yu says the media has an important role in encouraging those in their 20s and 30s to engage in public affairs, by giving them opportunities to express their ideas. In this regard the Internet has big part to play, he says.
Blood clots
Over one third of Macau’s population is aged between 15 and 34 detects that young people are now more active in public affairs than they were. Mr Yu points to Labour Day demonstrations mounted by youth-oriented groups every year since 2010. He also highlights the two “planking” protests since last year against shortcomings in the quality of service provided by telecommunications company CTM. Even so, a lot of the city’s young adults are oblivious to politics, he says. “There are groups of young people who are very active, paying close attention to public affairs, but I
The government and leaders of the establishment associations have often argued that the body politic needs more young blood. But they have done little to allow an infusion of youth. Over one third of Macau’s population is aged between 15 and 34, data from the Statistics and Census Service show. At the Legislative Assembly, over one quarter of the members are 60 years of age or more. The youngest member is Tong Io Cheng, who will turn 40 in November. The average age of the members of Chief Executive Fernando Chui Sai On’s cabinet is 57. The oldest is 63-year Secretary for Economy and Finance Francis Tam Pak Yuen. Professor Larry So Man Yum, a political analyst at the Macau Polytechnic Institute, says young adults have increased their social awareness considerably over the past 10 years. But he says they were not very interested in the political reform process. He says this lack of interest is difficult to explain. It may be due to the leading role played by pro-government associations during the public consultations, he says. “People were only participating in associations’ activities, rather than participating in the consultation process,” he says.
JUNE 2012
34 BILL KWOK-PING CHOU ASSOCIATE PROFESSOR OF POLITICAL SCIENCE, UNIVERSITY OF MACAU
Reform sophistry THE PRO-ESTABLISHMENT CAMP USED FALLACIOUS ARGUMENTS TO CONVINCE PEOPLE THAT ITS POLITICAL REFORM MODEL WAS THE BEST he political reform process is nearing its end. The government proposal to raise the number of members of the committee that elects the chief executive from 300 to 400, and to increase by two the number of directly elected members of the Legislative Assembly, while also increasing by two the number of the indirectly elected members, was already approved. It is likely to get the final nod from Beijing this month. I heard much sophistry during this debate. Much of it gained currency in pro-establishment forums to which no alternative voices were invited. Those that vocally supported the government’s political reform proposal throughout the process did not participate in debates with a more plural composition. This led to much of the pro-establishment sophistry being left unchallenged. I feel it is time to debunk the sophistry and set the record straight.
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- Political reform must be undertaken step by step I cannot think of any democratic jurisdiction where directly elected members of the legislature are still in the minority. But this is the case in Macau, around 35 years after the first direct election to the Legislative Assembly was held. Currently only 12 out of 29 legislators here are directly elected. After the political reform process, directly elected legislators will still account for fewer than half of the assembly’s members. This is no gradual change. Rather, we are stuck in a rut. - Macau must follow its own course in political reform, not ape Hong Kong Macau’s political system is based on its Basic Law, which was drawn up using Hong Kong’s as a reference. So Macau’s Basic Law is not that original. It beats me why some insist that we must necessarily go in a different direction from Hong Kong. - Macau’s Basic Law, unlike Hong Kong’s, does not mention universal suffrage, so it is against the Basic Law to push for it The Basic Law does not rule out universal suffrage by omitting it. Neither does the Basic Law mention that only association leaders are entitled to participate in indirect elections to the Legislative Assembly or in the elections of members of the committee that elects the chief executive. Is this also against the Basic Law? - Indirectly elected and government-appointed legislators are needed to maintain the executive-led political system Is there any democratic country where the executive branch does not dominate the political system? No, but in all democratic countries the majority of legislators are directly elected. Take the British system, for example. The dominant party in parliament selects the cabinet. From then on, the government is given the lead in policymaking, with the party that supports it ensuring all government-endorsed bills are passed by parliament. In the U.S. presidential system, the president has the power to veto bills approved by less than two-thirds of congress. When there are vacancies in the supreme court, the president is entitled to appoint new judges, usually choosing people that share his political views. This is set to influence the court’s JUNE 2012
rulings, many of which are strongly political. In other words, there are several ways for governments to ensure their predominance in the political system. Reducing or even abolishing indirectly elected and appointed seats in the Legislative Assembly here would not mean the end of the executive-led political system. - Increasing the number of indirectly elected seats will mean more balanced participation in politics by residents from all walks of life Balanced participation means everyone is entitled to equal representation. Indirect elections to the assembly do not achieve this, as ordinary citizens are not allowed to vote or take part in any other way. More indirectly elected seats only give the few association leaders that run the show even greater opportunity to participate in politics. More indirectly elected legislators will aggravate the present inequity, whereby ordinary citizens are entitled to only one vote (in direct elections to the assembly) while association leaders have three (in direct elections to the assembly, in indirect elections to the assembly and in elections to the committee that elects the chief executive). - Increasing the number of indirectly elected legislators and members of the committee that elects the chief executive would allow more young people to participate in politics This unfairly discriminates against the middle-aged and the elderly. - The number of indirectly elected legislators representing the professional and social service sectors should be increased to facilitate the development of those sectors If an athlete became an indirectly elected legislator, how could it improve anyone’s sports performance? Conversely, since we have had indirectly elected legislators from the labour and business sectors for so long, why do we still have problems with the quality of our labour force and the competitiveness of our businesses? - Since nearly half the directly elected legislators come from the world of business, advocating more directly elected seats would benefit only businesspeople, not ordinary citizens Businesspeople predominate to an even greater extent among the indirectly elected legislators. So indirect elections put ordinary citizens in an even more inferior position. - Full-blown direct elections would encourage bribe-taking Bribery exists because laws have loopholes and are not strictly enforced. It has nothing to do with direct elections: quite the opposite. Usually, countries without direct elections are those where bribe-taking is more widespread. In contrast, democratic countries are generally the cleanest. Note that I do not criticise those in power or the proestablishment camp for being in favour of maintaining a status quo that clearly benefits them. What concerns me is the sophistry they used to delude people.
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Closing sentence Ao Man Long is to face a total of 29 years in jail due to the biggest corruption scandal in Macau’s history acau’s highest court last month sentenced former Secretary for Transport and Public Works Ao Man Long to a cumulative punishment of 29 years in jail over a multimillion-dollar corruption scandal involving the biggest graft investigation in Macau’s history. The ruling came with the sentence for the latest court case involving Mr Ao. The Court of Final Appeal found the disgraced official, who was already serving a lengthy jail sentence for other offences, guilty of nine counts, according to the 108-page written judgement. The panel of three judges convicted him on three counts of money laundering and six counts of bribe-taking, and sentenced him to a fine of MOP240,000 (US$30,000) on top of his jail term. If Mr Ao fails to pay the fine, his time behind bars will be increased by six months. “The bribery acts of the defendant are most shocking given his high-ranking position in Macau’s administration, as well as the huge amount of sums involved,” the judgement said. “His acts have cast Macau’s government and its civil service in a very negative light,” the judges said, adding that the 55-year-old failed to show any remorse during his testimony. Mr Ao was already serving a 28-and-a-half-year jail term after being convicted in 2008 and 2009 of taking payments from contractors in return for approving either land sales or major construction projects in Macau. Last month, the court eventually sentenced the former official to a cumulative sentence of 29 years for the three cases. The maximum length of cumulative sentences in Macau is 30 years. This is believed to have been the final court case related to the so-called ‘Ao Man Long corruption scandal’, with the former official as a defendant.
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Big question mark This latest trial heard that Mr Ao received HK$20 million (US$2.6 million)
from Hong Kong tycoons Joseph Lau Luen-hung and Steven Lo Kit-sing for the acquisition of land on which the HK$20-billion luxury residential project La Scala is being built. The two men have both been charged with bribery and money laundering in a related court case in Macau. Mr Lau, chief executive of property firm Chinese Estates Holdings Ltd, has denied he attempted to bribe Mr Ao over the land tender in the case. Mr Lau, 61, is ranked fifth on Forbes magazine’s list of richest people in Hong Kong, with a fortune estimated at US$6.5 billion. The Macau government issued a statement saying it would now conduct an in-depth study on the court’s ruling. Officials may decide to confiscate the land as bribery was involved during its granting process. La Scala has already sold over 300
flats since pre-sales were launched in March, according to media reports. Around 80 percent of buyers are locals. This latest sentence also found Mr Ao guilty of taking bribes while awarding public contracts linked to the ZhuhaiMacau Cross-Border Industrial Park and the Coloane Wastewater Treatment Plant. Mr Ao, who was in office between 1999 and 2006, was first arrested in December 2006 by the Commission Against Corruption, and convicted on 57 counts of corruption, money-laundering and bribe-taking in January 2008. He was sentenced to 27 years in the first trial, which was increased to 28-and-ahalf years when he was sentenced in a second corruption trial in April 2009. Mr Ao had amassed a personal fortune of more than US$100 million in his seven years in office – 57 times his family’s income during that time. JUNE 2012
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Greater China
No simple answers Chen Guangcheng revives debate on U.S. influence in China BY SHAUN TANDON*
he United States has achieved a rare human rights breakthrough with China by negotiating the departure of dissident Chen Guangcheng, but few are ready to predict that the case will set a precedent. The dramatic case has revived debate over what influence the United States holds on human rights with China’s increasingly confident leadership, which in recent years has ended a practice of freeing dissidents as goodwill gestures.
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Mr Chen, a self-taught lawyer subjected to years of jail and house arrest for exposing forced abortions and sterilisations, arrived in New York last month, capping weeks of crisis between the world’s two largest economies. The 40-year-old in April pulled off an escape worthy of Hollywood. Despite being blind, he scaled walls in the dead of night as a getaway car took him from eastern Shandong province to the safety of the U.S. embassy in Beijing.
On May 2, hours after Secretary of State Hillary Clinton arrived for previously scheduled talks, U.S. officials escorted Mr Chen to a hospital and said China had assured that he would be allowed to join his family and study in a safe place. Some U.S. administration officials privately believed they had reached a historic achievement that could serve as a template for future rights cases as Beijing had negotiated over the conditions of a citizen on Chinese soil.
But a number of U.S. activists and lawmakers strongly criticised the initial deal on Mr Chen, questioning why the Barack Obama administration would take China at its word. Within a day, Mr Chen said that he was afraid for his family’s safety and wanted to leave to the United States. China, while quietly arranging Mr Chen’s departure, called for a U.S. apology. The U.S. State Department has been fastidious over its public language on Mr Chen and
37 repeatedly called the case “extraordinary.”
Unresolved matters Bonnie Glaser, a senior fellow at the U.S.-based Centre for Strategic and International Studies, doubts that Mr Chen’s case will start a trend. She points to exceptional factors – Mr Chen is blind and had broken bones when he sought U.S. help, while China was eager to ensure smooth talks with Ms Clinton. China’s leadership – keen to avoid instability, particularly as it undergoes a once-in-a-decade political transition – is acutely aware that many dissidents lose influence once they leave, Ms Glaser says. “Frankly, I think that a deal that got him out of the country was the best thing for China’s leadership,” she says. China had a sharply different reaction when another dissident, Liu Xiaobo, won the Nobel Peace Prize in 2010. Mr Liu remains in prison and China has sought to punish Norway, the host of the award. But Sophie Richardson of Human Rights Watch says that – even if it is unlikely that droves of dissidents will seek shelter at the U.S. embassy – the Mr Chen case showed activists inside China the possibilities of pushing the government. “I have trouble imagining that people who will have watched this saga unfold won’t in some ways feel empowered by it,” she says. Obama administration officials, heading into an election in November, have cast Mr Chen’s departure as the culmination of a long effort to build a working relationship with China, often behind closed doors. Sharon Hom, executive director of Hong Kong- and New York-based group Human Rights in China, said the Chen case did not give simple
Sharon Hom, executive director of Hong Kong- and New York-based group Human Rights in China, says the Chen case did not give simple answers on whether quiet or loud diplomacy works best with China answers on whether quiet or loud diplomacy works best with China as many ingredients – from international attention to Chinese netizen activism – had been factors. Ms Hom says that Mr Chen’s situation broke new ground as he was able to achieve his wish of studying at New York University accompanied by his family and – officially at least – has the right to return to China (see box). Usually, dissidents face the stark choice of abandoning their families or staying in China under threat. But Ms Hom says it was too early to assess the impact. Mr Chen has charged that provincial authorities are now going after his nephew, slapping a murder charge against him of what Mr Chen said was self-defence against thugs. “Mr Chen’s stay in the U.S. to rest and study, while an important next step for him and his family, does not resolve his future, guarantee the safety of his family, supporters and other activists back in China, or address the serious corruption and human rights abuses exposed by Mr Chen and other activists,” Ms *AFP NEWS AGENCY Hom says.
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lind lawyer Chen Guangcheng must get used to indefinite exile from China and diminished influence after he joined other dissidents in taking refuge far from home, fellow activists say. Mr Chen has repeatedly said he is not seeking exile in the United States, but wants to go back to China, and has expressed concern about the fate of the relatives he left behind. But past cases suggest the Chinese government will be reluctant to allow the return of a man whose escape caused international embarrassment and led to a diplomatic crisis with the United States. “If he wants to come back to China, I think it will be very difficult,” retired Shandong University professor and long-time social critic Sun Wenguang told AFP. “The authorities will not welcome him back. He brought on diplomatic turmoil and became a focus of the international press. The government will not allow him to return easily.” “The Chinese government has agreed to allow Chen Guangcheng to go abroad to study in accordance with his rights as a Chinese citizen,” rights lawyer Jiang Tianyong told AFP, citing Beijing’s official
explanation for Mr Chen’s flight abroad. “So he should also have the right, as a citizen, to return to China. But under the current political climate, I doubt the government will allow him to return. “There are many cases where the Chinese government violates domestic and international law and refuses to allow citizens to either leave the country or return.” They include leading dissident Wei Jingsheng, who left China in 1997 on medical parole in a deal brokered by the United States, and Christian activist Bob Fu, a close friend and supporter of Mr Chen who now lives in Texas. China has also barred the return of numerous activists linked to the 1989 Tiananmen democracy protests, Mr Jiang says. Exiled activists like Mr Chen can take heart from the explosion of social media as Chinese flock to Twitter-like “weibo” services and foreignbased Chinese-language news sources, such as Boxun.com. But retired professor Mr Sun said that even under house arrest, Mr Chen and activists like him had more influence in China than they did abroad. “He has suffered a lot and I congratulate him for succeeding in going abroad where he can still be effective. But I’m afraid he won’t be as effective as if he were in China.”
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Richer but not happier Economic growth sows unhappiness in the mainland, says study he mainland’s economic growth of the last 20 years has generally been met with declining happiness, especially among the poorest members of society, according to a U.S. analysis published last month. The study in the journal Proceedings of the National Academy of Sciences (PNAS) is based on six different surveys on self-reported satisfaction with life since 1990, a period when the mainland’s gross domestic product per capita increased fourfold. “There are many who believe that well-being is increased by economic growth and that the faster the growth, the happier people are. There could hardly be a better country than China to test these expectations,” says lead author Richard Easterlin, professor of economics at the University of Southern California. “But there is no evidence of a marked increase in life satisfaction in China of the magnitude that might have been expected due to the enormous multiplication in per capita consumption,” said Mr Easterlin, who is known for his work in the 1970s on how happiness is often not linked to wealth, coined the Easterlin Paradox.
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“Indeed people are slightly less happy overall and China has gone from being one of the most egalitarian countries in the world in terms of life satisfaction to one of the least.” In 1990, 68 percent of those in the wealthiest income bracket and 65 percent of those in the poorest reported high levels of satisfaction. But the latter figure has fallen more than 23 percentage points in the past two decades, according to the University of Southern California analysis of surveys carried out by the Pew Research Centre, Gallup and Horizon Research Consultancy Group, among others. Only 42 percent of Chinese people in the lowest income bracket reported high levels of life satisfaction in 2010, the study says. Meanwhile, the wealthiest Chinese who said they were satisfied with their lives grew about three percentage points, to 71 percent.
Have more, aspire higher “There is no evidence of a substantial uptrend in life satisfaction of the magnitude that might have been expected given the fourfold increase in GDP per capita over the study period,” it is concluded.
While the surveys did not document the reasons for the decline, it is a well-known phenomenon that “growth in aspirations induced by rising income undercuts the increase in life satisfaction related to rising income itself,” says the study. Other reasons may include “home life and the need for a secure job to support it, health, friends and relatives,” it adds. Similar trends have been observed in the former Soviet Union and East Germany during their transition periods. But the study cautions that it would be “a mistake to conclude from the life satisfaction experience of China, and the transition countries more generally, that a return to socialism and the gross inefficiencies of central planning would be beneficial.” Instead, leaders should take note that “jobs and job and income security, together with a social safety net, are of critical importance to life satisfaction.” The study also applauds the central government for taking steps in the last few years to “repair the social safety net,” which it described as “encouraging” for the country’s least advantaged citizens.
39 JOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - jid@macaubusiness.com
Back to basics SEVERAL BILLS CURRENTLY BEING REVIEWED BY THE LEGISLATIVE ASSEMBLY BLATANTLY BREACH THE BASIC LAW, BUT THAT HASN’T RAISED AN EYEBROW AMONG OFFICIALS he Legislative Assembly is currently dealing with several bills. Some touch on sensitive issues and create the need for reflection on the city’s legal system. It is not the first time that we all have listened to concerns about bills, either in terms of their substantive contents or the formal rigour of their provisions. But some of these latest law proposals demand careful attention and deserve a speedy clarification from the government. Let me offer a few examples. The bill regulating real estate agencies and their agents includes a range of penalties the government defines as administrative infractions. Defining which acts breach a law and what kind of penalties should be applied to them relates directly to the fundamental rights of Macau’s people, as safeguarded by the Basic Law. Matters such as these are within the scope of topics over which only the Legislative Assembly can legislate. It is difficult to understand why the government proposal sent to the assembly aims at regulating those matters later through bylaws, which don’t need to get the legislators’ approval. That reveals a disregard for the extant separation of powers between the Legislative Assembly and the government and is a public display of disrespect for the legislature. Of course, given the assembly’s composition and track record, some might say it is unlikely that much resistance will be offered when it is time for legislators to vote on such a bill. If that is the case, it is even more difficult to understand why the bill was drafted as it was. Why then the implicit contempt for the assembly, especially when the obsession with saving face typically seems to trump over other, ethical or professional, considerations?
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Double standards Another example is provided by the bill limiting access to casinos. The government wants to increase the minimum age for entry into a casino from 18 to 21 years. By extension, that also affects anyone who works in a casino. What the proposal presumes is that people under the age of 21 are too immature, if not irresponsible, and must be protected from their own weaknesses and gambling’s evils. Put aside how demeaning that view is towards young
If the government really thinks that residents under the age of 21 cannot be trusted to take care of themselves, then it has one obvious avenue to deal with the problem: call for a general revision of the legal age limit
people and that the bill came from basically the same government cabinet that previously tried so hard to reduce the age of criminal responsibility for some crimes. The proposal reeks of false moralism, which is never a good basis for law drafting. The age at which every resident becomes fully responsible for their acts is 18 years old – as neither the government nor its advisers can ignore. Where does the government find the authority or legitimacy to tell anyone who is responsible for their actions in every aspect of their lives, and accountable for their behaviour in both civil and criminal terms, that they are not allowed to decide if they want to visit a casino or work there? This is such a blatant violation of the Basic Law that it is difficult to understand how the proposal was put forward in the first place. If the government really thinks that residents under the age of 21 cannot be trusted to take care of themselves, then it has one obvious avenue to deal with the problem: call for a general revision of the legal age limit and ask the Legislative Assembly to amend laws accordingly.
Above reproach We are regularly treated to statements about the Basic Law, what it says and what it does not, and how sacred it is. There have been various Basic Law interpretations, some of dubious worth, brought forward recently to explain why the political system could not change faster or why some of its features could not be modified at all, ever. The same strictness in interpretation does not seem to apply when the issues are the separation of powers between the Legislative Assembly and the government or the protection of fundamental rights. It is not uncommon to hear people say that one should not worry too much, that the courts can deal with potential abuses or misinterpretations of the Basic Law. But recently the president of the Macau Lawyers Association protested against what his group sees as biased decisions by the courts whenever the government is challenged. His intervention drew a terse reaction from magistrates, who apparently took it as offensive. There is nothing too unusual about that. But the relevant part in their reaction was what they omitted. Macau’s judicial bodies had also been challenged by Mr Valente to carry on the legally mandatory inspections regarding the performance of courts, namely the regular performance evaluation of judges. Those evaluations have never taken place. On this issue, the judges’ communiqué was silent. People who want to believe in judicial impartiality, and who understand that a working and independent judicial system is the cornerstone of a modern society, may feel somewhat alarmed if they get the idea that those in charge of enforcing the law do not feel the need to apply it to themselves. That said, isn’t it time that legal experts and practitioners start discussing these issues in earnest? JUNE 2012
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Inside jobs The interior design industry is expanding fast, but Macau designers are out of the loop when it comes to the biggest projects BY LAURA LAI
nterior design has become an industry in its own right in the past 10 years, taking advantage of the boom in upmarket housing. Specialist home design companies have slowly increased in number, with some even allowing payment by instalment to suit the depth of a client’s pocket. But tougher nuts for the industry to crack are the big projects, whether commercial or residential. Macau-based interior design companies say they are usually given a secondary role as subcontractors, while all the core designing is done in ateliers in Hong Kong or further afield. Garrack Chu, director of i-Home Interior Design and Decoration Ltd, says his company undertakes between 20 and 30 home design projects each year – an average of two to three a month. Most of i-Home’s clients are residents. They include newlyweds fitting out their first homes and homeowners just wanting to renovate. Some clients are property speculators and investors from the mainland,
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but Mr Chu says they account for a small proportion of the company’s work. The majority of the work contracted to i-Home is designing the interiors of upmarket homes. Most are new flats. The other 40 percent are second-hand flats built since the handover. House-proud homeowners are prepared to spend good money. Industry insiders say the cost of a major renovation can be as much as 20 percent of the cost of buying the property. The designer’s fee ranges up to 10 percent of the renovation cost.
Paying the rent Interior designers also work on offices and shops, and in both the public and private sector. Unlike home renovations, most renovations of office and commercial space are straightforward, as the floor area is usually less segmented, says Mr Chu. A standard shop, apart from the retailing area, usually has just a stock room, changing rooms and a small toilet.
Only the larger enterprises here, such as restaurants, jewellery shops or hospitality companies opt for signature designs. Usually they go for clear-cut styles, Mr Chu says. “These companies would, based on their business strategy, discuss internally and decide on an outline of design requirements in advance.” One of the difficulties in renovating commercial property is meeting deadlines. “Business design projects have a rather tight lead time because the shops have to pay rent,” Mr Chu says. “Usually, within 30 days you have to deliver, with the design and construction inclusive.” There are various business models for interior design companies. They can take charge of the design only and leave it to the client to bring in the contractors to execute it. Or they can handle the design and on-site contractor supervision. In some cases, they do everything, taking responsibility for all stages, from the blueprint to execution, including the final touches.
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“In Macau, it’s actually hard to survive if one only focuses on interior design. In our company, we concentrate on execution,” architect Kao Lam at New Vision Design Ltd says
The managing director of DC Design and Engineering Co Ltd, David Chio, says most interior designers are highly qualified and creative, having studied abroad
The developers behind the city’s hotels, casinos and big residential complexes infrequently rely on Macau companies to design the interiors. The concepts for the whole property are often designed by companies overseas.
Helping out
“In the next few years, fair development in the sector is likely,” says Garrack Chu, director of i-Home Interior Design and Decoration Ltd
Casino interior designer Steelman Partners LLC of Las Vegas has worked on a number of developments here, including Sands Macao, StarWorld, City of Dreams, Casino Oceanus, the Plaza Macao and, more recently, Galaxy Macau. For its Nova City housing project, Shun Tak Holdings Ltd chose Hong Kong’s Steve Leung Designers Ltd and WMKY Ltd as the designers. Macau Property Opportunities Fund Ltd, managed by Sniper Capital Ltd, put awardwinning Japanese designer Yasumichi Morita in charge of the interior design of The Waterside, a tower in One Central containing 59 apartments for lease only. DC Design and Engineering Co Ltd managing director David Chio
says Macau companies usually have the opportunity to work on the bigger projects in the second stage, drawing up the detailed plans. This stage of the process is typically helping out, rather than proper design, says Mr Chio, who heads Macau’s Interior Designers Association. Architect Kao Lam at New Vision Design Ltd says the detailed plans usually mean heavy workloads and tight schedules. But, given the shortage of suitable labour, it is difficult to have a group of skilled designers committed to only a single project. The interior design of ancillary facilities in casino hotels, such as bars, gyms, restaurants and VIP rooms is usually separate from the design of the core project and so is subcontracted to different companies. Mr Lam says designers from Hong Kong and a few from Macau have done such work. Mr Lam says many upmarket clients here put great store in an interior designer’s reputation. They are suspicious JUNE 2012
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Property
of the quality and standards of concept design in Macau. “In Macau, it’s actually hard to survive if one only focuses on interior design. In our company, we concentrate on execution, having only one or two designers solely responsible for interior design,” he says.
Brighter outlook Since many of the bigger projects here just employ local companies as subcontractors, some interior designers are finding the mainland is a place where they can put their expertise to full use. With the economic growth there, interior designers from Macau, Hong Kong and further afield are much sought-after. Besides, as mainland contractors usually do the construction work, Macau designers can focus purely on design, without having to supervise the execution. Most materials used in interior design projects in Macau are imported from Asia. More specific and creative products can come from as far as the United States or Europe. Data from the Statistics and Census Service show that prices of construction materials have surged in recent years. Prices of materials for the construction of housing increased, on average, by 16 percent last year, rising faster than inflation, which rose by 5.81 percent. JUNE 2012
Although supplies from the mainland are cheaper, the quality may vary, Mr Lam says. Even so, many clients opt for them because of the price. Although the interior design industry faces challenges, i-Home’s Mr Chu says there is potential for development. The growth of the gaming industry should entail growth in retailing, presenting opportunities to
design commercial premises. As for designing homes, he says: “With more and more large residential properties under construction or to be completed in Macau and Taipa, homeowners need to decorate their houses. “If the economic outlook remains good, and the property market picks up, in the next few years, fair development in the sector is likely.”
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nterior designers in Macau face several hindrances, starting with the lack of official recognition of their craft. Several state governments in the United States require professional interior designers to have a licence. Macau does not. An architect at New Vision Design Ltd, Kao Lam says proper certification of interior designers would help curb illegal building, improper alteration of structures and unauthorised connection to the electricity and water mains. Industry sources say the lack of certification leads to an odd situation. When any government interior design project is put out to tender, only architects or engineers are eligible to bid. Yet, many will later get an interior designer to do the job. Interior designers say they must be jacks of all trades. They need to have good communication skills to exchange ideas with clients, a knowledge of interior architecture and they must be able to assess the quality of materials, as they usually handle procurement. Many also have a basic understanding of “feng shui” principles. A junior interior designer makes on average between MOP8,000 (US$1,000) and MOP10,000 a month, according to sources in the industry. A senior interior designer can earn up to four times this. Many eventually start their own businesses. The managing director of DC Design and Engineering Co Ltd, David Chio, who is also the president of the city’s Interior Designers Association, says most interior designers are highly qualified and creative, having studied abroad. There is no degree course in interior design in Macau. However, many lack experience, he says. Mr Chio estimates that there are about 20 companies and up to 70 interior designers in the business.
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How could we celebrate without you?
Thanks a million!
JUNE MAY 2012
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Property
Manhattan transfer One group of investors has resold high-end apartments shortly after buying them, dodging the special stamp duty BY ALEXANDRA LAGES
eal estate market players have found a way to bypass the special stamp duty imposed on the resale of residential property, intended to curb speculation. The law imposes a special stamp duty of 20 percent on the selling price if the new owner of a home resells it within a year of buying it. But an investigation by Macau Business indicates that at least one group of Macau investors has found a way to get around the levy. In late March, the owners of the 88 homes in Manhattan South Tower on Taipa resold 84 of them, less than six months after buying them. But these were no ordinary transactions. Completed in 2007, Manhattan South Tower has 37 floors containing 88 three-bedroom or four-bedroom apartments ranging in floor area from 156 square metres to 215 square metres. According to the Real Estate Registry and Jones Lang LaSalle, Manhattan South Tower was originally owned by a United States-owned investment fund based in Singapore called Apollo, through an offshore company called Apollo Manhattan Holdings II Ltd. Jones Lang LaSalle was appointed sole leasing agent, transaction manager and tenancy manager for the lease or sale of the apartments.
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In the fourth quarter of last year, a group of Macau investors bought Apollo Manhattan Holdings II (and therefore Manhattan South Tower) for HK$600 million. The building continued under Apollo Manhattan Holdings II. Three months later the building management company changed and shortly after 84 flats were put up for sale. A spokesperson for Apollo Manhattan Holdings II said the company did not pay any special stamp duty on the sales in March. Although the special stamp duty law covers the sale of property rights, by acquiring Apollo Manhattan Holdings II company as a whole, instead JUNE 2012
Photos: Manuel Cardoso
Side step
45 of just buying the Manhattan South Tower, the group of Macau investors was able to dodge the special duty. Questioned about this case, the Lands, Public Works and Transport Bureau forwarded our enquiries to the Finance Services Bureau, which said it would not comment on individual cases. The bureau would not say whether the Manhattan South Tower sales were liable to stamp duty. The Macau investors allegedly decided to sell most of the flats to take advantage of new demand that became apparent when homes in La Scala on Taipa and another phase of One Oasis on Coloane were put on the market. A spokesperson for the real estate agency that marketed the flats in Manhattan South Tower, Savills (Macau) Ltd, told Macau Business that executives in the gaming and hospitality industries bought most of them. The prices ranged from HK$4,500 (US$580) to HK$5,300 per square foot. The Manhattan South Tower is considered the best the development has to offer, because it overlooks the Cotai strip. A public housing complex now under construction will block views from
Questioned about this case, the Finance Services Bureau would not say whether the Manhattan South Tower sales were liable to stamp duty Manhattan North Tower. Rose Lai Neng, an associate professor of finance at the University of Macau and a real estate expert, is critical of the Manhattan South Tower arrangement. “Once new grey areas are found, a market bubble will build up again, especially because there is still a lot of hot money around,” she says.
Step backwards Ms Lai warns that if some investors need not pay stamp duty, they could rapidly resell homes for prices that ordinary market conditions would curb, because their transaction costs would be lower. “As more transactions are made, the market’s sentiment will be heated
up. End-users will once again be under the illusion that if they don’t buy now, the price will be even higher later, and therefore rush to acquire a unit, creating a higher-than-needed demand,” she says. A review of the special stamp duty is due in the middle of next year. It was introduced one year ago. So far it has reduced the number of sales but prices are still going up, continually setting records, according to the latest data. In the first quarter of this year the average selling price of residential space was MOP45,453 (US$5,682) per square metre, the highest yet, data from the Statistics and Census Service show. More than 2,300 homes were sold, almost 50 percent fewer than a year before.
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Property
School of cynical design Casino architecture is a centrifuge that pulls people in, holds them there and makes it hard to leave, says a Hong Kong academic BY DENNIS FERREIRA
or some, going to a Cotai casino is like being stranded on an island. It is what gaming operators wish for when they build a casino resort: to keep punters inside, longer. American architect Jonathan Solomon says that this is not typically an experience that visitors want. Mr Solomon is an associate professor in the architecture department of the University of Hong Kong. He says Macau is an expression of casino urbanism. It is an urbanism like a centrifuge: it exerts force to pull people in, keep them there and makes it hard for them to leave. He says this is most obvious on the Cotai strip. His own experience is that people have to travel hundreds of metres from their hotel room at the Venetian Macao to Taipa Village, even though the two are side by side on the map. The problem, according to Mr Solomon, is not only how the interior of a casino is built but also the road network around it. He says this makes Cotai a “highly disconnecting experience”. To increase connectivity between Cotai’s casino resorts, the properties must work as nodes in a network – a network that takes people from one place to another. Mr Solomon says Macau has an “interesting decision” to make when planning its expansion, if it really wants to play the role of Asia’s centre of gambling and entertainment. He laughs when asked if he thinks Macau has an urban plan. “No comment,” Mr Solomon says. He says the city does not appear to have any kind of master plan. That is not necessarily a negative, he argues, because it leaves more room for flexibility in responding to the city’s changing needs as time passes.
F
LA, London, Macau Macau moves at an incredibly fast pace but every move should be an intelligent one, Mr Solomon argues. A city’s development should not be taken for granted by its residents as, ultimately, they suffer if the expansion is mismanaged. Mr Solomon says the lack of connectivity is apparent not only in Cotai. He thinks that what is in store for the city, with the latest project to reclaim 3.5-square kilometres of land, is the creation of a clump of isolated islands. He finds this suspi-
NO IVORY TOWER T
he University of Saint Joseph is the city’s first to offer a degree in architecture, since 2009. University of Hong Kong associate professor of architecture Jonathan Solomon says it is “critically important” to have a next generation of architects educated here. Classes are more than a training ground for aspiring professionals; they are a vehicle to empower students to shape the city’s future, Mr Solomon says. “Locally trained and practising architects can only help.” JUNE 2012
Jonathan Solomon
cious as it suggests the city does not want to aggregate this new territory with its existing fabric. “The reclaimed land will just become isolated islands with no real connection to the SAR,” he says. This would make the city like Shanghai, London and Los Angeles, where there are many districts close to one another with no connections between them. There are nodal connections, but none for direct interaction among people that live there. Mr Solomon regards Macau as two cities in one: a historic one, created by centuries of Chinese and Portuguese interaction; and a modern one, an urban centre created according to a global pattern. The modern city resembles Hong Kong and New York – cities, he says, that are deeply disconnected from their heritage.
47
AVERAGE TRANSACTION PRICE PER SQUARE METRE OF RESIDENTIAL UNITS BY DISTRICT AS PER STAMP DUTY RECORDS
Source: DSEC
(MOP) District
2010
2011
Q2
Q3
Q4
Macau
32,026
30,347
33,397
Macau Peninsula Ilha Verde Tamagnini Barbosa Areia Preta and Iao Hon Areia Preta new reclamation zone (NATAP) Mรณng Hรก and Reservoir Fai Chi Kei Lamau Docks Horta e Costa and Ouvidor Arriaga Barca Patane and Sรฃo Paulo Conselheiro Ferreira de Almeida Ferreira do Amaral (Guia) ZAPE NAPE and Praia Grande Bay reclamation area Downtown Macau Barra / Manduco Praia Grande and Penha
27,603 23,108 25,141 22,857 34,413 25,145 24,895 29,157 25,745 18,875 20,538 20,476 25,713 19,620 48,445 19,383 26,676 24,888
29,517 24,524 25,886 21,887 34,615 23,506 25,437 28,099 28,603 18,849 20,990 21,948 24,953 20,705 58,820 18,223 23,058 32,955
Taipa Ocean Gardens and Taipa Pequena Downtown Taipa University and Pac On Bay Pac On and Taipa Grande City and Jockey Club
28,372 29,608 28,366 21,897 50,445 27,062
Coloane
59,509
Q1
2012
Q2
Q3
Q4
Q1
38,261
44,269
36,345
41,519
45,453
29,664 27,365 27,819 22,519 32,314 26,495 24,072 34,437 29,111 21,853 21,387 23,371 27,565 24,399 51,835 20,742 27,491 37,988
37,159 40,402 26,959 28,581 43,266 30,706 28,762 36,867 32,437 25,714 23,271 27,004 26,267 28,915 67,891 27,878 30,973 35,151
42,296 44,075 34,159 32,586 51,255 33,789 37,637 35,081 32,889 30,370 27,901 30,460 54,703 30,228 76,634 27,862 36,663 34,709
35,416 37,154 31,614 31,455 43,308 32,225 35,682 39,655 34,592 27,438 28,945 29,030 38,596 30,410 60,393 29,745 30,180 36,672
39,228 34,363 30,563 32,246 45,984 36,135 33,401 38,787 38,461 27,574 29,676 33,714 57,699 31,196 61,126 28,197 32,085 32,470
41,266 39,520 30,276 34,454 47,446 35,428 37,690 46,543 35,943 29,132 28,885 29,877 59,312 32,537 63,534 30,503 30,292 37,189
29,583 31,888 28,280 26,228 57,185 26,654
39,876 28,837 41,527 22,054 56,702 27,596
33,402 35,102 31,750 26,991 82,688 27,346
42,457 45,435 38,869 34,566 73,898 28,948
38,162 36,629 36,733 37,502 68,090 27,588
45,057 36,115 45,243 41,668 66,910 35,360
48,107 41,319 45,305 37,899 83,346 36,659
64,087
64,398
67,484
70,098
61,893
64,063
83,173
Notes: 1. The above information covers building units with stamp duty paid in the reference quarter 2. Including residential units that were exempt from the payment of stamp duty ~ No figure provided/confidential data
AVERAGE TRANSACTION PRICE PER SQUARE METRE OF OFFICE UNITS BY MAIN DISTRICT AS PER STAMP DUTY RECORDS (MOP) District Macau ZAPE NAPE and Praia Grande Bay reclamation area Downtown Macau Praia Grande and Penha
2010
2011
2012
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
22,169 16,896 22,252 28,838 ~
23,374 18,839 27,940 16,305 ~
27,078 32,046 27,802 25,801 ~
27,700 27,393 30,819 ~ 19,649
36,618 35,277 37,909 32,506 31,391
34,011 23,937 35,200 32,004 35,023
38,404 34,674 39,068 37,662 37,549
40,362 39,520 41,283 36,006 44,969
Notes: Only covers office buildings with ten storeys or higher ~ No figure provided/confidential data JUNE 2012
48 48
Property | Market Watch
Notable residential property transactions - 16/04 to 15/05, 2012 District
Property
Unit
Source: Centaline and Ricacorp
Floor area (sq. ft)
Sale price (HK$)
Price per sq.ft. (HK$)
Macau
One Central
Block 3, H/F, unit B (triplex)
8,236
98,932,000
Taipa
One Grantai
Block 1, M/F, unit A
5,350
41,730,000
12,000 7,800
Taipa
Windor Arch
Block 10, H/F, unit D
1,906
16,480,000
8,646
Macau
One Central
Block 4, M/F, unit A
2,326
16,200,000
6,965
Macau
One Central
Block 1, H/F, unit F
1,842
14,750,000
8,008
Macau
One Central
Block 1, H/F, unit E
1,833
14,500,000
7,911
Taipa
Nova City
Block 7, H/F, unit A
2,503
10,000,000
3,995
Macau
The Residencia Macau
Block 4, H/F, unit B (with car park)
1,719
9,972,366
5,801
Taipa
Nova City
Block 7, M/F, unit A
2,503
9,740,000
3,891
Macau
The Residencia Macau
Block 4, H/F, unit B (with car park)
1,719
9,680,120
5,631
Macau
The Residencia Macau
Block 3, H/F, unit B
1,767
9,680,000
5,478
Macau
The Residencia Macau
Block 4, H/F, unit B
1,719
9,631,240
5,602
Macau
The Residencia Macau
Block 4, H/F, unit B (with car park)
1,719
9,581,420
5,573
Macau
The Residencia Macau
Block 4, H/F, unit B (with car park)
1,719
9,535,360
5,547
Macau
One Central
Block 7, H/F, unit C
1,176
9,410,000
8,002
Taipa
Pearl on the Lough
Block 2, L/F, unit E (with car park)
2,055
9,280,000
4,515
Taipa
Supreme Flower City
Block 3, L/F, unit I (with car park)
2,060
9,100,000
4,417
Taipa
Nova City
Block 7, M/F, unit A
2,503
8,960,000
3,579
Macau
Villa de Mer
Block 2, H/F, unit B
1,695
8,480,000
5,002
Macau
Villa de Mer
Block 2, H/F, unit B
1,695
8,480,000
5,002
Taipa
Pearl on the Lough
Block 2, L/F, unit H
2,055
8,450,000
4,112
Taipa
The Manhattan
North Block, L/F, unit F
1,824
8,200,000
4,496
Taipa
Kings Ville
Block 2, M/F, unit E (with car park)
1,901
8,000,000
4,208
Taipa
Nova Taipa Garden
Block 29, M/F, unit A (with car park)
2,167
7,950,000
3,668
Taipa
The Manhattan
North Block, M/F, unit F (with car park)
1,720
7,720,000
4,488
Taipa
Nova City
Block 15, H/F, unit D
1,561
7,500,000
4,805
Taipa
The Manhattan
North Block, L/F, unit F
1,626
7,500,000
4,612
Taipa
Nova City
Block 7, M/F, unit B
1,983
7,490,000
3,777
Macau
La Cite
Block 1, H/F, unit B
1,803
7,280,000
4,037
Taipa
The Manhattan
North Block, M/F, unit E
1,626
7,100,000
4,367
Taipa
The Manhattan
North Block, L/F, unit F (with car park)
1,626
7,100,000
4,366
Macau
Villa de Mer
Block 3, H/F, unit A
1,475
7,000,000
4,745
Macau
Villa de Mer
Block 3, H/F, unit A
1,475
7,000,000
4,745
Macau
Villa de Mer
Block 3, H/F, unit B
1,475
7,000,000
4,745
Macau
Villa de Mer
Block 3, H/F, unit B
1,475
7,000,000
4,745
Macau
Villa de Mer
Block 4, M/F, unit AC
1,475
7,000,000
4,745
Macau
Villa de Mer
Block 4, M/F, unit B
1,479
7,000,000
4,732
Macau
Villa de Mer
Block 3, H/F, unit B
1,475
6,980,000
4,732
Taipa
Nova City
Block 13, H/F, unit B
1,520
6,838,800
4,499
Taipa
Nova City
Block 13, M/F, unit D
1,559
6,800,000
4,361
Macau
La Cite
Block 2, L/F, unit E
1,719
6,800,000
3,955
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Notable commercial property transactions - 16/04 to 15/05, 2012
Source: Centaline
Type
Building/Street
Unit
Floor area (sq. ft)
Sale price (HK$)
Shop
Rua do Mercado de Iao Hon
Shop
3,500
15,000,000
4,285
Shop
Avenida do Ouvidor Arriaga
Shop
1,200
14,500,000
12,083
Shop
Avenida da Amizade
Shop
1,710
12,600,000
7,368
Shop
Travessa dos Bombeiros
Shop
2,500
9,850,000
3,940
Shop
Rua de Paris
Shop
600
8,000,000
13,333
Shop
Avenida da Longevidade
Shop
307
6,880,000
22,410
Shop
Rua Central da Areia Preta
Shop
800
6,800,000
8,500
Shop
Rua de Inacio Pessoa
Shop
980
5,000,000
5,102
Office
China Civil Plaza
M/F, unit E
1,449
5,000,000
3,450
Shop
Avenida Marginal do Lam Mau
Shop
3,180,000
7,571
420
Price per sq.ft. (HK$)
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
JUNE 2012
49 Notable residential property rentals - 16/04 to 15/05, 2012
Source: Centaline and Ricacorp
District
Property
Unit
Macau
One Central
Block 2, L/F, unit B
2,267
40,000
17.64
Macau
Victory Plaza
H/F, unit A
2,261
36,000
15.92
Macau
Lake View Tower
Block 1, L/F, unit O
1,889
35,000
18.53
Macau
One Central
Block 7, M/F, unit H
1,178
25,000
21.22
Macau
Lake View Tower
Block 1, M/F, unit C
1,527
25,000
16.37
Taipa
The Manhattan
North Block, L/F, unit F (with car park)
1,720
25,000
14.53
Taipa
Pearl on the Lough
Block 2, M/F, unit F (with car park)
2,839
24,000
8.45
Macau
Lake View Tower
L/F, unit H
1,507
22,000
14.60
Taipa
The Manhattan
North Block, L/F, unit F
1,720
22,000
12.79
Taipa
Nova City
Block 5, H/F, unit C
1,975
22,000
11.14
Macau
Lake View Tower
Block 1, L/F, unit A
1,511
20,000
13.24
Macau
Lake View Tower
Block 2, L/F, unit G
1,565
20,000
12.78
Macau
Lake View Tower
Block 2, M/F, unit E
1,552
18,000
11.60
Macau
The Residencia Macau
Block 4, M/F, unit B
1,719
18,000
10.47
Macau
The Residencia Macau
Block 3, H/F, unit A
1,750
18,000
10.29
Macau
Lake View Tower
Block 1, L/F, unit D
1,497
17,000
11.36
Taipa
Nova City
Block 7, L/F, unit C
1,974
16,000
8.11
Taipa
Nova City
Block 13, H/F, unit B
1,520
15,700
10.33
Taipa
Nova City
Block 7, L/F, unit C
1,973
15,000
7.60
Taipa
Nova City
Block 14, L/F, unit C (with car park)
1,318
14,000
10.62
Macau
Bo Fung Court
Edf. Pou Fon Kok, M/F, unit B
1,319
14,000
10.61
Taipa
Nova City
Block 12, H/F, unit B
1,314
13,800
10.50
Taipa
Nova City
Block 14, M/F, unit C (with car park)
1,314
13,000
9.89
Taipa
Nova City
Block 4, M/F, unit F
1,339
13,000
9.71
Taipa
Nova City
Block 14, L/F, unit F
1,340
13,000
9.70
Taipa
Jardins do Oceano
Jardim Beira-Mar, L/F, unit B
1,503
13,000
8.65
Macau
The Bayview
Block 2, L/F, unit E
1,603
13,000
8.11
Taipa
Nova City
Block 6, L/F, unit D
1,050
12,800
12.19
Taipa
Nova City
Block 14, L/F, unit A
1,088
12,500
11.49
Taipa
Nova City
Block 6, L/F, unit A
1,088
12,500
11.49
Floor area (sq. ft)
Rent price (HK$)
Price per sq.ft. (HK$)
Taipa
Nova City
Block 6, L/F, unit D
1,050
12,000
11.43
Taipa
Nova City
Block 8, L/F, unit A
1,088
12,000
11.03
Macau
Treasure Garden
Block 1, H/F, unit A
1,406
12,000
8.53
Macau
The Residencia Macau
Block 4, H/F, unit D
1,209
11,000
9.10
Macau
Edf. King Xiu Garden
M/F, unit B
850
9,800
11.53
Macau
The Praia
Block 3, M/F, unit N
Taipa
Chun Fok Village
Block 5, L/F, unit K
Macau
Edf. San Tou Seng
L/F, unit B
Taipa
Nova Taipa Garden
Block 26, M/F, unit M
Macau
Fairmont Plaza
L/F, unit C (with car park)
Taipa
Edf. Hoi Yee Fa Yuen
Block 3, M/F, unit W
Taipa
Jardim de Lisboa
Macau
1,558
9,500
6.10
731
8,500
11.63
1,738
8,500
4.89
830
8,200
9.88
1,226
7,800
6.36
814
6,800
8.35
Edf. Magnifico, L/F, unit B
897
6,500
7.25
Edf. Polytec Garden
Block 6, L/F, unit AO
931
6,500
6.98
Macau
Edf. Jardim Kong Fok On
Block 8, L/F, unit BI
Taipa
Jardim Hoi Wan
Hoi Fong, M/F, unit G
1,250
6,500
5.20
958
6,000
6.26
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
Notable commercial property rentals - 16/04 to 15/05, 2012 Type
Unit
Property
Source: Centaline
Floor area (sq. ft)
Rent price (HK$) Price per sq.ft. (HK$)
Shop
Edf. Lei Hong
Shop
1,149
32,000
27.85
Office
Edf. Industrial Nam Fony
L/F, unit H
4,704
12,500
2.66
Note: L/F - Low floor; M/F - Middle floor; H/F - High floor
JUNE 2012
50
Property
RESIDENTIAL MORTGAGES SOAR
HOMES PRICES STAY STEADY
The average transaction price of residential units reached MOP52,637 in April Residential space prices mostly stayed steady in April with the average transaction price of residential units reaching MOP52,637 (US$6,580). This number was down by just 0.7 percent compared to April, according to data released last month by the Financial Services Bureau. The figure was up by 4.2 percent from a year before. The total number of homes sold last month reached 1,600, an increase of 26 percent compared to April.
PUBLIC HOUSING BOOM
New approvals of residential mortgage loans rose sharply in the first quarter of 2012, statistics released by the monetary authority show. For the first three months of the year, new residential mortgage loans approved by Macau banks rose 22.0 percent quarter-to-quarter to MOP5.7 billion (US$713 million), of which 93.9 percent was extended to residents. When compared with the same period last year, new approvals of residential mortgage loans dropped by 33.2 percent. Meanwhile, commercial real estate loans further plunged during the first three months of 2012, posting a 45.8 percent quarterto-quarter drop to MOP5.7 billion.
UNHAPPY TENANCY
Between January and April this year, as many as 38 complaints relating to residential lease agreements have been filed with the Consumer Council. The number for the same period last year was 18, Portugueselanguage newspaper Jornal Tribuna de Macau reported. According to the report, property issues are the fourth most complained about matters in Macau. Complaints lodged with the Consumer Council include tenants being evicted from their houses six months into the lease agreements. Others include rent hikes of up to 30 percent.
Ilha Verde will see a big boom in public housing, with 2,350 new units slated to be built on two separate plots of land in the northern district, it was announced last month. This is the first project in the second phase of the public housing programme, after the 19,000 homes the government pledged in 2007 to complete by this year-end. Bids for the construction of the new batch of homes will be invited in the third quarter of this year. Still included in the 19,000 units goal, a total of 770 units of public housing units are currently under construction at Ilha Verde.
JUNE 2012
51 NOELEEN HEYZER EXECUTIVE SECRETARY OF THE UNITED NATIONS ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
Shock-proofing Asia’s economies THE GREATEST RISK TO THE ASIA-PACIFIC ECONOMY IN 2012 IS A DISORDERLY SOVEREIGN-DEBT DEFAULT IN EUROPE ncertainty and volatility have quickly become the “new normal” of the global economy. For several reasons, this turbulent external environment poses the most significant threat to Asia-Pacific growth in 2012. One of this environment’s main features is the on-going weakness of major developed economies. The expected V-shaped global recovery, from the depths of the 2008 financial crisis, proved short-lived. The world economy entered a second stage of crisis in 2011, owing to Eurozone’s sovereign-debt crisis and continuing uncertainty about the economic outlook for the United States. Mapping the landscape of these threats, forecasting their impact, and presenting a range of policy options to help countries to ensure inclusive and sustainable growth despite the uncertainty, is the focus of the United Nations’ “2012 Economic and Social Survey of Asia and the Pacific”. Our forecast is that persistent headwinds will slow AsiaPacific economic growth to 6.5 percent this year, down from 7 percent in 2011. Reduced demand for regional exports and higher costs of capital, combined with loose monetary policies and trade protectionism in some advanced economies, will contribute to the slowdown. Nevertheless, Asia-Pacific growth will continue to outpace that of all other regions, acting as an anchor of stability and a new pole of dynamism for the world economy. For example, South-South trade with the Asia-Pacific countries in 2012 will help other developing regions, especially Africa and Latin America, to reduce further their dependence on the low-growth advanced economies.
U
Shanghai
The commodity boom that has resulted from higher prices presents both risks and opportunities. Price shifts alter incentives, but the less-developed economies of Asia and the Pacific must resist the impulse towards narrow commodity specialisation. The lesson from the first round of Western globalisation was that natural-resource specialisation, especially in the poorest countries, can delay industrialisation, economic diversification and the creation of productive capacity.
Shared prosperity Key challenges Moreover, robust growth from the Asian economic powerhouses will continue in 2012, with China likely to grow at 8.6 percent and India’s growth expected to accelerate from 6.9 percent to 7.5 percent. The South-East Asian sub-region is likely to record a slight increase in growth, owing to Thailand’s strong recovery following the 2011 floods, and annual inflation in the Asia-Pacific region as a whole is projected to fall from 6.1 percent to 4.8 percent. The greatest risk to the Asia-Pacific economy in 2012 is a disorderly sovereign-debt default in Europe, or an unravelling of the Eurozone. This worst-case scenario could lead to AsiaPacific export losses of up to US$390 billion (MOP3.1 trillion) in one year, with least-developed and landlocked developing countries worst hit – losing as much as 10 percent of their total exports. Although unlikely, such a scenario could reduce regional growth by as much as 1.3 percentage points, and prevent 22 million people from escaping US$2-a-day poverty in 2012. A second key challenge to Asian regional growth in 2012 is commodity price volatility, together with a long-term rising trend. High prices and persistent volatility are increasingly features of the “new normal”, and both national and regional economies need to adjust to this reality.
Another key step in “shock-proofing” Asian economies will be to address the problem of jobless growth, unemployment, and rising inequalities. This needs to be a gradual process of rebalancing, supporting greater domestic consumption as an enhanced engine of growth and productivity, job creation and income equality. Other critical economic-policy challenges in 2012 will include managing the balance between growth and price stability – which will require inflation-fighting measures beyond monetary policy alone; coping with capital flows, especially the surge in short-term debt; dealing with exchange-rate volatility; and addressing the impact of extreme weather and natural disasters. The Asia-Pacific countries are fortunate to face the turbulence and uncertainty of the global economy this year from a position of relative strength. High gross domestic product growth rates, significant fiscal room for manoeuvre and increasing economic cooperation make the region’s prospects for 2012 brighter than almost anywhere else. Making the right policy choices – to build resilience and pursue a sustainable pathway to shared prosperity – will prepare Asia and the Pacific to flourish in the context of sustained global uncertainty. That is good news in a troubled and turbulent world. JUNE 2012
EXCLUSIVE CEO INTERVIEW
52
GET SET FOR GROWTH Banco Nacional Ultramarino has unveiled a strategy to boost the bank’s competitiveness. The man in charge, chief executive Pedro Cardoso, tells Macau Business the bank will increase its offering of products and services to existing clients, while moving into new segments with high-growth potential BY EMANUEL GRAÇA PHOTOS BY CARMO CORREIA anco Nacional Ultramarino, or BNU, is celebrating the 110th anniversary of its operations in Macau, where it operates as a commercial and issuing bank. Is it special to achieve such longevity?
Pedro Cardoso - It means the culmination of a long and good history for BNU, and for the relationship between Macau and BNU. This has translated into a deep knowledge of the local market, as well as a constant challenge to develop, progress and do better. Your results were positive last year.
The main highlight for 2011 was the growth of business by 13 percent yearon-year, compared with very low single-digit levels in 2009 and 2010. This growth has been reasonably balanced between deposits and lending. JUNE 2012
We also achieved very good cost control results. Total operating expenses decreased by 2 percent. In 2011, for prudential reasons, and also because of our lending growth, we increased our lending provisions significantly by 145 percent. That led to a decline of 13 percent in net income, reaching MOP325 million. I would highlight that BNU continues to be an extremely liquid bank. The loans-to-deposits ratio, that compares loans to customers with deposits gathered from customers, remains below 55 percent. You mentioned an increase both in loans and deposits last year. Did that growth take place among individual or corporate clients?
The business growth in 2011 was very well balanced, with 13 percent on assets and 13 percent on liabilities. Also, in terms of number of credit cards, we grew 12 percent. As for the number of users of our online service, it expanded at a 17 percent growth rate.
In terms of type of customers, we had a bigger growth from the corporate sector than from individuals. One of the fastest growing bank segments in Macau is renminbirelated financial products. Is this also true for BNU?
Of course. We feel however that this is an area of the market that still has a lot of potential. We expect that potential to translate into more business not only for deposits and credit cards, but also for loans and lending products. We feel that there is room to grow in Macau not only in renminbi but also in other currencies. We feel that the Macau banking market is highly competitive but we also know there is a lot of potential to innovate and develop new products and services.
CHARTING GROWTH The monetary authority and Beijing have discussed Macau becoming a renminbi settlement platform for trade and other economic activities between the mainland and Portuguese-speaking countries. Is this an interesting area for BNU?
Definitively, yes. Last year, together with an international consultancy, BNU did a strategic review. We have identified 15 areas of growth where we are investing and one of them is the cross-border business between China and the Portuguese-speaking countries. We believe one of our biggest advantages is that we belong to a banking group that operates in almost all the Portuguese-speaking countries. BNU has identified 15 growth areas. Can you highlight some others?
The first is to develop the cross-selling business within our existing customer base. BNU has right now more than 180,000 customers, both corporate and individuals, but, on average, we sell only 2.4 products and services to each customer. That is well below international standards, which in developed countries stands above four products. That is one of our priorities – to increasew the number of products and services sold to each customer. Another very important priority is to be in segments that present high growth potential and where BNU has not traditionally had a strong track record, namely in the small and medium-sized
EXCLUSIVE CEO INTERVIEW
53
“Last year, together with an international consultancy, BNU did a strategic review. We have identified 15 areas of growth where we are investing” “Our transformation project is a project for the next two-anda-half years, to be finalised by 2014”
JUNE 2012
EXCLUSIVE CEO INTERVIEW
54 enterprises and merchants segment. We have also identified the need to reshape our organisational structure, and we have already done that, to better cope with the future challenges and opportunities in Macau’s banking market. Does that mean you’ve reshaped the organisation or the branch network?
That means both. We have already reshaped our organisation to be stronger in terms of its marketing and commercial capabilities, as well as in terms of risk assessment and in terms of backoffice processing. But we expect in the next two years to open four to five more branches. We currently have 14. Would that mean hiring more staff?
Photo: Luís Almoster
Right now, we have a total of 446 people. We expect to have an increase of staff due to the fact that we are going to open new branches but we also expect to have a reduction in the back-office area. In the end, we expect a slight increase in staff numbers. You mentioned BNU’s bet on SMEs and merchants. What can you improve on?
We have created a new, dedicated team for this segment. The team is, right now, trying to work better and more closely with our existing customers. That is the first step. Like in the retail business area, also in the corporate and small merchants segment, we are still well below our potential business levels with existing customers. That is the first step: to increase business levels with these customers. Then we have a long list of potential customers to address in the future. But, right now, the first step is, throughout 2012, to work more and better with the existing customers both in lending as well as in the deposit areas.
REQUIRING CHANGE When do you expect to have fully implemented your strategic plan?
Our transformation project is a project for the next two-and-a-half years, to be finalised by 2014. Together, my colleagues and I are fully involved and motivated to develop it. Without it, do you think BNU would be able to cope with the changes expected for Macau?
The transformation project is absolutely needed for BNU. JUNE 2012
“I am concerned about the fact that there are banks that tend to focus on market share and not so much on profitability. That leads to very harsh terms in pricing” Is wealth management a sector you also want to boost?
BNU has had one important area for a number of years, which is private banking. In private banking, we provide a wealth management service to our customers. We offer them structured products as well as international mutual fund products. We don’t have a discretionary management portfolio service right now. We don’t feel that is one of the priorities at the present moment. You have a partnership in bancassurance with insurance company Companhia de Seguros Fidelidade-Mundial SA, which is also part of the same group as BNU. How successful has it been?
In 2011, we made important progress together with Fidelidade in terms of
launching new products and services to customers. I would highlight the home protection insurance, that is coupled with our residential mortgage products sold to our retail banking customers, as well as the travel insurance, that is sold not only throughout our branch network but also sold through our online banking. How successful have those products been so far?
Both exceeded our expectations. One year ago, the government enacted a new special stamp duty on residential transactions. A couple of months earlier, new mortgage lending guidelines were implemented. Did those measures impact your mortgage business?
It continues to grow at a very fast pace. In the first quarter of 2012, our
EXCLUSIVE CEO INTERVIEW
55 provided cash services, credit card services and we have offered our services to their staff. For BNU, how does the high volume of visitors translate into increased business?
In several ways. First, we have acquiring agreements with merchants in Macau. So, all the business done through credit cards with those merchants passes also through BNU. Also, in the big gaming companies, we have that type of service. Plus we have more than 100 ATM machines in Macau. The withdrawing of money and cash advances that is done through those ATM machines passes through BNU.
Photo: Luís Almoster
What is the weight of the visitor segment in your results?
“BNU has right now more than 180,000 customers, both corporate and individuals, but, on average, we sell only 2.4 products and services to each customer. That is well below international standards” residential mortgage portfolio increased more than 5 percent compared with the end of 2011. Do you feel that these measures were positive for the market?
All measures aiming to create a more consolidated market are always welcomed.
LIQUID, CAPITALISED BNU partners with trading platform Boom to offer online stock trading services. Since stocks are a popular investment here, do you plan to offer services of your own in this area?
We are assessing different alternatives. We expect to have new developments quite soon, within this year. BNU increased its lending provisions last year. Was that
related to the Basel III minimum reserves requirements?
BNU is not only a very liquid, but also a very capitalised bank. We expect to have by the end of the current quarter, a solvency ratio in the region of 16 percent, well above the minimum levels required in Macau and all over the world. BNU has participated in several syndicated loans to finance casino projects. Will you continue to do so?
With the development of the Cotai strip, we expect to have new transactions in the future. Of course that will depend on the number of casino licences and on the pace of development. It has been an excellent partnership with those companies. We have not only lent to them since the beginning of their operations in Macau, we have also
That is quite difficult to assess. But the acquiring business for BNU is almost as important as the credit cardissuing business. Macau’s monetary policies are effectively pegged to those in the United States. That has led to odd situations were Macau’s inflation rate is high, but banks are offering low interest rates on deposits. Is it hard to offer attractive products due to this mismatch?
Yes. The current situation is a challenging one, for two main reasons. The first is the level of nominal interest rates, which is quite low. For BNU, considering it is mainly a retail bank with a significant amount of deposits, a very low level of nominal interest rates is quite negative for our net income. More important than that, is the level of competition in the market in terms of interest rates both for deposits and for loans. In 2011, our net interest rate, which is the average interest rate charged to loan customers minus the average interest rate that we paid to customers for deposits, decreased by 10 percent in real terms. It is quite a challenging environment. I would say that quite low nominal interest rates are a negative factor for BNU and, I imagine, also for other banks. Should Macau look to peg its currency either to a basket of currencies or directly to the renminbi?
That is a complex issue that I am JUNE 2012
EXCLUSIVE CEO INTERVIEW
56 sure Macau authorities and regulators are looking at. Is competition between banks in Macau fierce? We have 29 banks in such a small market.
I am not concerned about the number of banks. I am concerned about the fact that there are banks that tend to focus on market share and not so much on profitability. That leads to very harsh terms in pricing. It is very hard to see anywhere in the world, and I have worked in different markets, a banking sector with such low net interest margins. As the economy slows, might we face the risk of banks discovering their margins are actually too low?
My personal expectation is that the trend of decreasing net interest rates will, little by little, be reduced. Some big mainland banks are investing a lot in Macau. Is that positive or are those competitors, with huge assets behind them, too strong?
Competition and challenge are always good for the industry, not only for consumers, but also for the players in the banking market. Competition allows us to improve and to improve the quality of our service. I think that is quite positive, although the first impact, which is a reduction of margins, is negative. Do you expect to see some consolidation within the banking sector?
Not for the near term. Is it something BNU is looking at?
Not actively. We have a project for organic growth.
SMART CUSTOMERS Looking at your international experience, is the Macau customer more demanding than elsewhere?
All over the world customers tend to be quite demanding. Nowadays there is a tremendous amount of information out there from different sources. Customers here are not very different from customers in Europe and other places. They know what banks offer, the quality of their services, the price of those services and they compare. That is quite natural here, as well as in other countries. JUNE 2012
How easy is it to retain clients?
In our case, client retention is not the problem. Our main challenge, as I said before, is to increase business per customer. BNU is owned by Caixa Geral de Depósitos SA, a banking group controlled by the Portuguese government. Portugal faces a difficult economic situation. Has that led some clients to worry about BNU’s soundness?
More than 99 percent of BNU’s business is in Macau or in other places nearby. Our business with Portugal is extremely low. BNU is a local bank with a long tradition in Macau. I wouldn’t say that from time to time we don’t have one or two enquiries about the situation, not only in Portugal and in Europe but also in other countries around the world. But, from a business point of view, that has not translated into any negative factors. BNU has two representative offices in the mainland. Are you planning on building up your presence there?
BNU has a representative office in Shanghai and Caixa Geral de Depósitos has one branch in Zhuhai, as well as one representative office in Mumbai in India. As part of our strategy, we tend to direct the activity of those operations to support the cross-border trade business between China, India and the Portuguesespeaking countries as well as, in the case of Zhuhai and Shanghai, for the crossborder business between the mainland and Macau.
EXPERIENCE COSTS Banks have accused the gaming sector of hiring their best staff for their accounting and financial departments. How well have you coped with that?
One of the areas that is critical in our strategic business plan has to do with staff. We are taking important measures to retain and motivate staff. Our average turnover rate is in line with the market, not only in Macau, but also in China overall. In order to reach the results we aspire to have in the future, we will have to decrease that turnover rate in order to provide better service to our customers. It is completely different to have people that have worked with us for 10 years, who know quite well the procedures and
the customers, than to have just junior people, with very little experience. How do you assess the regulator’s role in Macau?
Our perception is that Macau is a very well, highly regulated market. The main areas of regulation and supervision are well covered, namely liquidity, solvency as well as consumer rights and protection. Following the international financial crisis, new policies for the banking industry were enacted. A new deposit protection scheme starts soon, which will oblige banks to pay an annual contribution of 0.05 percent of the amount of protected deposits held. Is that cost reasonable?
I would say, based on international standards, that it is quite reasonable. You have been in Macau for about one year. What is your assessment so far?
It is quite a challenging job because it is a very special place. It is a multinational and multicultural experience. The business potential is enormous. The main challenge is to cope with all the potential that we have in front of us. When you were first appointed to head BNU, there was some surprise in Macau, as at the time you were a member of the board of directors at Caixa Geral de Depósitos group. Does that mean BNU’s importance within the group has increased?
More important than making those subjective assessments is to have someone here that has a background in the banking industry of almost 25 years, in different areas and in different countries. The most important thing now is for BNU to grow on a sustainable basis and to avoid what has happened in other countries, where we saw tremendous growth rates, a boom, and later on a burst. When will your mission be accomplished?
When we finish implementing the transformation plan for BNU, I would say that my mission is accomplished. By then, should we expect you to move on to a new assignment elsewhere?
I don’t make those kinds of projections.
EXCLUSIVE CEO INTERVIEW
FINDING FUN IN DIVERSITY Born in 1965, Pedro Cardoso was appointed as chief executive of Banco Nacional Ultramarino (BNU) in August last year. He replaced Artur Santos. Since January 2008 and up until December last year, Mr Cardoso was a member of the board of directors of Caixa Geral de Depósitos SA, the Portuguese banking group that owns BNU and has a presence in 24 markets. Mr Cardoso holds an MBA in Finance from the Catholic University of Portugal. Aside from Lisbon, his international experience includes stints in Madrid and New York. Mr Cardoso has been in Macau for almost one year and is learning Cantonese. He says what has surprised him the most is the city’s international feel and multiculturalism. He says leading a team that is as diverse as BNU’s “is not easy, but it is very fun”. Both customers and staff are to be commended for being so open to new ideas, he says.
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Gaming
PLAYING FOR BIG BUCKS Photo: Carmo Correia
One-fifth of visitors that hit the city’s casinos come prepared to gamble away over MOP10,000 a trip BY SARA FARR
JUNE 2012
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ne of Macau’s best-kept secrets is the amount of money visitors bet on average in casinos. A survey by the Institute for the Study of Commercial Gaming at the University of Macau has now shed some light on the topic. Although close to half of the visitors surveyed that said they gambled did not disclose their betting budgets for their visits, 1,785 did. The data, in the first edition of this year’s annual “Macau Visitor Profile Study”, are eye-opening. The average casino gambling budget for each trip was MOP15,257 (US$1,907) – although 62.4 percent of visitors surveyed that disclosed their spending on betting had a budget of MOP5,000 or less. More than one-fifth had set aside more than MOP10,000 for gambling.
The results of the survey support the notion that the casinos always win, as half the visiting players said they had made a loss during their current trip JUNE 2012
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Gaming
The researchers interviewed 7,314 adult visitors over the course of 2011. More than half were from the mainland, while Hong Kong and Taiwan were the next-biggest source markets. Of the sample, 46.7 percent said they had already gambled during their current visit or intended to do so. They spent an average of 4.7 hours gambling.
Table games were the most soughtafter, attracting about 90 percent of visiting players, while fewer than one-third played the slot machines.
Membership rewards The results of the survey support the notion that the casinos always win, as half the visiting players said they had made
VISITORS’ GAMBLING ACTIVITIES 53.3%
54% 52% 50% 48%
46.7%
46% 44% 42%
Gambled or planned to during the current trip
Did not gamble during the current trip
REASONS FOR NOT GAMBLING
Vegas freeloaders
Casino ambience is negative Religious motives Gambling is negative
1.3%
1.1%
Other
8.2%
No interest
57.1%
9.0% Not enough money
5.3% Not enough time
18.0%
GAMBLING BUDGET FOR CASINO GAMES MOP20,001 to MOP50,000
12.1% MOP10,001 to MOP20,000
MOP1 to MOP500
11.9% MOP501 to MOP1,000
8.7%
13.3%
MOP8,001 to MOP10,000
14.0%
MOP1,001 to MOP2,000
13.3% MOP5,001 to MOP8,000
2.7% MOP3,001 to MOP5,000
14.5%
JUNE 2012
MOP2,001 to MOP3,000
9.4%
a loss during their current trip. The average loss was MOP8,401. Around onequarter said they had left the casinos as winners, with average winnings of MOP4,611. Almost one eighth of the total respondents were members of a Macau casino loyalty club. Of the loyalty club members, 86 percent gambled during their current visit. That was more than double the percentage that gambled among respondents that were not members of loyalty clubs. Similarly, members of casino loyalty clubs spent, on average, more than double the amount of time gambling that nonmembers did. Curiously, gambling was only the third most common answer respondents gave when asked the primary purpose of their visit. Only 16.5 percent said the primary purpose was gambling, while 36.9 percent said it was seeing the tourist attractions and 17.7 percent said it was shopping. However, asked to evaluate their trip up to that point, almost half the respondents said the biggest attraction was the casinos, followed by the shopping. Davis Fong Ka Chio, who heads the Institute for the Study of Commercial Gaming, says that visitors, when answering survey questions, generally give a “universally acceptable answer” – so they may say gambling is not their primary purpose when, in truth, it is. The average number of visits that total respondents had made to the city in the preceding 12 months was 3.9 – although 48.2 percent said their current trip was their first in the preceding 12 months. Almost one in eight respondents had never been to a casino outside Macau. The Institute for the Study of Commercial Gaming compared the results of its study with those of a similar survey conducted in Las Vegas in 2010. The Vegas data show that while only 9 percent of visitors there went primarily to gamble, 80 percent ended up gambling during their trip, a much higher percentage than in Macau. Mr Fong says one reason for this is Las Vegas’s slot machines, which visitors spend the afternoon playing while downing free drinks. In Macau, slot machines generate less than 5 percent of casino gross gaming revenue. “For the traditional Chinese
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PARTICIPATION IN GAMBLING ACTIVITIES (MULTIPLE RESPONSES) 100% 90%
CASINO GAMBLING RESULTS AS REPORTED BY VISITORS
89.7%
80% 70%
Win
60%
25.6% Loss
50% 40%
Break-even
30.4%
30%
50.0%
24.4%
20% 10%
0.7%
0.6%
0.4%
0.3%
Horse racing
Greyhound racing
Soccer betting
Others
0% Table games
Slot machines
Visitors to Macau that gambled lingered longer than players in Las Vegas, who spent on average 2.9 hours gambling
gambler, slot machines are not really a gambling device,” Mr Fong says. Visitors to Macau that gambled lingered longer than players in Las Vegas, who spent on average 2.9 hours gambling. The average gambling budget in Las Vegas was the equivalent of MOP3,739.
The Institute for the Study of Commercial Gaming will prepare a second edition of the “Macau Visitor Profile Study” this year. “The aim is to provide a foundation and database for casinos to monitor trends and adjust their strategies,” Mr Fong says.
JUNE 2012
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Gaming
PUSHING UPWARDS The biggest rush of new resort development in years could signal changes in government policy Photo: Manuel Cardoso
BY MUHAMMAD COHEN
JUNE 2012
63 wave of casino resort development now gathering momentum represents the sector’s biggest boom in six years. With up to five projects getting underway this year in Cotai, the surge may indicate a shift in Macau’s policy to align more closely with Beijing’s, some analysts say. Last month, the government gazetted its long anticipated land grant for Wynn Cotai, paving the way for Wynn Macau Ltd to begin work on a resort worth US$4 billion (MOP32 billion).
A
A week earlier, Galaxy Entertainment Group Ltd announced it had already started construction on Galaxy Macau’s HK$16-billion (US$2.1 billion) second phase. These are the government’s first casino resort approvals since Chief Executive Fernando Chui Sai On took office in December 2009. Some experts link the approvals to the central government’s endorsement of Macau as a “world tourism and leisure centre”, as stated in China’s 12th Five Year Plan approved by the National
People’s Congress last year. The goal received further support at the Congress session in March that also heard proposals to ease border crossings between Macau and the mainland. A new pedestrian border crossing, likely to operate round the clock, was announced last month by Macau and Guangdong officials. “Beijing has given the green light,” said one source who asked not to be named. “Beijing views Macau as the tourism centre of China. You can’t reach
Ricardo Siu Chi Sen, a gaming and tourism specialist at the University of Macau, believes there has been a policy change to promote the construction of casino resorts, rather than just casinos
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Gaming
that without two or three times what you have here now. When you roll out all that, you’ll need 50,000 more employees. You can’t achieve all of that without a policy change.” Melco Crown Entertainment Ltd hopes the government approval to kick-start its Macau Studio City project will come within weeks. “We expect to recommence construction in the first half of 2012 and continue to be optimistic about that timeline,” Melco Crown head of corporate communications Maggie Ma told Macau Business. While construction remains on hold, she confirms reports of preparatory work on the site. “We are respectful of the government process and continue to cooperate with the authorities to move things forward,” Ms Ma says. Melco Crown acquired the Studio City site from its feuding former owners last year. Work on the site began in 2007. Sands China Ltd too is already gearing up for its next project in Cotai. Piling works at Lot Three could be in by the end of the year, chairman Sheldon Adelson said in April. It might then take up to 30 months until the property is complete. Sands China was granted the rights to develop Lot Three years ago. The government has said it will make one additional Cotai land grant this year besides Wynn’s: MGM China Holdings Ltd and SJM Holdings Ltd each has pending applications. A statement from the Lands, Public Works and Transport Bureau confirmed the applications but gave no timetable for a decision. Neither did it indicate policy changes on casino development. Simultaneous construction of multiple casino resort projects would, however, indicate a shift in government policy that has effectively restricted construction by limiting the supply of imported labour. Ricardo Siu Chi Sen, a gaming and tourism specialist at the University of Macau, believes there has been a policy change to promote the construction of casino resorts, rather than just casinos. “The motivation is clear that by promoting Macau from a ‘world gambling centre’ to a ‘world tourism and leisure centre’, sustained growth of the Macau economy can be better ensured in the long run,” he says. “My initial understanding of the new development plans of Wynn and JUNE 2012
Photo: Manuel Cardoso
Shifting policy
Galaxy is that they are more in line with the public interest to further push Macau as a world tourism and leisure centre in the Pearl River Delta, with more emphasis on the non-gaming features.”
Integrated state Wynn’s Cotai property will include 2,000 hotel rooms, a theatre that can accommodate single performances or a resident show, along with attractions similar to the Wynn Macau’s popular Tree of Prosperity and dancing fountains, twice the retail space of Wynn Macau, and Climax, a nightclub concept Wynn is developing in Las Vegas. Galaxy Macau’s phase two will expand the property’s signature Grand Resort Deck, featuring a sand beach and the world’s largest rooftop wave pool, raise the retail count to 200 stores, and introduce Ritz-Carlton and JW Marriott brands to Macau with a total of 1,250 rooms. “Ultimately, both Galaxy Macau phase two and Wynn’s Cotai project
will further promote Macau as the region’s premier holiday destination,” Union Gaming Group senior analyst Grant Govertsen says. “Over time, we think the behaviour of Chinese tourists will gradually change. This will be manifested in longer visits, much greater than the current 1.5 days, and greater use of non-gaming amenities. “Think of the integrated resorts in Singapore that have significant nongaming amenities and are a large draw for gamblers and non-gamblers alike. As more and more non-gaming amenities are built in Macau, the more attractive Macau becomes to casual visitors.”
Harmony first Mr Govertsen thinks announcements of projects so close to the National People’s Congress meeting is just coincidence. “Galaxy is now in a position to move forward on the heels of a very successful first year at Galaxy Macau phase one. Similarly, Wynn was given the approval now, rather than last year, as the gears of
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“Ultimately, both Galaxy Macau phase two and Wynn’s Cotai project will further promote Macau as the region’s premier holiday destination,” Union Gaming Group senior analyst Grant Govertsen says
government tend to grind very slowly.” The Five Year Plan vision for Macau is “a consideration of the government” but not the main driver, Mr Govertsen says. “We believe that a higher priority is, and always will be, the element of social harmony. The theory being that new developments should promote such harmony, as defined by even more job opportunities and higher wages for Macau residents.” Prosperity for Macau fulfils national objectives as well as local goals, Mr Govertsen adds. “We think the fact that Macau is a self-sustaining SAR provides a significant benefit for the central government insofar as it is a net generator of public revenue rather than a net user of funds from [Beijing]. For the Macau
government, continued growth of the gaming and leisure industry would likely mean greater upward mobility for its residents.” Whatever the reason, the Macau government may simply be bowing to the inevitable. “The ultimate development of the Cotai strip is a foregone conclusion. The government has no choice but to do what it can to allow an organised and efficient development path to move forward,” Galaviz & Company managing director and chief economist Jonathan Galaviz says. “Everybody, including Beijing, knows that Macau is going to be a tourism and casino hub for many years to come. While economic diversification is critical to Macau’s long-term future, the
success of its tourism sector is critical to its economic stability in the short-run.” The Macau government is also improving infrastructure to support tourism sector growth, Mr Siu says. He cites progress on the light rail system and widening cooperation with neighbouring Guangdong province, including development of Hengqin Island.
Welcome changes At the National People’s Congress meeting in March, the Macau delegation made several proposals to improve immigration. Delegates suggested streamlining procedures with a single checkpoint for travellers, rather than separate exit and entry posts for each trip. They also requested longer crossing hours
JUNE 2012
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Gaming
Last month, the government gazetted its long anticipated land grant for Wynn Cotai, paving the way for Wynn Macau Ltd to begin work on a resort worth US$4 billion
and expanded use of the Zhuhai-Macau Cross-Border Industrial Park checkpoint, the only border post currently open 24 hours a day, seven days a week. Macau delegates also urged prompt completion of new facilities at the main border crossing post at Gongbei. A station on the Guangzhou-Zhuhai intercity rail line is due to open near the crossing early next year. Last month, Macau and Guangdong authorities agreed on the establishment of a new border checkpoint to be built between Macau and Zhuhai in the northern area of the peninsula. Expected to be open around the clock, the government estimates the new checkpoint will handle up to 250,000 crossings a day. The new facility will be located where the Nam Yuet wholesale market is now, and will be for pedestrians only. However, all details – including its operating hours and opening date – still need Beijing’s approval. A Union Gaming research note estimates the Gongbei expansion, longer operating hours and greater utilisation of the trans-border industrial park border crossing alone could boost annual tourist arrivals to 49 million. That would JUNE 2012
mean 75 percent more visitors to Macau than last year. Those extra visitors would increase mass market gaming revenue by US$6.7 billion, an increment of 75 percent over last year’s mass market total. The Macau government’s initiatives indicate confidence that the flow of mainland tourists will remain unrestricted despite the change in central government leadership later this year. Beijing’s political support for tourism, enshrined in the Five Year Plan, makes the visa restrictions of 2008 seem like ancient history. Despite forecasts of a slowdown in the mainland’s economic growth this year, analysts still see Chinese tourism as a good bet, though they warn against focusing too narrowly on it.
Broad focus “In the coming decade, the Chinese market is large enough for Macau,” Mr Siu says. “In the long run, of course, more diversified sources of visitors are definitely beneficial to Macau’s sustainable growth.” Mr Govertsen agrees. “We think Macau can be a smashing success on
the back of Chinese tourists alone. However, greater appeal to other nationalities makes a lot of sense. It makes sense to target and cater to other regional preferences given a large and relatively untapped opportunity set, for example India.” “From a public policy perspective, Macau must become an international tourism hub rather than just a regional destination for mainland Chinese visitors,” says Mr Galaviz, who splits his time between Las Vegas and Asia. “This is one area where Las Vegas excels over Macau. Las Vegas has been able to position itself as an international tourism destination, and this has helped Las Vegas weather the problems associated with the U.S. economic crisis. In other words, it would have been a lot worse for Las Vegas if it didn’t have an international visitor profile. “The danger for Macau’s economy, however, is that it will become too leveraged into the tourism sector without focusing on areas ripe for economic diversification.” Economic diversification is another area of shared focus for both Macau and Beijing. Stay tuned.
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STEPPING UP THE FIGHT
Gov’t wants concessionaires to create their own teams to handle problem gambling on the casino floor The Macau government is set to put down in writing, informal requests made earlier to the city’s gaming operators to create their own teams to handle problem gambling at their properties. The news was confirmed by an official source to Portuguese news agency Lusa. “Gaming concessionaires must promote responsible gambling in order for gambling to be seen as an entertainment and to avoid, as much as possible, problems for the local society,” the official source said. The Social Welfare Bureau told Lusa it has so far this year received 30 new requests for help and counselling from problem gamblers. Since 2005, the bureau has handled close to 560 cases of problem gamblers, of which 52 were recorded last year.
FRANCIS LUI TO TAKE OVER GALAXY ENTERTAINMENT
The chairman of Galaxy Entertainment Group Ltd, Lui Che-woo, whose family controls the gaming operator, announced last month his succession plans. His elder son Francis Lui Yiu Tung, vice-chairman of Galaxy Entertainment Group, is to take over the group’s gaming business in Macau, according to media reports. His younger son, Alexander Lui Yiu-wah, executive director of developer K Wah International, also controlled by Mr Lui Che-woo, will be in charge of the company’s business in Hong Kong.
HENGQIN GOOD FOR CASINOS
Union Gaming analysts are bullish about the positive impact the development of several theme parks in Hengqin Island will have on Macau’s gaming industry. “We think that the development of Hengqin should be a key driver of mass market gaming revenues in Macau, given the proximity, ease of access and presumably longer length of stay of visitors to Hengqin’s theme parks,” analysts Grant Govertsen and Felicity Chiang wrote in an industry research note. Earlier last month, the hotel at the under-construction Chime-Long International Ocean Resort in Hengqin was topped off. The resort’s first phase, with a cost of RMB10 billion (MOP12.6 billion), also includes “Ocean Kingdom,” the first of several planned theme parks on Hengqin. The resort’s promoters expect it to attract more than 20 million visitors annually upon full build-out, which would make it the most visited resort in the world.
POKERSTARS RETURNS TO GRAND WALDO
The PokerStars Macau live poker room will make a return to the Grand Waldo hotel casino on June 9, PokerStars has announced. It was previously located there in 2008, before moving to the Grand Lisboa in 2009, where it remained until the contract came to an end in March this year. The new poker room will be located in the Grand Waldo main casino area while the special events will be held in the new conference and exhibition centre. The Macau Poker Cup: Red Dragon series will launch the new venue from June 9 to June 18. “It’s like coming back home after a long trip. It feels good,” said Danny McDonagh, PokerStars Director of Live Operations for Asia-Pacific.
SANDS FAREWELLS PARCELS 7 AND 8
Sands China Ltd withdrew last month its judicial appeal to get parcels 7 and 8 on Cotai, were it had already invested over US$100 million (MOP800 million) in pre-works, the company said in a statement to the Hong Kong Stock Exchange. In December 2010, the Macau government rejected a land concession application by Sands China for Cotai lots 7 and 8. In January 2011, the company filed a judicial appeal with the Court of Second Instance.
JUNE 2012
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Wielding a brand Increased competition is forcing Cotai’s casino resorts to improve their marketing efforts BY EMANUEL GRAÇA
otai is getting more crowded by the day. As new casino resorts open, their marketers are stepping up their game to ensure nobody is a loser. The era of “build it and they will come” has passed, industry insiders say, and non-gaming attractions are now used to distinguish Cotai’s casino resorts. Galaxy Macau’s vice-president of marketing communications Jane Tsai says casino resorts have been benefiting from a tendency in Asia for any-
Photo: Manuel Cardoso
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thing new to win a lot of attention in the months after it is launched. “But if you haven’t done the marketing and the positioning right, you are not going to get the long-term return,” Mrs Tsai says. It benefits nobody for the operators of casino resorts to engage in marketing quarrels, she says. “We, as well as Macau, all benefit if we work together. We all have distinct-enough products.” With gaming advertising forbidden in the mainland, Macau’s main source of visitors, Mrs Tsai says it is even more
important for casino resorts to work on their brand positioning. It comes down to the basics: how well casino marketers know their customers. “You cannot market something effectively if you don’t even have a good product niche. You definitely have to know the customer segment, you have to know the market and you have to have a good product.” Mrs Tsai says Galaxy Macau’s positioning strategy revolves around the theme of being the “new palace of Asia”,
69 offering an authentic “Asian resort” experience. “The insight on the Asian resort is understanding that most consumers in the Asian region head to Southeast Asia to go on holiday. Why not then take that understanding of a choice to travel and give them a reason to come to Macau? It is using that customer insight to create a product,” she says. She says the Galaxy marketing team works in such a way that when visitors arrive in Macau, they are already aware of the brand through active marketing in source markets.
Word of mouth To achieve success, casino resorts need to invest in an integrated marketing plan that includes everything from regular advertising to inviting reporters to visit and write about the property. “There is some amount of lastminute decision-making that does hap-
“If you haven’t done the marketing and the positioning right, you are not going to get the long-term return,” says Galaxy Macau’s vicepresident of marketing communications Jane Tsai
pen at the border itself,” Mrs Tsai says. “You can actually influence a percentage of the traffic coming across the border with prominence of signage and topof-mind awareness.” Also important, is that patrons leave Galaxy satisfied with the service. “Word of mouth is the most powerful form of marketing,” Mrs Tsai says. Brendon Elliott, the vice-president of sales and resort marketing of Venetian Macau Ltd, a subsidiary of Sands China Ltd, has among his tasks the promotion of Cotai’s newest casino resort, Sands Cotai Central. The first phase opened in April and includes a Conrad hotel and a Holiday Inn. “What we are starting to do is have greater alignment with those global brands,” Mr Elliott says. “We are working on maximising Conrad and Holiday Inn’s brands and DNA, their loyalty [programmes] and their market positioning for the positioning of Sands Cotai Central.” He says the hotels bring a new level of customer that the Venetian Macao and even the Four Seasons Hotel Macao could not previously reach. Mr Elliott expects the opening of the Sheraton in September to do more of the same, but also do it in the meetings and conventions market. The Sheraton chain’s parent company, Starwood Hotels and Resorts Worldwide Inc, has a special loyalty programme for planners of meetings and conventions.
Venetian benchmark
“We are working on maximising Conrad and Holiday Inn’s brands, their loyalty [programmes] and their market positioning for the positioning of Sands Cotai Central,” says the vice-president of sales and resort marketing of Venetian Macau Ltd, Brendon Elliott
Although Wells Fargo analyst Cameron McKnight said last month that the data so far show no signs of Cotai Central being a big driver of growth in the number of visitors to Macau, Mr Elliott says the casino resort is performing as expected. “The second quarter is the most quiet period in the year. We are on track. We are doing quite well in regards to the product positioning over there,” Mr Elliott says. Apart from Sands Cotai Central, Sands China also has the Plaza Macao and the Venetian in Cotai. Mr Elliott says the Venetian is the easiest part of the Sands China portfolio to market. “It is an iconic property. When we look at the other integrated resorts built around, it has all been benchmarked against the Venetian,” he says. But, he adds that the resort “still needs to have its brand appeal, its awareness. You can’t just sit back.” JUNE 2012
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The results of research published last month by Union Gaming indicate that the Venetian leads Cotai’s walk-in mass market, with a share of 50 percent. It is also the overall leader in the mass market in Macau, with a share of 20.4 percent, while Galaxy Macau comes in third, with 12.1 percent, the research shows. The Lisboa complex, on the peninsula, is the second most sought-after property, with a mass market share of 14.7 percent. A great deal of Mr Elliott’s effort goes into developing new markets. “To fill the world’s largest Conrad, the world’s largest Holiday Inn and currently Asia’s largest hotel, it requires a diversification of segmentation. We cannot rely just on one segment,” he says. Mr Elliott was at IMEX Frankfurt in Germany, one of the world’s main trade shows for incentive travel, meetings and events, last month. “It went phenomenally well,” he says. “We walked away with more enquiries that we have ever in the past.”
Entertainment envelope Sands China took part in the event under the Sands Cotai Macao brand, a trade JUNE 2012
brand that brings the strengths of all its Cotai operations under one umbrella. “That allows us to compete on a global scale with some strength and credibility,” Mr Elliot says. Sands China has also been developing special packages, bundling together entertainment with hotel stays. “We do a phenomenal amount of our business-tobusiness through packages.” Sands China in general, and the Venetian in particular, have played an important role in the city’s effort into tap the Indian market. The process began in 2009, when the Venetian played host to the annual India International Film Awards ceremony, broadcast to an estimated audience of 500 million. Since then the property has hosted other Indian shows, the latest being January’s Zee Cine Awards. “The great thing about the Indian market is that people are very aspirational, they love celebrities,” Mr Elliott says. “By hosting these awards, it gets us significant traction.” Indian tourists prefer to travel on weekdays, helping to fill a void in hotel occupancy. Greater China visitors usually come for the weekend. “We have
got another one or two markets we are currently looking at and are working on developing similar strategies to what we do with India,” Mr Elliott says. Without disclosing figures, he says Sands China’s marketing budget this year will be the same as last year’s. So far the return on investment has been “phenomenal”. Melco Crown Entertainment Ltd says its entertainment offerings distinguish its City of Dreams casino resort, creating an envelope which is filled by gaming. Entertainment offerings include the “Dragon’s Treasure” multimedia show, the Club Cubic nightclub and the HK$2-billion (US$258 million) “The House of Dancing Water” show. “We believe our premium massmarket focus at City of Dreams represents one of our key competitive advantages, giving us an ability to capture and leverage a loyal and more profitable customer base,” the company told Macau Business. “We have continued to execute this premium strategy, both in the rolling chip and mass-market gaming segments, as well as in our world-class entertainment and other non-gaming amenities.”
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FEBRUARY JUNE 2012 2012
Illustrations: Rui Rasquinho
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Gaming
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Coming of age A bill to raise the minimum age for employment in casinos is due to be enacted soon, to the applause of croupiers and observers BY LUCIANA LEITÃO
iu Fa is a 20-year-old who gave up her studies a year ago to work in the gaming industry as a hostess for VIPs. She is candid enough to say she did it for the money. Now she has come to regret it. “Seeing so much money can change your heart,” she says. Ms Siu was studying in the mainland when she decided to exchange her lecture notes for bank notes. Her thoughts at the time were: “You can make so much money in a casino and meet a lot people.” After one year in the job, Ms Siu is bored of watching people gamble, and she dislikes the relentlessly smoky atmosphere. The job has also taken a toll on her private life. She complains in particular about working shifts, which change every week. “I can’t see my friends,” she says. Now she is considering hitting the books again. “Study can change my life.” Next month cases like Ms Siu’s will be history. The legal minimum age for employment on a casino floor will be raised to 21 as early as July 2. At least, that is what is envisaged by the latest version of a bill the government sent to the Legislative Assembly in April. The bill was approved on its first reading one year ago but the assembly must put it to a vote one more time before the government can enact it. Its principal purpose is to increase the minimum age for gambling in casinos from 18 to 21 but the new age limit will apply also to new casino employees. The bill proposes heavy penalties for offenders. Casinos that recruit under-age casino-floor employees face fines ranging from MOP10,000 (US$1,250) to MOP500,000.
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Inspector Lo Community leaders and government officials have repeatedly expressed concern about the number of young adults that drop out of tertiary education – or do not even apply for it – so they can go to work in casinos, where they can earn high salaries with few qualifications. At the end of last year, the average salary of a croupier was MOP14,700, almost 50 percent more than the median monthly salary. Some legislators and analysts accuse the
government of double standards. They argue that it is laughable for the government to say that at the age of 18 young adults cannot take on the responsibility of working in a casino yet can handle the responsibility of marriage. The gaming industry had 50,000 employees at the end of last year. Almost half were croupiers and a considerable number were doing other work on the floor, for example as cage cashiers, pit bosses or slot-machine attendants. There is no publicly available data on how many casino employees are younger than 21. Vincent Lo is 24. He entered the casino industry soon after finishing high school. He started off as a dealer and is now a dealer inspector. Mr Lo’s job does not satisfy him, but he concedes it is hard for someone with his standard of education to move into a new industry and earn similar pay. One of the things he most dislikes is the heavy smoking on the casino floor. “I don’t smoke but I have no choice,” he says. Working shifts leaves him little time to spend with family or friends. “The night shift is the worst.” On top of that, he must cope with grumpy punters. “When customers in casinos lose money, they lose their temper.” He says not everything is bad about working in a casino. It has given him the opportunity to meet new people and the relationships among staff are good. He does not intend to leave the industry any time soon. His goal is to save enough money to set up his own business.
Outgoing character Carlos Siu Lam, an associate professor at the Polytechnic Institute of Macau, says raising the minimum age for employment on casino floors is not going to solve the social ills connected to gambling. “Some people are already very mature at 18, while others only mature at 22 or 23,” he says. But in view of the obstacles to importing labour to fill most positions on casino floors and the shortage of resident labour, Mr Siu acknowledges that casinos cannot afford to delve too deeply into a candidate’s suitability. JUNE 2012
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“In Las Vegas, for instance, casinos recruit people based on their personality, whether they are sociable and have an outgoing character. Thus staff find it easier to adjust,” he says. Given the danger of casino floor employees becoming problem gamblers and suffering from stress-related issues, casinos should offer staff more training in managing their emotions, and the government should offer classes to help workers deal with stress, Mr Siu adds. He points out that all kinds of young adults work in casinos. While some are dropouts, others are graduates with their eye on management positions. Even among the dropouts, some eventually resume their schooling.
Fast buck Ricardo Siu Chi Sen, a gaming and tourism specialist at the University of Macau, approves of raising the minimum age for employment on casino floors. He says young adults up to 30 years of age may still have trouble coping with the complicated human interactions in casinos. “Life values of some young people may be distorted,” he says. Young people may also be more likely to become problem gamblers, as they see huge amounts of money gambled away in just a few hours and may lose track of reality, Mr Siu adds. Some people are more prone than others to give in to the temptation to make a fast buck. He says low-skilled immigrants that arrived in Macau from the mainland in the late 1980s may press their offspring to find work as soon as they are old enough. “As a significant portion of the new immigrants from the end of the 1980s possess a very low education level, they may not have good understanding of the importance of education. To many of them, short-term income is the best choice,” Mr Siu says. Macau Gaming Industry Employees Association president João Bosco Cheang Hong Lok says age must be taken into account when considering the perils of working in casinos. Mr Cheang says that with his background working in casinos for more than 30 years, he knows loan sharks prey on younger croupiers to get them to borrow money to gamble or to take part in illegal activities. “I am concerned about workers under 21, because they may not be mature JUNE 2012
enough. They may start stealing chips or displaying other criminal behaviour,” he says. As for the problem of young people abandoning their studies to work in casinos, Mr Cheang says the casinos could right this wrong by giving their employees more training and helping them to further their studies. And the government could arrange talks on how to manage the pressure in the tensionloaded working environment.
Bachelor girl Yoki Leung started working in a casino in 2008, because she wanted to be a part of the booming gaming industry. “I also wanted to take a rest from studying,” Ms Leung says. The adjustment was not easy, especially having to get used to working in shifts. Now, at the age of 27, she has re-
sumed to her studies but is also keeping her job. “Today, after I finish my classes at 1pm, I go to work,” she says. She started as a dealer but now she is a pit boss. “As a dealer you need to be very patient. Even if patrons scold you, you need to bear it. Sometimes it’s difficult, because even if you provide good customer service, they will shout at you because they lose money,” Ms Leung adds. She says she once saw someone throw an ashtray at a dealer. The positive side of a casino job is the pay and benefits, which are usually above average, Ms Leung says. Now she is taking a course leading to a Bachelor of Social Science degree in gaming and recreation management at the Macau Polytechnic Institute. She would like to work for the government, eventually. “I am ready to make a change,” Ms Leung says.
75 GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - gustavo.cavaliere@gmail.com
A game changer CHANGING THE CITY’S PREFERENCE IN CASINO TABLE GAMES MIGHT BRING NEW BENEFITS t is unquestionable that Macau is a unique place. It is so unique that it allows for the closure of poker rooms, arguably one of the few, if not the only, casino games that could actually help tourism and economic diversification. It is a strange decision. Although poker has continuously raised its international profile, with multimillion-dollar tournaments taking place worldwide on a regular basis, Macau will go the other way. Before we analyse the move in depth, let me lay out a disclaimer: I am an occasional poker player and I participate in tournaments around Macau. As of January last year, the city had at least five poker rooms at the Venetian Macao, City of Dreams, StarWorld, Wynn Macau and Grand Lisboa, respectively. One of the world’s most successful poker brands, PokerStars, ran the Grand Lisboa room. The room at City of Dreams is gone. Grand Lisboa did not renew its deal with PokerStars, which had to move to Grand Waldo, a second-tier property. Meanwhile, the word on the street is that other properties may soon shut their poker rooms. How can it be that a game which is getting bigger elsewhere, is trimming its expansion here? It is not for lack of demand. There are plenty of poker players around. On any given day, and without any special event drawing them in, players are probably waiting on the sidelines until they can get a seat at one of the city’s few tables. Partially due to the work done by PokerStars, Poker King Club and other promoters, there are more Asian poker players than ever before.
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Simple arithmetic One could say that boosting poker in Macau is a complicated matter. There are several parties involved, from the government to casino operators and their shareholders. But let us keep things simple. The main issue is that baccarat tables provide gaming operators with higher revenue per unit than poker tables. That is related to the nature of both games: baccarat hands are faster and the player bets against the house. Poker is a “rake” game, where players pay a commission to the casino on each hand. Since there is a cap on the number of gaming tables in
The key to boosting poker in Macau rests in the government’s hands. But the government’s lack of vision to grab hold of the opportunity poker presents is disappointing
Macau, supply is restricted. The casinos cannot get as many tables as they would like. In turn, that obliges managers to make hard choices on table quotas that are reflected on the gaming floor – poker tables are often sacrificed to make room for more baccarat tables. Gaming operators’ shareholders do not really care about which games are available on the floor. They care about the share price, which is directly related to revenue and profitability. Both the casino managers and shareholders’ opinions are understandable. They look after their best interests within the regulatory framework. The key to boosting poker in Macau therefore rests in the government’s hands. But the government’s lack of vision to grab hold of the opportunity poker presents is disappointing.
Special rules The dictionary defines opportunity as “a set of circumstances that makes it possible to achieve something”. That is exactly what Macau has with poker. The reasons behind a gaming table cap have already been explained thoroughly elsewhere – roughly, it is a government attempt to control the fast growth of the casino industry in Macau. But, looking at the broader picture, implementing it blindly to all types of games shows little foresight. Unlike baccarat, which draws the majority of its punters from the mainland, poker has an international audience. Players from as far as Europe and the United States come to Macau to play the tables and to participate in tournaments. Poker players tend to stay longer, while enjoying the restaurants and entertainment the city has to offer. Some bring their families, helping to build up Macau as an international, family-friendly tourism destination. Poker also gets regular media coverage worldwide. That too could help to build Macau’s profile. What if, instead of strangling poker’s growth, the government relaxed rules and promoted its development? What if it exempted poker from the table cap and authorised all interested casinos to open a poker room? Would this be detrimental to the city’s gaming industry and to the tourism sector at large? I think quite the opposite. It is my opinion that with the proper vision and wisdom, Macau could rapidly become the world’s poker capital, without having a negative impact on baccarat. It would mean more jobs, more visitors, and less dependence on one casino game and one tourist market. It would also likely boost the hospitality, entertainment, and food and beverage industries. And, bottom line, it would bring more revenue, and in a more sustainable way, for the city. In the short term, Macau’s economy will continue to be driven by gaming. But the government has a choice: either maintain the baccarat-driven status quo or push ahead with games that help to bring more international visitors, who stay for longer and tend to spend more money after they leave the table. JUNE 2012
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Gaming
The false shuffle
Grand Lisboa named as victim in HK$24 million shuffler scam BY MARTIN JOHN WILLIAMS*
he Grand Lisboa has been named in a Macau court as the casino that lost more than HK$24 million (US$3.1 million) in March last year in a shuffling machine scam. The flagship property of SJM Holdings Ltd, the leader of Macau’s gambling market by revenue, was targeted by a gang of mainland Chinese. The gang’s shuffler-swapping scam was first detected in January last year at SJM satellite casino Le Royal Arc, the Court of First Instance heard late last month. A representative of the company that supplied the machines testified that police were informed after two machines used at Le Royal Arc were found to have been compromised during a routine maintenance check. The machines had been fitted with small cameras and infrared transmit-
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ters and were swapped with genuine machines on baccarat tables while dealers and other staff were distracted, the court was told. Card order data would be noted by an accomplice, and then telephoned back to the suspects at the table, who would bet accordingly. Two Grand Lisboa employees also appeared as witnesses, together with surveillance footage of some of the suspects exhibiting apparently suspicious behaviour in a VIP room, which was not named. An SJM statement in response to GamblingCompliance enquiries said the casino had worked with police to monitor the operation before the authorities closed in. “On discovering the scam, the Grand Lisboa security and surveillance team immediately informed the authorities,” the statement said.
“In agreement with the authorities, Grand Lisboa allowed the operation to continue so that evidence could be collected and all the perpetrators could be identified and apprehended,” it said. “Security and integrity of the gaming operations for our customers remain our prime concern,” the statement added. SJM declined further comment on the matter, citing legal and security considerations. One suspect captured in the Grand Lisboa’s surveillance footage was alleged to have swapped a machine at the feet of a distracted dealer. When asked to explain his movements at the table, the suspect, surnamed Liu and aged 47, told the court he suffered from beriberi and “had to make the movements [seen in the video] to take off my shoes and scratch my feet”.
No information The case was not cracked until July 25, more than six months after the rigged shufflers were first detected, when seven of the 10 alleged gang members were arrested at the nearby Wynn and Encore hotels, the court heard. Police then paraded the suspects from Yunnan and Jilin provinces before the media on July 26, as well as the rigged shuffling machines and other seized items. At the hearing, six of the seven defendants pleaded not guilty, while a seventh defendant refused to plea. Earlier reports said the shuffling machine company detected three other rigged machines within two months of the first discovery. The case is also notable because at least one concessionaire had not been informed by police of the gang’s activities and the circulation of rigged machines at the time they were arrested, according to a GamblingCompliance source in the company. Senior staff at the Gaming Inspection and Coordination Bureau, Macau’s gambling regulator, were allegedly also unaware of the case until the police press conference in July. The hearing continues. * GAMBLING COMPLIANCE / MACAU BUSINESS JUNE 2012
Photo: Gonçalo Lobo Pinheiro
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SANDS RENEWS EDWARD TRACY’S CONTRACT The company’s president and CEO has had his contract extended until August next year
Sands China Ltd announced last month it has renewed the contract of Edward Tracy, the company’s president and chief executive officer. Mr Tracy’s term as president and chief executive officer of the company will now expire on August 26, 2013. The new contract states that Mr Tracy will receive a base annual salary of US$1.2 million (MOP9.6 million) plus incentives. Earlier last month, the company had already announced the grant of a total of 260,000 share options to Mr Tracy. Meanwhile, Sands China will become the 49th constituent of Hong Kong’s benchmark Hang Seng Index, the index reviewer said in a statement. The gaming operator will be the first Macau casino stock to be included in the Hang Seng Index. The change will be effective June 4.
VIP JUNKET LOOKING FOR DUAL LISTING Nasdaq-listed Asia Entertainment & Resources Ltd announced last month that it has engaged an investment bank and a Hong Kong law firm for a pre-IPO enquiry in relation to seeking a dual listing of its securities in Hong Kong. The VIP room gaming promoter currently operates three gaming rooms in Macau, namely at StarWorld, Galaxy Macau and Venetian Macao. AERL recorded a net income of US$15.3 million (MOP122 million) in the first quarter of 2012, up by 19 percent year-on-year.
WYNN EYES US$1.5 BILLION SYNDICATED LOAN
MACAU CASINOS TO HIT US$62 BILLION IN 2017
Wynn Macau Ltd started last month marketing a US$1.5 billion (MOP12 billion) loan to banks, Reuters and Bloomberg reported. The facility is split into a US$1 billion, five-year revolving credit facility and a US$500 million, six-year term loan, a person familiar with the matter told Bloomberg. The money is to be used to finance the company’s new project on Cotai, banking sources told Reuters.
Deutsche Bank analysts Carlo Santarelli and Kelly Knybel estimate that Macau’s gaming market will almost double in revenue size over the next six years. In an investors note released last month, the two analysts say they “believe the Macau gaming market can be roughly US$62 billion [MOP496 billion] in 2017.” Macau’s gaming industry raked in MOP267.9 billion last year.
JUNE 2012
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Russia’s rising Vegas Vladivostok could be the next big thing on the Asian gaming map BY LUCIANA LEITÃO
he search for a trading port led to the founding of Vladivostok, now a search for gaming revenue may put the port city on the itineraries of high rollers. After Macau, Singapore and the Philippines, Russia is setting itself up to be a leading gaming and entertainment player in Asia. Vladivostok authorities announced last month they were looking for businessmen keen on investing in a gambling and entertainment zone near the city. Tenders will open in the middle of this month. Gaming operators, along with other private developers, will have up to 60 days to deliver their concepts for integrated resorts to state-owned Nash Dom Primorye, the company in charge of managing the proposed Integrated Entertainment Zone. Discussions with potential investors are likely to
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start by the end of October. First announced in 2010, the zone is planned for the Bay of Muravyinaya, about 20 kilometres from the new Vladivostok International Airport and about 50 kilometres north of the city. About 2.6 square kilometres have been set aside for the first stage of the development but the final area could more than double that. The first stage of development is expected to be ready in five years, says Nash Dom Primorye general director Marina Lomakina. Nash Dom Primorye hopes to attract corporations “who possess the capability, creativity and passion to develop multiple integrated resorts”. The zone would require a minimum total investment of US$2 billion (MOP16 billion) from private investors. The development will be based on
the Singapore and Las Vegas models, says Ms Lomakina. “We believe the Integrated Entertainment Zone will create a compelling experience for Asian tourists seeking a destination that is near but culturally different. At the same time, we believe that the private sector will be interested in the tourism and casino gaming potential of the Integrated Entertainment Zone.”
Gambling gateway The project has space for roughly five substantial resorts, analysts estimate. The question remains as to how many competitors the Russian authorities will allow. A report quoted by Reuters from Gaming Market Advisors, which conducts casino market research, said that the development could rake in annual revenues ranging from US$2 billion to
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US$7 billion once it is complete. In comparison, Singapore’s two casinos took in more than US$5 billion last year. Vladivostok, the capital of the Primorsky region, might be more often identified in Macau with women who work in the territory’s nightlife industry. But the biggest city in the Russian Far East has a population approaching 600,000 people and is a busy transportation hub. The city is a two-hour flight from Seoul, Tokyo and Beijing; it is the end terminal on the Trans-Siberian Railway; and has access to sea routes across the North Pacific Ocean. With such a strategic location, Nash Dom Primorye officials will target punters from the mainland, South Korea, Japan and the United States. Domestic visitors would also help drive up the numbers at the gaming tables. Unlike other Asian countries that ban nationals from gambling on home soil, Russians are allowed to do so in four designated areas. “We have no north Asia port for gambling,” Bo Bernhard, executive director of the International Gaming Institute at the University of Nevada, told Reuters.
“For a long time the debate has been, will it be Korea or Japan? And all of a sudden Russia is in play. It’s an interesting opportunity.” Four companies have already signed development contracts with Nash Dom Primorye, ahead of the tender process kicking off. One is with the First Eastern Gaming Company, a Russian firm that has already started planning for its first hotel-casino in the area. Another is Royal Time Group, a Russian company that manages restaurants, recreational clubs, gambling houses, hotels, attractions and aquatic parks. The third is H.W., a U.S.based company, and the fourth is Dalta Vostok 1.
Gaming expectations Of the four Russian zones where casino gambling is legal, Vladivostok is the only one to have formally initiated plans for attracting overseas investors. But Nash Dom Primorye officials hope the zone will be about more than just casinos, with gaming accounting for less than a tenth of the overall area. “We cannot prohibit them [companies] from creating more gaming but I hope we can achieve some agreements
on how much will be gaming and how much will be entertainment,” Ms Lomakina says. Apart from casinos, the plan for the Integrated Entertainment Zone envisions luxury accommodation, a yacht club, shopping malls, mountain-skiing resort, golf club and other all-year-round recreational amenities. Nash Dom Primorye is ready to invest at least US$200 million in basic infrastructure at the zone, previously “virgin” territory, all of which should be ready in two years, ahead of investors breaking ground. The company appointed Las Vegasbased Galaviz & Co as lead strategic adviser for the integrated resort tender process. The company’s managing director and chief economist, Jonathan Galaviz, says the zone will create 5,000 jobs and welcome 2 million tourists per year. Mr Galaviz is sure Vladivostok has all the features needed for such a development and notes it will host the 24th Asian Pacific Economic Cooperation Summit in September. Ahead of the meeting, billions of dollars have been invested in infrastructure, new hotels, exhibition halls and a marine amusement park.
JUNE 2012
80 ASTRID S. TUMINEZ VICE-DEAN (RESEARCH) OF THE LEE KUAN YEW SCHOOL OF PUBLIC POLICY, NATIONAL UNIVERSITY OF SINGAPORE
VISHAKHA N. DESAI PRESIDENT OF ASIA SOCIETY
Power to Asia’s women EMPOWERING ASIA’S WOMEN WILL BENEFIT THEM AND ENRICH THE ENTIRE REGION veryone’s eyes are on Asia’s rise. China, once dismissed as poor and backward, is now the world’s second-largest economy. India, with its huge population, scientific prowess, and entrepreneurial vitality, is another powerful engine of Asian growth. Add to this Japan and South Korea’s formidable economies and Southeast Asia’s dynamism, and a picture emerges of rising wealth, confidence and leadership. Yet few women in Asia make it to the top. Social norms undervalue girls and women, with sex-selection abortions resulting in an estimated 1.3 million girls per year not being born in China and India alone. Still, women have benefited from Asia’s economic development. According to the World Economic Forum’s “Global Gender Gap Report 2011”, rising prosperity has narrowed gender inequality in many countries. Women are making progress in health, education, economic opportunity and political empowerment, which they can leverage for future leadership. Furthermore, family and dynastic factors have helped to catapult women to the highest political posts. Indeed, Asia has had more female heads of state than any other region in the world, which, together with economic success for some, creates an impetus for change in perceptions of women’s role, status and capabilities. Data for indicators of women’s leadership in Asia, though limited, show that the Philippines, Australia and New Zealand are consistently among the top performers. With the addition of economic and occupational parameters – such as women in senior management positions, promotion rates, remuneration and wage equality – these countries are joined by Singapore, Mongolia, Thailand and Malaysia.
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Gender gaps While South Asia performs worst in overall gender equality and women’s attainment, it comprises three of the top five countries in terms of political empowerment (Sri Lanka, Bangladesh and India). South Asian countries also lead in terms of women in parliament (Nepal and Pakistan); women ministers (Bangladesh); and women leaders in sub-national government (India, Pakistan and Bangladesh). But being vaulted to leadership by family and dynastic connections is not a sign of greater gender equality. And, while affirmative action has also significantly increased women’s political representation, limited political leadership gains have yet to translate into real benefits for women in general. Moreover, while development has benefited women, the relationship between human development and female leadership is not directly proportional. Some of the Asian economies with the highest human development rankings, such as Japan and South Korea, are among the worst in terms of women in senior management, wage equality, remuneration and political empowerment. Singapore and Hong Kong, too, display significant gender gaps in leadership, despite high human development. In Asia, many women – 70 percent in Japan, 53 percent in the mainland and 46 percent in Singapore – simply do not JUNE 2012
make the transition from middle to senior management. Women need more systematic support to facilitate their choice to pursue high-powered careers without giving up their roles as mothers and caregivers. Significant improvement is needed in mentoring, parental leave, childcare and elder care, as well as more gender-equal retirement and pension schemes. Ultimately, entrenched social and cultural norms remain the most intractable obstacle to female leadership in Asia. A broad campaign is needed to educate people, change the valuation and perception of girls and women, and give women a more equal voice – at home and in public – in order to facilitate their transition to leadership roles.
Governments need to act But education is only part of the solution. Affirmative action programmes can expedite female representation in leadership, but they take time to affect deeply ingrained social norms. Over time, however, exposure to female leaders at the local level can reduce bias and boost the aspirations and educational achievement of young women, as is happening in India. Governments, particularly in the mainland and India, can step up efforts to end sex selection. More laws – and better enforcement – are needed to reduce domestic violence against women and to increase women’s bargaining power through broader property ownership, better access to legal and other support services, and greater freedom to leave marriages. But there is reason to be optimistic: in Pakistan and Indonesia, encouraging examples show how partnerships among government, police, women’s groups, paralegals and non-governmental organisations can work to strengthen women’s voice and agency, and thus their potential to contribute more fully to society. Furthermore, Asia’s governments can nurture female leadership in two areas of economic activity in which women already feature heavily: agriculture and entrepreneurship. To be sure, the work tends to be low in productivity and scale, and women are often pushed into such jobs by poverty. But governments should seize the opportunity to pursue policies that provide women in these sectors greater access to capital, skills training (for example, in budgeting and financial planning), technology and networks. Economic development correlates positively with gender equality. But, as the World Bank notes in its “World Development Report 2012”, gender equality is an independent value, not just an instrument for economic growth and efficiency. While the Bank highlights women’s progress in education, life expectancy and labour-force participation, it also describes continuing problems, including the excessive death rates of girls and women in low- and middle-income countries, educational disparities, uneven economic opportunities and unequal authority within and outside the home. From birth, girls in Asia face significant obstacles to fulfilling their human potential – especially their potential for leadership. It is time to remove the barriers. Empowering Asia’s women will benefit them and enrich the entire region.
G2E ASIA 2012 HIGHLIGHTS 82
Ahead of the game There were more visitors and more diversity at last month’s G2E Asia. But there is still room to improve, exhibitors say BY LUCIANA LEITÃO
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ast month’s Global Gaming Expo (G2E) Asia again showed why the annual event is dubbed as Asia’s largest gaming conference and exhibition. G2E Asia’s sixth edition recorded a 10-percentplus increase in attendance, according to preliminary figures from organisers American Gaming Association and Reed Exhibitions. That puts attendance at over 6,000 people. The number of exhibitors increased slightly year-on-year. There were around 130 exhibitors from over 20 countries. President and chief executive of the American Gaming Association, Frank Fahrenkopf was happy with the results both on the gaming conference side and on the exhibition floor. JUNE 2012
“All the seminar programmes were absolutely packed. We even had to bring in extra chairs.” Mr Fahrenkopf says this year’s event attracted a more diverse crowd, including both senior and junior staff from the casino industry. On the trade show, there was also more diversity among exhibitors, he says. Exhibitors were overall satisfied with the attendance figures, but say G2E Asia still has room to improve. Steven Lim Tow Boon, executive director and chief operating officer of gaming supplier and distributor RGB International Bhd, says traffic at G2E Asia trade show has been increasing for some years already. He says he would like G2E Asia to grow larger and to
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SEE YOU IN VEGAS A
fter last month’s Global Gaming Expo (G2E) Asia, industry professionals already have their mind set on G2E Las Vegas. Also organised by the American Gaming Association and Reed Exhibitions, the American version of the trade show and conference event will take place from October 1 to October 4 at the Sands Expo and Convention Centre in Las Vegas. This year, G2E has designated space specifically for table games on the show floor to help maximize exposure for exhibiting companies. Nearly 26,000 industry professionals from around the world attend G2E every year.
broaden its scope in the future. “We don’t see the Internet gaming sector here and we don’t see the hotel sector here.” An expanded schedule would also be welcomed, Mr Lim says.
Top quality visitors Ramesh Srinivasan, president and chief operating officer of gaming supplier Bally Technologies Inc, says last month’s G2E Asia had top-notch trade visitors. Many were senior casino executives with corporate clearance to strike deals. He adds that the trade show is gradually attracting more international attendees as new casinos open in Asia Pacific. Plus, there are also a lot of European visitors, according to Mr Srinivasan. Like Mr Lim, he also says G2E Asia should expand its scope to include iGaming. Agnes Lee, marketing support engineer for video security provider Schneider Electric and a regular at G2E Asia, has witnessed the event’s growth over the years. She says her company participates at the trade show to boost brand awareness and to keep in touch with clients. This year, Ms Lee says she had some positive discussions during the event that she expects can develop into deals. JUNE 2012
G2E ASIA 2012 HIGHLIGHTS 84 Ms Lee notes G2E Asia 2012 had a stronger component of Cambodian and Filipino visitors, as the gaming industry in their respective domestic markets is expanding. “The focus [of G2E Asia] has always been more on Macau, but we are starting to have more international visitors,” she says.
Mixed feelings Scott Huang, sales director of gaming machine supplier Astro Corp, says he is a bit disappointed with this year’s G2E Asia outcome. “This year was a little bit slow for me. There were fewer people and not many enquiries, unlike last year.” Even so, Mr Huang was able to have some fruitful discussions. “Several casinos were interested in our slot machine with a massage chair.” He says Astro sees its presence at G2E Asia as a way to boost corporate profile and increase market share in Macau. “We see more casinos opening up, and that means more machinery is required,” Mr Huang explains. Shigeki Machida, managing director of Matsui Asia Ltd, which manufactures and supplies gaming chips and table accessories, says G2E Asia attendance was irregular. Sometimes, Matsui’s booth was filled with visitors, but there were moments when it was empty. “Most of the important customers attend the conferences. So they come to the booth together and all at once in a very limited time frame,” he says. Already a veteran at G2E Asia, Mr Machida says there has been a progressive increase in the number of visitors, especially international visitors. Deals are also on the rise. “Before it was more Macau-orientated. Now, [the trade show] covers all Asia and even beyond.” Keijiro Kan, vice-president of Angel Playing Cards Macau Ltd, says organisers could do more to boost the international profile of G2E Asia. He says the event should broaden its appeal beyond just the casino industry, embracing other forms of regulated gambling. Next year’s G2E Asia is scheduled for May 21 to May 23, again at the Venetian Macao. JUNE 2012
Patent fight
Dispute between Shuffle Master and LT Game shakes up G2E Asia
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his year’s Global Gaming Expo (G2E) Asia was more than what some exhibitors bargained for. The event was shaken up by a very public intellectual property rights battle between American gaming supplier Shuffle Master Inc and Macau firm LT Game Ltd. This was the latest episode in a dispute between both companies that started at G2E Asia 2009, when Customs officials seized a Shuffle Master’s Rapid Baccarat gaming machine unit. The move was triggered by a patent infringement claim by LT Game. The company says it holds a Macau patent for multi-terminal products that combine electronic betting with a live dealer and live baccarat. The case has dragged out in court ever since. Last month, one week ahead of G2E Asia, LT Game obtained an injunction from the Macau Court of First Instance to block rival manufacturers from displaying at the trade show, any product that breached the company’s patents. Even so, Shuffle Master decided to display its Rapid offering, unlike three other suppliers also targeted by LT Game’s injunction – including Alfastreet, which has already announced it will not attend next year’s G2E Asia. Shuffle Master’s action led to LT Game calling Customs officials during the first day of G2E Asia. They forced the American supplier to cover the offending products with sheets.
On the next day, the first in which the trade show floor was open to public, Shuffle Master uncovered the tables after getting court authorisation. They were later again covered by Customs allegedly because some paperwork was missing. Everything was eventually settled by the end of the day, and Shuffle Master was authorised to display its Rapid products at G2E Asia. There were no more incidents the next day, which was also G2E Asia’s last. “We never knowingly infringe any other intellectual property,” Shuffle Master’s chief executive officer Gavin Isaacs told Macau Business. “We have 2,000 [patents] of our own, why would we do that?” Frank Fahrenkopf, president and chief executive of G2E Asia organiser American Gaming Association, says patent fights should be decided in the courts, not on the trade show floor. The patent war between Shuffle Master and LT Game has led G2E Asia organisers to consider moving the show to Singapore. So far, no final decision has been announced. Other suppliers exhibiting at G2E Asia said they regretted the incident. One executive that wished not to be named told Macau Business his company was also involved in patent disputes with other exhibitors at G2E Asia. However, he said those kinds of issues should be left outside international trade shows.
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G2E ASIA 2012 HIGHLIGHTS 86
Two for one IGT president Eric Berg sees Macau as a leading platform for expansion in Asia and beyond BY MUHAMMAD COHEN
and needs of consumers and needs of casinos.” IGT’s total revenue grew 13 percent in the first quarter of this year to US$541 million (MOP 4.3 billion), with 77 percent of it coming from North America. The Las Vegas-based company dominates the North American slots market with a 50 percent share of installed base, according to Mr Berg, though its Macau share is below 10 percent. “We want to grow our international market share toward our North American number,” he says. “International business is a tremendously important thing to IGT and where we put a lot of focus.” Asia’s fast growing markets are in the cross-hairs of IGT’s global expansion, and Macau provides the leading edge. “Macau serves as a two-for-one opportunity,” Mr Berg explains. “As we grow and invest in Macau, we can use that to grow in other markets in the region.” To support its expansion efforts, IGT undertook recently what Mr Berg calls “the largest research project in the Asian gaming market” to discover what players want. “We noticed how different consumers are around the world. Before I joined IGT, I thought a game is a game is a game,” he admits.
Chinese beauties
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first fi rst time visitor to Macau and a newcomer to gaming, International Game Technology, Inc (IGT) president Eric Berg finds both fascinating. “Macau is spectacularly fascinating, full of energy and excitement, and epitomises the growing and dynamic economy of China,” Mr Berg told Macau Business at G2E Asia. “It’s clearly energising and the growth is compelling.” Mr Berg joined IGT last July after JUNE 2012
having run global business operations for companies like Goodyear, and domestically for PepsiCo, but with no previous experience in gaming. Casino supplying “is a terrific industry with the confluence of several factors,” he says. “It’s a B2B [business-to-business] business that requires B2C [businessto-consumer] understanding of how consumers segment into different categories and what they find entertaining. You have to understand the wants
The research looked at slot machines across the board, from graphics to the frequency and size of payouts. “We used that to come up with new game designs that we then took back to operators and we listened to them,” Mr Berg says. “The beautiful thing is that IGT has the wherewithal, that it doesn’t have to put all its chips on one number.” Creating successful localised content for different markets goes beyond simply changing the language and currency, according to Mr Berg. “We also come up with localised themes and symbols. We have a fundamental understanding of consumers to build a game from scratch including math models.” At G2E Asia 2012, IGT featured several games designed for Asian markets, like “West Journey Treasure Hunt”, “Golden Three Kingdom”, “Four Great Chinese Beauties” and
87 “Big Dragon Lounge�. “We’re developing localised content to appeal to consumers,� Mr Berg says. Megabucks, a progressive jackpot game popular in North America, has been installed at Sands China Ltd properties throughout Macau. “That’s a product that offers the potential of a life-changing jackpot,� Mr Berg says, noting that the jackpot exceeded HK$52 million (US$6.7 million) at the time of G2E Asia. “That’s an example of taking a Western-themed game and then transferring it and localising it,� he says. “We think IGT is a compelling partner for operators because of our understanding of consumers and our technological leadership,� Mr Berg says. “We’re able to develop this technology and leverage those costs to hundreds of casinos.�
Hitting the floor On the systems products side, IGT has been among the suppliers pushing ahead server-based gaming tools. “Operators can decide which games to use when. That gives the
Eric Berg
operator flexibility to optimise the product on the floor,� Mr Berg says. “If it’s a standalone game and under-performing, it might take weeks to change. Now it can be done with the touch of a few buttons to deliver a fresh game and reach out to touch the player.�
IGT has also developed personalised system messaging tools, using a “picture in picture� window to let operators communicate directly to slot players. “It can let the player order a drink and let the operator inform players about bonuses and promotions,� Mr Berg says. The gaming supplier now wants to start using cloud computing to store and run its gaming management systems, “so that the operator doesn’t have to install that server on the floor,� the IGT president says. “It’s the same benefits with significantly reduced start-up costs.� Using its expertise as leverage, the company has meanwhile moved into the online and social gaming space, supplying interactive casino games and technology for operators to provide to customers online. “It’s an emerging business for us, and we believe it’s going to be a big growth area for IGT,� Mr Berg says. But at G2E Asia 2012, the company stayed focused on Asia. “Beyond Macau, we see big growth opportunities in the Philippines, Vietnam, maybe Cambodia.�
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G2E ASIA 2012 HIGHLIGHTS 88
The gaming wizard Rich Schneider, now in Aristocrat, is one of the names that have helped to shape the slot machine industry partially explains its early success. All slot manufacturers are now following suit and trying to bring similar products online. “Copying is the most sincere form of flattery,” Mr Schneider says. “Relative to our competitors, we had a good head start. That helped us,” he adds. “We naturally fell into the sweet spot of gamblers.” One of the advantages Aristocrat had while entering the Macau market is that it is based in Sydney, where there is a thriving Asian community. According to Mr Schneider, that meant a big percentage of the company’s staff was Asian, giving it helpful cultural insights in product development. Even in Australia, Aristocrat had already become “very used and exposed to the Asian mentality.” Asian punters are among the country’s top casino customers. Rich Schneider
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hile most slot machine providers are trying to build up their presence in Macau, Aristocrat Leisure Ltd faces the opposite problem: how to defend its 60-percent market share. To help it achieve that goal, the Australian company last year hired high-profile Rich Schneider as its new chief product officer. Based in the company’s Las Vegas office, Mr Schneider leads all aspects of product design, portfolio management and global marketing activities. He also directs the overall leadership of Aristocrat’s creative studios, which have the hard task of developing products that can put the gaming supplier ahead of the pack in Macau. “There are some great products out there,” Mr Schneider told Macau Business on the sidelines of last month’s G2E Asia. “We will have to raise our game to develop new and better concepts.” Aristocrat was one of the first slot machine suppliers to introduce games with an Asian appeal to Macau. That JUNE 2012
Mapping the Asian player Mr Schneider is widely regarded as an important force in the gaming industry and has played significant roles in shaping its future. Most notably, he was executive vice president of product strategy at International Game Technology Inc. In his new position for less than one year, Mr Schneider says Aristocrat’s approach to defending its turf in Macau is based on improving existing themes and already proven features. “We don’t take so much a revolutionary approach to game design, but more an evolutionary approach.” An example of that is Aristocrat’s “Legends” series. It extends the company’s best-performing titles with new product features. “Five Dragons Legends” was the first in the series. “Five Koi Legends” is the latest offering. “Our top five games here are all strongly Asian themes that can be extended,” Mr Schneider says. “We have the strongest brands in Macau.” Profiling the Asian player, Mr Schneider says they “are very much gamblers: they like volatile games and
take gambling very seriously – the entertainment is in the gamble itself.” Another feature is that there is high customer loyalty to a brand. Finally, for a game to be successful in Asia, it needs to have “some great cultural hooks”. Mr Schneider says it is possible the Asian slot machine market will further segment in the future, with the need to develop specific products for different jurisdictions. “The Chinese market tends to dominate right now, but potentially that could happen.”
Going number one Mr Schneider has played a vital role in conceiving what is now known as the Gaming Standards Association and has been a tireless advocate for open standards. He has also contributed to the creation of system bonusing products,
89 which he says are good tools to help operators differentiate and build patron loyalty. “They take maybe 1 percent or 2 percent of the returnto-player of the game, that gets redistributed. That is an important thing for the operator – to be able to take out that money and decide how it wants to give it back to the player.” Mr Schneider says system bonusing products only start to erode a game’s attractiveness when they use 5 percent or more of the return-to-player. “Then it really starts to take out a lot of the heart and soul of the game.” As chief product officer, Mr Schneider is also overseeing Aristocrat’s product development for the online and mobile gaming markets. “Our long-term goal is to be the number one provider of gaming content, regardless of the distribution channel.” Although there are an increasing number of platforms where people can gamble, Mr Schneider thinks slot machines won’t disappear any time soon. “People still go to movies, although they can watch them at home. There is the excitement of being in the casino, that you won’t get any other way.” But he adds the slot machine gaming experience is likely to evolve substantially in the future, to integrate new technology and boost synergies between different gaming platforms. Mr Schneider says “there is a lot of magic” in developing new slot machine cabinets and games. “They are very complex, but it is easy to overlook them if you are not a gambler.”
It’s your daily business
G2E ASIA 2012 HIGHLIGHTS
Photo: Carmo Correia
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Gavin Isaacs
Pit boss
Shuffle Master chief executive Gavin Isaacs sees leadership in electronic tables as the springboard to growth BY MUHAMMAD COHEN
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huffle Master Inc performed the old fan-dance striptease on the G2E Asia 2012 show floor with its Rapid electronic table games system. Due to an intellectual property dispute with LT Games (see related story on page 86), Shuffle Master covered up the Rapid, then took it all off, covered it up again, and finally took it off for good once the dust had cleared. Like any good strip tease artist, Shuffle Master had something it thought was worth showing off underneath the wraps. “We’re a world leader in electronic tables,” Shuffle Master chief executive officer Gavin Isaacs says. “Rapid is a great product.” The Rapid system enables players to wager on tables with live dealers through multi-game electronic terminals “which we pioneered”, Mr Isaacs told Macau Business. Each table can be connected to dozens of terminals. Players use individual touch screens to make their wagers on a computerised table game layout, and after each round is completed all wagers and cash balances are instantly resolved. Rapid installations can offer any combination of baccarat, roulette and sic bo. Asia plays a key role in expansion plans for Mr Isaacs, who joined Shuffle Master in April last year, after holding JUNE 2012
senior positions with Bally Technologies Inc and Aristocrat Leisure Ltd in Europe, the United States and Australia. Las Vegas-based Shuffle Master reported revenue of US$56 million (MOP448 million), a 28 percent increase yearon-year, for the three months ended January 31. “We’ve had some great growth recently,” Mr Isaacs says.
Ongame, on board To understand Shuffle Master, Mr Isaacs believes one has to understand its five product lines. The company debuted its first, signature automatic card shuffler in 1992. Shufflers still lead the company’s utilities line, with new technology such as optical card recognition systems that visually record each card as it is dealt to enhance security. Other utility products include deck checkers and chippers. Shuffle Master produces a line of proprietary table games featuring progressive and side bet options. “These are the source of our IP [intellectual property] that we move to electronic table games,” the company’s third product line, Mr Isaacs says. Electronic table systems include live dealer Rapid and fully automated table games that can be connected to dozens of terminals. Shuffle Master’s i-Table line combines a live
91 dealer with an electronic betting and payout calculation interface, utilizing touch-screens embedded in standard size tables; it is aimed at minimising errors and disputes, and speeding up play. The company also offers electronic gaming machines and a portfolio of slot games. Shuffle Master puts its portfolio of games online through its iGaming division. In March, the company acquired online poker platform provider Ongame Network Ltd for EUR19.5 million (MOP195 million) in cash. The deal includes an additional payment of up to EUR10 million, contingent on legalisation of real-money online poker in the U.S. within five years. Mr Isaacs sees the online gaming business as an opportunity for global growth. “Online is the next big thing,” he says. “We have the content, and we bought a poker engine that the customer can brand, and we provide the back-end support.” The acquisition aligns with Shuffle Master’s strategy of expanding its online product offerings to capitalise on regulated online gaming. The company aims to operate purely as a business-to-business provider and not to provide gaming content directly to players, Mr Isaacs says. Overall, “we want to maintain dominance where we dominate,” he says. “In slots, there are opportunities for global expansion. In electronic table games, we want to continue to improve. In the online space, we want to be ready for expansion as jurisdictions open up.”
Jolly good Just over half of Shuffle Master’s revenue comes from outside the U.S., according to its chief executive, with 30 percent of the total from Australia and 15 percent from Asia. “Asia is part of my overall strategy to grow internationally. I hope to grow in Asia, in Canada and in Latin America,” Mr Isaacs says, citing Cambodia, the Philippines and Vietnam as significant areas for Asian expansion. Shuffle Master’s revenue from Asia more than doubled year-on-year in the quarter ended January 31. “Ken Jolly, who runs this region as Shuffle Master’s executive vice-president for Asia, is one of the best salesmen I’ve ever worked with,” Mr Isaacs says. “He knows how to open markets and has assembled a solid team. We want to open up new markets while staying strong in Macau.” Currently, Macau accounts for just over 30 percent of Shuffle Master’s business in Asia, with the Philippines and Singapore each just below that figure. “In Macau, we invest in products to innovate and grow our base,” Mr Isaacs says. “There’s a lot of competition, so price points are low. You fine tune games here to make more money elsewhere.” The company is currently working with developers to create new Chinese slot games. “It’s been a very successful experience, and we want to do more of that,” Mr Isaacs says. Shuffle Master emphasises service in the region and its chief executive stresses that the company doesn’t use a call centre for service enquiries. “Customers want to talk to people who can fix problems, not call centres,” he says. “If our service people can’t fix it over the phone, they can jump in a car or get on plane and go there.”
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G2E ASIA 2012 HIGHLIGHTS
Photo: Carmo Correia
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Interactive play
Ramesh Srinivasan
Although online gaming is illegal in many jurisdictions, Bally says there are already several opportunities to explore within the interactive market
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as Vegas-based Bally Technologies Inc is not standing idle waiting for online gaming to be legalized in its home turf or in Asian markets. Company president and chief operating officer Ramesh Srinivasan says interactive products are already one of Bally’s development priorities. “We don’t need to wait for the day when online gaming becomes completely legal,” Mr Srinivasan told Macau Business at G2E Asia 2012. “There are a lot of good things we can do even before that happens.” Among the possibilities available are play-for-free games and social media-based applications targeting to boost communication between casinos and patrons. The goal is to bring the casino to the players, and bring players back to the casino. “We offer incentives on the internet-based platforms that help players to come to the land-based casino; and we offer them incentives in the casino so that they continue playing on the Internet,” Mr Srinivasan explains. An example is mobile app games including GPS-enabled JUNE 2012
locators. This allows players to find the real slots in nearby casinos and plots the location on a map for them. “If mobile wagering becomes legal one day, we will just make a transition. But we’re not waiting for that; we’re making progress even without that,” says Mr Srinivasan. Bally’s interactive division, introduced last October, encompasses the company’s mobile, Internet and social media initiatives, complementing its traditional games and systems business lines. Bally integrates its mobile and Internet solutions with its core casino patron, slot-management and business-intelligence systems, to give gaming operators a “single view of the player”. That, in turn, enables casinos to reach their patrons whether they are on the casino floor, at home or on the move.
Shopping spree Mr Srinivasan says there are already Macau casinos interested in using Bally’s mobile products. He hopes to have some clients here within one year.
93 This is not so much the case yet for online and social media solutions. “But that will come pretty quickly,” Mr Srinivasan says. Bally acquired mobile gaming platform and applications provider MacroView Labs one year ago. The company develops smart-phone and web-based mobile apps for the hospitality, retail and gaming industries – everything from concierge services to GPS-fuelled social networking integrated with Facebook and Twitter. Mr Srinivasan says this acquisition allows Bally to offer products to casinos to help them manage their mobile content, launch mobile campaigns and interpret user data. Bally has since made other acquisitions to add muscle to its interactive division. In February, the company acquired Chiligaming Ltd’s business-to-business, cloud-based iGaming platform. Also during the same month, Bally purchased a business-to-business remote gaming server for online and mobile gaming.
Beat it Bally continues meanwhile to invest in Macau both in systems and games. Mr Srinivasan says the past 12 months were particularly positive in systems deployment, with the inclusion of SJM Holdings Ltd on its client list, which also features Sands China Ltd and Galaxy Entertainment Group Ltd. “On the games side, we are making progress. We are creating more games based on Asian themes and mystery progressive links,” he adds. “I wouldn’t say we are making great progress in penetrating the market share, but we are getting there. The progress is going on steadily.” Bally is hoping Michael Jackson’s popularity in Asia can help improve things further. At last month’s G2E Asia, the company showcased its “Michael Jackson King of Pop” game, to debut soon in Macau. The music-filled game runs on Bally’s new Pro Series V22/32 cabinet with the custom, Pro surround-sound chair. In February, Bally partnered with a casino in California to power the world’s largest slot machine tournament, using its “Hot Shot Blazing 7s” game and DM Tournaments application. Mr Srinivasan says the company is open to undertake similar promotional events in Macau. “That just illustrates how powerful our systems are now.” “Asia Pacific has a lot of potential for us and it is an important area of growth,” Mr Srinivasan says. “We are just getting started in Australia, we just installed our first systems in New Zealand a couple of months ago, and we are just beginning in the Philippines. We just went live in Cambodia with the systems.” The company expects to get a strong foothold in the upcoming Manila Bay casino resorts, both in systems and games. Bally is now working to adapt its portfolio to Macau’s new technical standards for electronic gaming machines. From October onwards, all machines will have to comply with the new rules. Mr Srinivasan doesn’t regard the new specifications as too stringent. But he says it is a short deadline. “We’re absolutely dedicated to getting those changes done, but we do wish they had given us a little bit more advance notice.”
bizintelligenceonline.com
G2E ASIA 2012 HIGHLIGHTS 94 when clients need a specific person to run a department or to run a gaming floor. It’s quite specific. It’s not as if we walk into Macau and fill in 10,000 jobs. We’re not doing that,” Mr Pettemerides says. Although Pentasia’s core business is online gaming recruitment, in the Asia-Pacific region, the company’s client base is geared towards vendors of gaming technology.
Photo: Carmo Correia
Beyond consultancy
Jonathan Pettemerides
The right fit A new consultancy, Pentasia Macau, is focusing on high-end hiring to the gaming industry BY SARA FARR
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nly last year Pentasia Group decided the time was right to establish a Macau office. The executive search and recruitment provider to the gaming industry opened its local human resources consultancy in November. Now the goal is to grow. Jonathan Pettemerides, Pentasia’s managing director for the Asia-Pacific region, says the company’s clients include gaming technology vendors, casino operators and companies providing support services to the gaming industry. JUNE 2012
“By employing someone in Macau we’re basically providing our existing clients with a direct relationship so that they can contact us at any time. And also we have someone who feeds back market intelligence to us in Singapore, where our major regional hub is,” Mr Pettemerides says. The office here does not work directly as a recruitment agency. It relays insight and advice to the Singapore office, the region’s fully licensed recruitment business founded in 2007. “We add value at a very high-end
The Macau branch may yet shift from a human resources consultancy to a fullfledged gaming recruitment agency. “What we’re trying to do is provide a better quality of service. If to provide an even better level of service is to set up a recruitment company, then it’s logical that we’ll do that within the next year,” Mr Pettemerides says. For now, the company is looking to hire more consultants. Pentasia is committed to expanding the market in Macau, as well as the rest of the Asia-Pacific region, including the gaming sector in Cambodia, Vietnam and the Philippines. “At the moment we’re trying to assess how we can grow regionally,” Mr Pettemerides says. Pentasia Singapore has seen a yearon-year, double-digit growth every year since 2009, with the Asia-Pacific region now the company’s most profitable market, according to Mr Pettemerides. He was in Macau last month to attend G2E Asia, which he considers the “most important” conference of the region for the company. Not only does the event attract a significant number of gaming technology vendors and senior company directors, but “as consultants, we’re looking to learn as much as possible about the industry, about the industry trends, and about product development from each of our clients. “The more we know about their businesses, the better we can service them.” Pentasia was founded in Britain in 2001 to provide recruitment services to the online gaming sector. It has since become one of the biggest gaming-specific recruitment companies in the world, boasting a sizeable candidate database. The company has also built an international network of offices spread across seven countries on three continents.
95
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JUNE 2012
G2E ASIA 2012 HIGHLIGHTS 96
High-tech drive Technology is the way to go for casinos in labour-short Macau, gaming executives and suppliers say BY ALEXANDRA LAGES
A
t first glance, the table-driven Macau gaming market might seem averse to technology. That is far from true, industry insiders said during G2E Asia’s conference panel on the expansion of gaming technology in Asia. Semi-automated and fully automated electronic table games are on the rise here, as a way to bypass both the cap on the number of live tables and labour shortages. Eric Persson, executive vice president of corporate slots and marketing for Las Vegas Sands Corp, said the number of electronic tables in Macau will more than double in the next five years due to the cap on live tables. “The vast majority of growth in the Macau market will be on the electronic gaming table side,” he said. There is currently a 5,500-table cap on the number of live gaming tables in Macau, that expires next year. After that, the government will limit annual growth in the number of gaming tables to 3 percent. The growth limit will last for 10 years.
JUNE 2012
Electronic tables are still far from the net revenue levels of live tables. Peter Johns, vice president of electronic games for Galaxy Entertainment Group Ltd, said the gaming operator is already using fully automated electronic table games at its properties. The company is now looking at introducing semi-automated electronic tables too, which combine live dealers with electronic betting terminals. “We are trying to work out what is the right model and the right manufacturer,” he said, adding that baccarat is likely to be on offer. Mr Johns said electronic table players are a new market segment, different from slot and live table customers respectively. “They are people who like to play tables, but find it intimidating. But they aren’t really slot players, although they trust in electronics,” he said.
Rise of the machines Electronic table games in Macau are growing in sheer numbers also because of the labour shortage. The latest data
available shows that the unemployment rate currently stands at 2 percent, the lowest since 1992. The government has been reluctant to allow a lot more imported labour in, as it tries to ensure residents enjoy the best job opportunities. “One of the challenges in Macau is we have a very low unemployment rate. Electronic gaming tables facilitate to achieve both the goals of the government and the casinos,” Mr Persson said. “It is a win-win situation because you use less labour. And labour is the biggest issue in Macau, especially in new casinos,” Mr Johns said. Kurt Gissane, managing director for Asia Pacific at Bally Technologies Inc, said the advantages of using electronics on the casino floor go beyond staff savings. Technology also boosts accountability and customer satisfaction, he argued. Ken Jolly, vice president for Asia at Shuffle Master Inc agreed. He said gaming technology helps to minimize dealer error and make staff training easier.
97 ers while they are in Macau gambling. The parties later settle accounts back in the mainland. “They [junkets] play a very important role in identifying and recruiting customers in the mainland, and also bearing the risks of credit extension. If it wasn’t for the junkets taking on the risks of extending credit, Macau couldn’t see the numbers it has now,” Mr Tong said.
Ring my bet
In praise of the middlemen Industry insiders say Macau’s casinos couldn’t be as successful without the help of junket operators BY ALEXANDRA LAGES
O
ver 70 percent of Macau’s casino gross revenue comes from VIP gaming, fuelled by junket operators. But these middlemen are also critical to the gaming industries of Australia, New Zealand and the Philippines. Even Singapore is slowly opening its doors to junkets. The Lion City licenced its first two junket operators in March. This begs the question: is it possible for casinos in Macau to carry on without junket operations? “It’s very difficult,” said Hoffman Ma Ho Man, deputy chairman and executive director of Success Universe Group Ltd, which owns a 49-percent stake of Ponte 16 casino resort, in a
joint venture with SJM Holdings Ltd. “It is a model that has been around for ages,” even prior to the liberalisation of Macau’s casino industry, he said at a G2E Asia conference session on the evolution of junket operations in Asia. For Shaun McCamley, senior associate of iGamiX Management & Consulting Ltd, junket operations in Macau have a very bright future. “It’s still a growing market,” he said. As long as there are customs restrictions on how much money players from the mainland can bring into Macau, junkets will be needed, said Tony Tong, co-founder of consultancy PacificnetVentures.com. To bypass those restrictions, junkets lend money to mainland high roll-
In Macau, casinos use two remuneration methods to compensate junkets promoting their VIP rooms. On a fixed commission basis, junket revenues are capped at 1.25 percent of rolling chip turnover, the aggregate amount of bets players make. On a win/loss split basis, the junket receives an agreed percentage of the “win” in the VIP gaming room, plus certain incentive allowances. Mr McCamley said junket operators are increasingly moving away from the fixed commission system. This is because when players are on a losing streak, junkets can have their commission revenue greatly reduced. Mr Ma however said the win/loss split system also has risks. Junkets are required to bear a percentage of eventual losses that the VIP room might incur. That can be a big burden for smaller operators, with not so deep pockets. Mr Ma said junkets would increasingly become more careful in extending credit to avoid liquidity problems. As gaming taxes here are much higher than in Singapore, junkets have a lower capacity to handle bad debt, he argued. Junkets are reportedly using more and more phones and the Internet as communication channels for placing bets in Macau on behalf of players that are in the mainland, although this is illegal. “It’s definitely growing,” Mr McCamley said. Mr Tong said phone and Internet betting started at VIP rooms inside SJM Holdings Ltd properties, but has since spread around. Such a system revolves significantly around trust between the junket and the player placing the bet. The punter is not able to know the bet outcome and must trust in the information relayed to him through the phone or Internet. It is also something that is very hard for the authorities to track. JUNE 2012
G2E ASIA 2012 HIGHLIGHTS 98
Appeal boost
Macau needs to extend its allure beyond gaming and the mainland tourism market BY ALEXANDRA LAGES
M
acau welcomed 28 million visitors last year. That number is expected to increase by 10 percent this year, according to the Tourist Office. While the overall figures are impressive, experts say the city is too reliant on the mainland market. The perception of Macau abroad also needs to be groomed, they add. Brian Fiddis, senior vice president of casino marketing at MGM Macau, says tourists still regard Macau as a gambling destination only. “We have to broaden that perspective,” he said at G2E Asia during a conference session on marketing in Asia. “Demographics show that 60 percent of tourists are from the mainland. We don’t have to promote Macau in the mainland, but we have to enhance the city’s image as an attractive place,” he said. Jeffrey Ng, vice president of marketing at World Gaming Magazine, agreed. JUNE 2012
“Macau is just known as the gaming Mecca. People are not staying long enough. It [the government] should create more non-gaming attractions, otherwise Singapore will win,” he said. Mr Fiddis however admitted Macau has a peculiar problem: not enough hotel rooms to cope with demand, especially on weekends. That prevents the tourist base from growing further, both in size and source markets.
Plan of attack Official statistics show that as of March-end, Macau had 22,300 guest rooms. In the first quarter of 2012, the city’s hotels and guesthouses welcomed a total of 2.2 million guests, up by 13.6 percent year-on-year. The average occupancy rate stood at 83.2 percent, up by 2.2 percentage points year-on-year. It is not only Macau that is fighting for a better marketing positioning in the mainland. MGM Macau is facing similar challenges.
“MGM is known in the mainland for the old film company”, although both businesses are not longer connected, said Mr Fiddis. “The challenge for us is to build our brand and profile.” Mr Ng urged casinos to continue attracting visitors from other jurisdictions and not to solely rely on the mainland market. “You need to start developing relationships with other countries and with [their] local media,” he said. Casinos in the United States and Europe are increasingly using social media as a marketing tool to reach new audiences. The same is true for their Asian counterparts. Mr Ng said social media are nowadays an “important part” of any marketing plan. However, someone has to constantly monitor this channel and keep on providing updates. “If you are not prepared to provide intense content and to have a plan of attack, you cannot retain your audience,” he said.
99
JUNE 2012
G2E ASIA 2012 HIGHLIGHTS 100
Legal fine-tuning Ten years after the liberalisation of the gaming industry in Macau, some experts say it is time to update the legal framework BY ALEXANDRA LAGES
M
acau is the world’s unchallenged casino gambling leader. But is its legal framework sound enough? The topic was up for discussion at one of the conference panels at G2E Asia. Lawyer and former Sands China Ltd executive Luís Melo said it is time to review the regulatory framework. Although he praises the results achieved after the 2002 gaming liberalisation, he says some changes are needed. Mr Melo said “a lot of [legal] loopholes” have emerged. He partially blames them on the Gaming Inspection and Coordination Bureau’s approach to solving problems on a case-by-case
JUNE 2012
manner, instead of by issuing new rules. “There are a number of items that require changes but we don’t see any political will to do so,” he said. The lawyer especially called on more stringent licensing regulations for junkets. The system has remained unchanged for 10 years. Mr Melo said the lack of enough checks and controls means the entire junket organisation is “not robust enough.” He also urged the Gaming Inspection and Coordination Bureau to make its rulings public. “One of the strangest things about Macau’s legal system is that most of the relevant decisions that affect the gam-
ing sector are processed by instructions issued by regulator. These are confidential and are not disclosed publicly.”
Step by step Gaming consultant David Green is not so anxious to see changes introduced to Macau’s regulatory framework. He said the system will eventually be supplemented in due time with more technical regulations for slot machines and new rules regarding administrative infractions. Mr Green heads Newpage Consulting, a company hired by the Macau government to provide consultancy services and carry out studies on the gaming industry. According to Mr Green, one concern being expressed by investors and operators alike relates to the looming expiry date of Macau casino concessions starting in 2020. He said he suspects these concerns are not well founded, and that the government will address the issue in a timely manner. Mr Green says emerging gaming jurisdictions in Asia need to first determine how to best serve the public interest when deciding whether to legalise casinos. If the aim is to have a greater and more diverse tourism offering, to create employment and generate revenue, “these objectives should be clearly articulated to prospective investors and operators alike.” On the other hand, governments need to also consider if locals will be allowed to gamble and, if so, subject to what conditions, Mr Green said. Mr Melo proposed the establishment of minimum regulatory standards for gaming worldwide. He called for a common ground on gaming legal frameworks, no matter whether the country follows Continental or Common Law. “I don’t believe in the full harmonisation of legal systems across the world, but to have regulators to agree on a number of minimum standards would be positive,” he said.
101
Watch out for the neighbours Regional competition is getting fiercer in Asia’s gaming industry, but there is still space for further growth BY ALEXANDRA LAGES
Vietnam’s Ho Tram Strip
D
espite being the world’s largest casino market, Macau is facing increasing regional competition, as other jurisdictions in Asia look into gambling as a way to boost their economies. At last month’s G2E Asia conference, several speakers warned Macau authorities about the need to keep an eye on emerging regional players. The territory must remain competitive because there are new opportunities in Asia for both gaming operators and punters, said Michael Gift, associate dean of the Faculty of Business Administration of the University of Macau.
Mr Gift was one of the speakers in the session “The Big Picture: How Asian Economic and Social Trends Impact Gaming”. Ricardo Siu Chi Sen, a gaming and tourism expert at the University of Macau, said on the same panel that increasing incomes and wealth in Asia will continue to raise demand for casino gambling as a form of entertainment. “While the pie is getting bigger, the market is still undersupplied for the foreseeable future,” he added. Mr Siu said that several social, cultural, religious and government constraints are likely to continue to impact the development of gaming in Asia.
Mr Gift warned businesspeople planning to invest in gaming in this part of the world that Asia is not homogenous. Different policies are needed in different places. “We need to understand the pieces. One strategy for Asia will be deficient,” he said.
Lucky money Even within the Chinese gambling market, there are opportunities for investors, experts say. Despite its monopoly on casino gaming, Macau is not the exclusive provider of regulated gambling to Chinese citizens. The topic was under discussion in another G2E Asia conference session. Chinese lottery has a lot of potential, according to Hoffman Ma Ho Man, deputy chairman and executive director of gaming company Success Universe Group Ltd, which is also engaged in lottery. “There are a lot of opportunities to invest in,” he said. Wang Xuehong, executive director of Peking University’s China Centre for Lottery Studies, said the Chinese lottery market is forecast to reach RMB300 billion (MOP377 billion) in revenue this year. Su Guojing, founder and chairman of the Asian Responsible Gaming Alliance, said revenue is expected to continue growing steadily in the years to come. “The industry is getting more attention both from home and abroad. Many people are talking about when will this industry be liberalised,” he said. Mrs Wang said online lottery is another area of potential growth in the mainland, despite some regulatory setbacks. There have also been recent talks about legalizing horse racing betting on the mainland and even about Hainan Island welcoming what would be mainland’s first casino. According to Mr Ma, Hainan has approval in principle from the central government for a casino. But to be able to go ahead with the project, the province needs to first ensure it is financial sustainability, as Beijing would stop supporting it, he said. Mr Ma says the central government currently transfers up to RMB40 billion per year to Hainan Island. JUNE 2012
G2E ASIA 2012 HIGHLIGHTS 102
Singaporean style Emerging gaming jurisdictions in Asia are looking at Singapore’s casino resorts as a reference, but that could be a mistake BY ALEXANDRA LAGES
locals, no billboards, no digital texts, radio, TV, printed materials. Nothing. There is no promotion from the casino for the mass market until the customer is there. And every promotion activity has to be approved in advance,” Mr Arasi said. “It is the most under-promoted mass business in the world.”
Need for critical mass
Marina Bay Sands
T
wo years into the opening of Singapore’s two casino resorts, the Lion City has been widely praised for the results achieved so far. While Singapore may overtake Las Vegas as soon as this year as the world’s second biggest casino market, authorities there were also able to create a strong non-gaming component. But the Singapore model will not work in most places in Asia, warns Thomas Arasi, president and chief executive office of Harbinger Advisers LLC. The former Marina Bay Sands’ chief executive was one of the speakers in a G2E Asia conference session on how the integrated casino resort model can work across Asia. First experienced in Macau, the JUNE 2012
Asian casino resort model fully proved its strength in Singapore. Now, Vietnam and the Philippines are developing their own casino resorts too. Other jurisdictions like Taiwan, South Korea and Japan, are considering embracing this model. However, Singapore’s integrated casino resorts are unique, according to Mr Arasi. One of its main features is that gaming is only a small percentage of the total property area, he says. Another differentiator is the way Singaporean authorities regulate the market, with a focus on keeping residents away from casinos, although not making it illegal. “There is no marketing targeting
Mr Arasi said that to support such model, there is a need for a large domestic market, coupled with high numbers of tourists. He said many Asian jurisdictions want to replicate the Singaporean casino resort model, “but they just don’t have a big enough market.” Many of those emerging jurisdictions don’t want to allow locals to gamble. “That will not work,” Mr Arasi said. Paul Steelman, chief executive officer of international architect group Steelman Partners, is more optimistic. He said the Singaporean model could work in other regions, but only if they meet a string of requirements regarding transportation, potential customers, etcetera. Mr Steelman said an integrated casino resort needs to include a hotel, gaming areas, retail, food and beverage outlets and entertainment offerings. “It has to be tailored to the region where it is going to be placed. It has to have a certain amount of risk. It has to be agile and futuristic,” he said. Mr Arasi said the most important components of a casino resort are the gaming areas, restaurants, hotel and shops. “It must be something that attracts visitors.” Robert Drake, group chief financial officer of the Galaxy Entertainment Group Ltd says the gaming operator achieved this at Galaxy Macau. “We developed something very unique. It’s very easy to get around the property and we added some degree of creativity to it,” he said.
103
Sal Piacente
Scammed out
Asian casinos fight world’s best cheats, says security expert BY STEPHEN COATES*
A
s billions of dollars pour into Asia’s gleaming casinos, they are becoming the front line of a sometimes hugely lucrative battle between cheats and the house, says security consultant Sal Piacente. Both sides look to employ the latest, most advanced technology, but he says a scam in the Philippines last year took the gaming security world by surprise. An Asian syndicate used an improvised camera hidden up a member’s sleeve to film the sequence of cards in a deck as it was cut on a baccarat table in Paranaque City in May last year. The order of the cards was relayed digitally to another gang member who, after analysing the footage in slow motion, returned to the table as the deck finally came into play hours later. Mr Piacente, a 47-year-old from Brooklyn, said the multi-million-dollar “cutter scam” showed that as long as Asian casinos were the most lucrative in the world, they would attract the most skilful cheats. “The scams that happen here [in
Asia] are a lot more sophisticated than in the United States,” he said at G2E Asia last month. “What was happening here in Macau five years ago, is happening in the States now.” Asia is in the midst of a casino building boom, fuelled by wealthy VIP gamblers from the mainland, with billions of dollars being invested in huge integrated casino resorts from Macau to Manila Bay and Singapore. The new properties bristle with cutting-edge surveillance technology, but the cheats are coming up with their own high-tech innovations, such as the sleeve-camera used in the Philippines. “If you go to a place like this in Macau, where the surveillance is a lot better trained, then the cheats have to be more sophisticated,” Mr Piacente says.
Practice makes perfect Most of the exhibitors at G2E Asia showed off the latest slot machines or video gambling innovations, but Mr Piacente’s booth consisted of himself, a baccarat table and a bag of tricks.
Loaded dice, split chips and reflective gold rings are some of the more traditional tools of the cheater’s trade, which Mr Piacente, president of UniverSal Game Protection Development Inc, demonstrated with a magician’s flare during several workshops at Asia’s largest casino expo. He is also a master of sleight of hand – false shuffles, second deals, card palming – and can memorise a deck of cards instantly from sight. He has worked a lifetime to perfect his skills, but tells his clients in the gaming world that the real cheats will be smarter, faster and better – especially in Asia where so much more money is at stake. “I sit at home and practise thousands of moves for hundreds of hours. They’re at home practising one move for thousands of hours. They do that one move better than I could possibly imagine,” he says. “An amateur practises until he gets it right; a professional practises until he can’t get it wrong.” It is a constant battle. *AFP NEWS AGENCY JUNE 2012
104 KEITH MORRISON AUTHOR AND EDUCATIONIST - kmorrison.iium@gmail.com
Feed the mind, mind the belly THE STRUCTURE OF MACAU’S SOCIETY AND THE ECONOMY IS TOO FAT AROUND THE MIDDLE AND TOO THIN AT THE TOP
Education mismatch Table 2 shows a large increase in the percentage of workers holding a bachelor’s or higher degree. Still, there are insufficient highly qualified graduates to meet demand for some kinds of qualified professionals. This is common knowledge in the fields of law, medicine and the social services. The data also indicate that there was a rise in the JUNE 2012
the percentage of the unemployed who are new entrants to the job market has risen steadily since 2002. The upward trend is clear, even after adjusting for the seasonal spike in new labour every July to September when school leavers and university graduates join the labour market, and for the increase in unemployment in late 2008 and in 2009 due to the global financial crisis. Note that the data published by the Statistics and Census Service about fresh entrants to the labour force do not distinguish between school dropouts and university graduates. What is clear is the number of university students is rising. The number of resident students
TABLE 1
BREAKDOWN OF THE WORKFORCE BY CCUPATION 2011
2002
Variation
(percent)
(percent)
(percentage points)
Legislators, government officials, association leaders, company directors and managers
4.9
5.6
- 0.7
Professionals
3.6
3.2
+ 0.4
Technicians and associate professionals
9.1
8.6
+ 0.5
Clerks
26.9
16.5
+ 10.4
Service and sales workers
22.3
19.9
+ 2.4
Skilled agricultural and fishery workers
0.4
0.6
- 0.2
Craftsmen
8.6
10.5
- 1.9
Plant and machine operators, drivers and assemblers
4.5
12.7
- 8.2
Unskilled workers
17.1
16.2
+ 0.9
2.6
6.3
- 3.7
Unemployed
Source: Statistics and Census Service
P
percentage of residents with a seniorsecondary school education. What we have, then, seems to be schooling that leads to jobs where few skills are required, with many people over-qualified for the tasks they are performing. There is a lack of opportunities for some high-skilled professionals and yet insufficient professionals to meet demand in other sectors. One would imagine that fresh entrants to the workforce, particularly bigger numbers of university graduates, would lead to increases in highly paid occupations but the data is inconclusive. As the unemployment and underemployment rates have fallen,
Note: Percentages may not add up to 100 owing to rounding
TABLE 2
BREAKDOWN OF THE WORKFORCE BY EDUCATION LEVEL 2011
(percent)
2002
(percent)
Tertiary
24.1
Senior secondary school
28.5
17.6
Junior secondary school
27.2
32.7
Primary school
16.0
26.6
4.3
10.1
No schooling or pre-primary education only Note: Percentages may not add up to 100 owing to rounding
13.0
Source: Statistics and Census Service
eople who drink too much alcohol and eat too much become potbellied. That is, they are thin everywhere except around the middle, which bulges. It is a neat analogy for Macau’s society and economy. The city has levels of unemployment and underemployment that are the envy of many parts of the world. In the first quarter, the unemployment rate was 2.0 percent and the underemployment rate 0.8 percent. This continued a declining trend over the past decade, as seen in the graph. With this came a change in the make-up of the labour force, as shown in Table 1. These data roughly track several interesting trends over the last 10 years. There was a small reduction in the proportion of the workforce in the highest paid occupational group: legislators, government officials, leaders of associations, directors and managers of companies. At the same time, there were only small rises in the proportions of professionals and technicians. By far the biggest rise was among lower-paid white-collar workers, among which were clerks, and service and sales workers. The proportion of the workforce who are craftsmen and blue-collar workers decreased as the economy became increasingly service-oriented. But the proportion of unskilled workers went up. Development appears to be riding on the back of white-collar employees in the lower-stratum service and sales sectors. While there is evidence that the lower middle class is expanding, there is still a sizeable and rising proportion of unskilled workers.
105
NEW ENTRANTS TO LABOUR MARKET, UNEMPLOYMENT AND UNDEREMPLOYMENT % 30
Unemployment rate
Percentage of unemployed searching for first job
Underemployment rate
Trend lines
25 20 15 10 5 0
Q1 Q2 Q3 Q4
2002
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2003
2004
2005
2006
registered in the city’s universities rose to 19,121 in the 2011-12 academic year, up from 9,793 in 2002-03.
Twin readings There are two almost contradictory interpretations, one pessimistic and one optimistic. The pessimistic view is that it appears that fresh entrants to the labour force find it hard to get their first job quickly, as more and more are looking for a position when the data are collected. The optimistic view is that, although the percentage of the unemployed who are fresh entrants to the labour market is rising, they do find work, as indicated by falling unemployment and underemployment rates. Regardless of which interpretation is correct, an inescapable fact is that many graduates seem to be working in jobs where their education is not fully utilised. The last decade has been a period of unprecedented development. Sociologically, the city saw expansion of the lower middle classes. In employment, the city recorded an increase in lowergrade service, sales and office work. In education, the city has an increasing number of workers, more than 50 percent of the total, who completed only secondary schooling before entering the labour force. Macau has a classic potbellied society: fat around the middle and thin everywhere else. Conspiracy theorists may argue that the city is the result of a classic ploy by the elite to perpetuate their ideological
2007
2008
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009
2010
2011
hegemony under the guise of preserving social stability. They permit some people to rise from the lower to higher social groups, without allowing so much upward mobility that it could weaken the position of those in power. There is just enough mobility to soothe or ‘cool out’ those who otherwise might complain or take to the streets in protest.
Expansion plans Believe the conspiracy theory or take a more pragmatic view, the fact of the matter is that there are still too few people in Macau’s higher social and economic groups. This suggests that if we really want the city to develop, much needs to be done. The city must develop society’s upper echelons. The city must create more high-grade employment opportunities and diversify the economy much more, so that the highly qualified can find employment that matches their qualifications. There has been much talk about diversification but few observable results. The city also needs to expand and diversify higher education to serve a diversified economy, and to give highlevel employment training. Money is pouring into the government’s coffers. Why not spend some of it on real support for new high-grade enterprises that will create employment opportunities? Why not also use that financial capacity to create more openings for professionals, instead of waiting for outside entrepreneurs and financiers to take the initiative?
106
Commanding comfort After centuries as a defensive strongpoint, Pousada de São Tiago is today the city’s only heritage hotel BY SARA FARR
any places in Macau have lost touch with history, but the five-star Pousada de São Tiago has a Portuguese heritage that dates back four centuries. It is the only hotel that is also an historical landmark on the city’s list of protected heritage monuments. The Portuguese built the São Tiago da Barra Fortress in the early 17th century. It commanded maritime access to the Inner Harbour. Some 350 years later, there was not much point in defensive fortifications, so the government helped convert the fort into a hotel – “pousada” is Portuguese for inn – which opened in 1981. The building was acquired by Stanley Ho Hung Sun in 2004. Renovation by international designer Khuan Chew, who designed the interiors of the Burg al Arab hotel in Dubai, was completed in 2007, turning the place into an all-suite hotel, with 12 suites. The hotel includes a Spanish restaurant, a bar, a café and the 1740 St. James Chapel – a popular place for weddings. It is one of the few five-star hotels in Macau without a casino in or near it. It is Macau’s only member of Relais & Châteaux, an association of some of the most charming hotels and restaurants around the globe. “We don’t see other modern hotels as our competitors because this is a unique structure,” says Johnson Chan, the gen-
M
JUNE 2012
eral manager of the Grand Lisboa hotel, who also oversees the Pousada de São Tiago. “Either you like it or you don’t.”
Running water The 2007 renovation gave it a “sort of modern comfort,” Mr Chan says. Half the suites have antique furniture and the other half have a more modern look. All have their own Jacuzzis. Because Pousada de São Tiago is an historical landmark, its upkeep is one of the management’s main headaches. The façade, the walls and everything else must be maintained as they were originally. The façade undergoes maintenance every week. And maintenance is costly. “We do invest heavily,” Mr Chan says. He also says it is hard to find people with the right skills to do the work. One problem that cannot be solved is that during heavy downpours, water runs down the stairway leading up to reception and the restaurants. “We cannot touch that. We got experts in and they told us not to seal it, to allow the water to flow,” Mr Chan says. “Because if you seal it, the water remains inside [the rocks] and there is nowhere to move it to.” This would, in turn, cause more damage. This clearly does not deter patrons. Mr Chan says demand for the Pousada de São Tiago’s suites has increased in recent years. He expects an increase of 10 percent to 20 percent this year.
Tourism
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HISTORY INCARNATE F
or nearly four centuries, the São Tiago da Barra Fortress stood guard over the entrance to the Inner Harbour, a bulwark against invaders and a welcome landmark for seafaring traders, adventurers and scholar-missionaries. Today that past is preserved in the Pousada de São Tiago, which stands on the foundations of the fort and resonates with its history. The fort is dedicated to St. James – “São Tiago” in Portuguese – who was beloved by Portuguese fighting men. Its story began in the early 17th century, when the Portuguese started building a string of forts to defend Macau from attack from the sea. Work began in 1616 on a small fortification at Barra to dominate the narrow channel into the Inner Harbour. The strongpoint played an important part in repelling the Dutch attack on Macau in 1622. In 1629, the São Tiago da Barra Fortress was completed. At the time, it looked like a small fortified town, with a garrison of up to 70 soldiers. After the Dutch were beaten off, the fort’s cannon were never fired in anger again. They were sold during World War II to raise money to buy rice for Hong Kong and mainland refugees from the Japanese occupation. As time went by, parts of the fort were demolished to allow the construction of new roads. The security forces finally withdrew from the Barra Fortress in 1976.
“We don’t see other modern hotels as our competitors because this is a unique structure,” says Johnson Chan, the general manager But it is not a normal hotel. At any given time, the rooms might all be fully booked, or only one or two suites might be occupied. One of the constraints on the hotel’s business is that it can accommodate only small meetings or weddings. “We do slow promotion. We don’t push hard because we only have 12 suites,” Mr Chan says. Even so, many patrons keep coming back. “We have a lot of repeat customers who come here for relaxation, the food and for the tranquillity of this area,” Mr Chan says. Guests are often newlyweds. “Some of them come back for their anniversaries.” The hotel attracts a lot of attention abroad, media from all over the world having shown interest in its history. There are no plans to expand Pousada de São Tiago or to renovate it again. “We believe that if we keep it, the property remains part of the heritage and part of history for Macau. So by expanding we would be building a new property, and at this stage we are not going to do that. The major issue is to keep it for the next century,” Mr Chan says. Like the city’s other hotels, the Pousada de São Tiago has difficulty finding suitable employees. “Not only do we lack staff, we also lack skilful staff,” Mr Chan says. About half the staff have worked there for a long time, but retaining employees is not easy because the small size of the hotel means they must be jacks of all trades. It is hard to attract young people and new graduates. “Youngsters feel differently. They think this is a small property and that they don’t have much chance of advancement,” Mr Chan says. “Young people, more and more, think big.” However, the Pousada de São Tiago can and does bring in staff from its sister-hotels in Mr Ho’s Lisboa hotel group.
Photo: Carmo Correia
Romantic setting
Johnson Chan JUNE 2012
Tourism statistics
108
Visitor arrivals Year-on-year change (%)
2011 Total - Same-day visitors - Overnight visitors Average length of stay
28,002,279 15,077,119 12,925,160 0.9 days
Year-on-year change (%)
Latest
9,324,476 5,038,499 4,285,977 1.1 days
12.2 15.6 8.4 --
6.3 5.2 7.7 0.1 days
Notes Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Apr 2012
Visitors by place of residence Year-on-year change (%)
2011 Asia - Mainland - Guangdong - Fujian - Zhejiang - Hunan - Beijing - Shanghai - Tianjin - Chongqing Individual visit scheme - Hong Kong - Taiwan - Japan - South Korea - Others America Europe Oceania Others
27,287,076 16,162,747 8,196,139 932,316 575,595 533,495 314,696 471,366 100,585 172,140 6,588,722 7,582,923 1,215,162 396,023 398,807 1,531,414 310,608 251,748 127,983 24,864
Latest
Year-on-year change (%)
12.4 22.2 131.1 164.2 140.1 191.9 185.6 159.0 151.2 166.8
9,077,866 5,618,826 2,742,653 288,281 193,928 182,257 118,141 168,642 41,702 67,974
6.3 13.5 7.5 12.0 13.5 33.0 17.7 8.5 33.2 42.2
Jan-Apr 2012
20.1 1.6 -6.0 -4.2 20.2 -0.6 4.5 3.0 0.3 8.8
2,322,997 2,375,016 335,532 137,864 153,701 456,927 101,231 88,257 47,981 9,141
9.8 -4.5 -13.1 11.3 16.2 -0.5 3.8 8.5 8.9 22.4
Jan-Apr 2012
Notes
Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012
Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012
Hotels Hotel and guest-house rooms Hotel guests Hotel average occupancy rate Average length of stay
11.3 22,356 11.0 8,612,127 4.3 84.1 1.53 nights -0.01
percentage points nights
Latest
Year-on-year change (%)
22,272 10.6 2,180,685 13.6 percentage 83.2 2.2 points 1.48 nights -0.06 nights
Notes Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012
Visitor expenditure Year-on-year change (%)
2011 Total spending (excluding gaming) MOP 45.3 billion - Non-shopping spending - Shopping spending Per-capita spending
JUNE 2012
MOP 22.9 billion
22.4 MOP 1,619 MOP
billion
20 23 16 7
Latest MOP 13.1 billion MOP 6.4 billion MOP 6.7 billion MOP 1,891
Year-on-year change (%)
35 28 42 25
Notes Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012
Source: Statistics and Census Service
Year-on-year change (%)
2011
Tourism 109
LESS PEOPLE VISITING ON LABOUR DAY
The number of visitor arrivals to Macau during the Labour Day holiday (April 29 to May 1) dropped slightly over last year. Official figures released by the police show that Macau recorded a total of 351,000 visitor arrivals during that period, a year-onyear drop of 0.81 percent. Overall, Macau authorities recorded over 1.1 million border crossings during the Labour Day holiday, including tourists and residents.
NEW BORDER CROSSING IN SIGHT Checkpoint to open round the clock and handle up to 250,000 crossings per day There will be a new border crossing between Macau and Zhuhai for pedestrians next to the existing Border Gate. Chief Executive Fernando Chui Sai On made the announcement last month after the annual GuangdongMacau Cooperation Joint Conference. During the meeting, both sides agreed that there is an urgent need to build a new passage to accommodate the growing number of cross border travellers. The new border checkpoint is
expected to run 24 hours per day and handle up to 250,000 crossings per day. According to Mr Chui, the crossing, on the site of the Nam Yuet wholesale market, will not be open to vehicles. The proposal still needs to be submitted to the central government for approval. For now, there are no estimates either on the construction budget or on the checkpoint’s opening date. Real estate agents say the new border crossing could drive up shop prices in the area by up to 10 times.
HOTEL ROOM BOOM
Macau could have as many as 50,000 hotel rooms in five years, according to Tourist Office director João Manuel Costa Antunes. At the end of March, Macau had close to 22,300 hotel rooms. Bloomberg quoted Mr Antunes as saying Macau needs the added capacity because hotel occupancy rate averages about 85 percent and it can be difficult to find vacancies on the weekends. He said Macau’s tourist arrivals would increase at least 10 percent in 2012 from last year’s 28 million.
VISITORS SPENDING A LOT MORE
Total spending of visitors to Macau (excluding gaming expenses) soared during the first three months of 2012. The value reached MOP13.1 billion (US$1.6 billion), up notably by 35 percent year-on-year, according to the Statistics and Census Service. Of that, total shopping spending of visitors amounted to MOP6.7 billion, up by 42 percent year-on-year. Per-capita spending stood at MOP1,891, an increase of 25 percent year-on-year. The Statistics and Census Service extrapolated total spending of visitors from a sample of 43,000 visitors.
JUNE 2012
mbreport ANIMAL WELFARE 110
OUTSIDE THE LAW Cruelty to animals goes unpunished because it is not really against the law BY LUCIANA LEITﾃグ
JUNE 2012
111 nimal rights advocates worldwide have been harshly critical of Macau since reports came out that more than 300 greyhounds are killed at the city’s canidrome every year after the end of their racing careers. Anima – the Society for the Protection of Animals and Macau Yat Yuen Canidrome Co Ltd almost reached a deal in April that would have given retired greyhounds new homes. But the deal fell through when the canidrome failed to deliver the first dog on schedule. A new attempt is now being made, and a decision is expected within this month. Macau lags behind other countries in protecting animals, local animal welfare associations say. They argue that if the city had proper laws on the breeding, trading and abuse of animals, there would not be so much cruelty. Albano Martins, who heads Anima, says there is hardly a single modern law that covers animals. The last relevant piece of legislation that touches on animals was the 1954 law that famously rules that eating cats or dogs is punishable with a fine of up to MOP200 (US$25), Mr Martins states. But he says there are restaurants and construction sites where cats or dogs are still eaten. Animal rights activist Almond Chan is well aware of this. “Very traditional local Chinese eat cats in winter,” she says. Others catch them to supply mainland customers. Ms Chan is the founder of Meow Space, an independently funded adoption centre for stray cats. It also serves as a gallery for art with a feline theme, and as a shop selling cat-related creative products. She says Meow Space has taken care of almost 1,000 cats since it was established in 2007, and has a successful adoption rate of close to 99 percent. Ms Chan says the main problem in Macau is the lack of an animal protection law. Animal rights activists have held a march in the city every year since 2008 to protest against the government’s failure to legislate.
A
Photo: Luís Almoster
Stalled proceedings The Civic and Municipal Affairs Bureau put forward a draft bill in May 2007 on animal ownership, which it consulted the public about for less than one month. Five years later, nothing has come of it. Macau Business asked the office of the Secretary for Administration and Justice, which oversees the Civic JUNE 2012
mbreport ANIMAL WELFARE 112 and Municipal Affairs Bureau, what progress the bill had made. The questions were forwarded to the Civic and Municipal Affairs Bureau, which failed to reply to any of them. Secretary for Administration and Justice Florinda Chan said last November that the government had no plans to present an animal welfare bill this year. She said the 2007 bill was being revised to bring it up to international standards. The 2007 bill envisaged fines of up to MOP5,000 for abandoning an animal and up to MOP10,000 for abusing an animal. “It’s better than nothing at all, but the draft is not exceptionally good,” Mr Martins says. “Currently, there isn’t any protection against abuse. You only have to pay a fine of MOP200, while in Singapore you have to pay much more and you can even go to prison if you abandon a pet.” The co-founder of the Abandoned Animals Protection Association of Macau, Yoko Choi Wing Chi, says abandonment is a form of cruelty to animals. The association takes care of stray pets and has in its care 250 cats, 180 dogs and five rabbits, most of them found in the street. “We also have some cases where the dog is old and the owner doesn’t want it any more,” Ms Choi says.
Wynn steps up Mr Martins says animal abandonment is common in Macau. For every 10 unwanted cats or dogs Anima takes in, it manages to find new owners for about three. “One of our rules is that we only receive animals that we consider in danger,” he says. “Given our lack of space, if someone calls us just saying they don’t want an animal any more, we can’t take it in.” Anima has a new shelter that opened in 2010, but the group is still short of space. It does not cage animals, putting them instead in shared quarters. Anima’s work has caught the attention of Wynn Macau Ltd boss Steve Wynn, and it was announced earlier this year that Mr Wynn was donating MOP2 million to the association. Animal welfare associations have become stricter about who can adopt their animals. They make phone calls or even visits so they can get an idea of what sort of home awaits an animal. This follows some misjudgements, Mr Martins says. A survey by Anima JUNE 2012
HEALTH CHECK I
t is impossible to know how many pets there are in Macau, as only dogs must have a licence, which must be renewed annually, between January and February. By April this year 1,013 new dog licences had been issued and close to 8,500 old ones renewed. Last year more than 10,100 licences were issued or renewed. Albano Martins, the head of Anima – the Society for the Protection of Animals, says the Civic and Municipal Affairs Bureau should ask what has happened if a dog owner does not renew the dog’s licence. He says failure to renew a licence could mean the dog has not had all the required vaccinations. But he adds it could also just be a sign that licence renewal is expensive – it costs MOP200 (US$25). Mr Martins says cats should also be licensed annually. At present is impossible to be sure that the city’s pet cats have had all the required vaccinations, he says.
END OF THE ROAD T
he public kennel put down 161 dogs and nine cats in the first four months of this year. Last year 620 dogs and 20 cats were put down, an average of over 50 animals per month. The good news is that from January to April 72 dogs and four cats in the public kennel were adopted. Last year 135 dogs and 26 cats were adopted. The public kennel has no choice but to kill the animals, given its limited space, says Albano Martins, the head of Anima – the Society for the Protection of Animals. Without harsher penalties for people who abandon their pets, the killings will go on, he says. Several animal rights associations currently pay to have stray dogs and cats sterilised to control their numbers.
113 found that previously, about half of the animals it had given away for adoption had died or disappeared. Animal rights advocates say legislation on animal rights should go beyond just ownership. Mr Martins highlights concerns such as the breeding of animals for sale, which the 2007 bill did not deal with. He says this shows that the government’s agenda does not cover animal rights. Ms Choi is worried about animal abuse. Her association has been collecting evidence about cases for years. “A few years ago, teenagers burned a cat. They were sent to the police and the same night they returned home,” she says. “Some time ago, we got a dog which the owners had cut off his ears.”
Poor practice
WORTHY OF IMITATION W
ith Macau under fire for its lack of animal protection legislation, there are a few places in this part of the world that the government could learn from, experts say. In Singapore, anyone found guilty of abandoning a pet may be imprisoned for up to 12 months and a fined up to S$10,000 (MOP64,580). Other matters are currently under discussion there including the creation of a national adoption centre for animals, and a requirement for all pet shops and farms to license dogs at the point of sale. Taiwan’s animal protection law punishes offenders with fines of up to NT$250,000 (MOP68,345) and one year in prison. It forbids “any animal race or contest for the purpose of gambling directly or indirectly”. The law also requires registration of the birth, acquisition, transfer, loss or death of any pet animal. Hong Kong has several laws covering animals. Veterinarians must be registered. It is illegal to keep any dog five or more months old without a licence. The maximum licence fee is HK$80. But Hong Kong also has problems. Its law against cruelty to animals can be invoked only when an animal has already been the victim of an overt act of cruelty. Traders in animals need not demonstrate any suitability for their trade or train their staff in the proper care of animals. There is no requirement for pet shops to have a vet see to their stock.
Veterinary practitioners also need to be regulated. Mr Martins says this is an issue of public health. Private veterinary clinics are unregulated, and even the government is wary of giving them responsibilities such as rabies vaccinations. Vet Rachel Choi came to Macau from Hong Kong and has been working here for four years. She says the lack of regulation of vets is worrying. “Anyone can become a vet in Macau and no one cares,” Ms Choi says. “It affects the whole market and it decreases the whole wellbeing of the animal.” The Macau Association of Veterinarian Practitioners has written to the chief executive asking for certification of vets here. It has received no reply. Ms Choi says protection of animals is better in Hong Kong. “There are a lot of leaflets, information, alongside animal protection associations,” she says. Communication among vets is better in Hong Kong too. Ms Choi says that in Macau some vets refuse to divulge to their colleagues what treatment they gave animals that were once their own patients. Ms Choi says most patients in her clinic belong to people that treat their pets well. But she says about one in five cases makes her raise her eyebrows. Vet Francisco Galvão agrees that legislation on animal rights and ownership is needed. But he says people generally take good care of their pets. “I have not seen any case of animal abuse in my clinic,” he says. “Also, there is a very low rate of accidents or running-over.” JUNE 2012
mbreport ANIMAL WELFARE 114
Running wild Pet shops are prospering in a market without clear rules BY LUCIANA LEITÃO
necdotal evidence suggests that pet shops are multiplying like mice. But many keep animals in deplorable conditions, while others sell new-born puppies and kittens, a practice banned in several countries. Animal welfare associations say proper regulation is needed. There are no official figures about the turnover of the pet retailing business or the number of pets sold in Macau. But some numbers reflect a rising trend: Macau imported MOP24.5 million (US$3.1 million) worth of dog and cat food for retail sale last year, about 25 percent more than the year before, data from the Statistics and Census Service shows. That sum of money bought over 1,000 tonnes of food, about 10 percent more than the year before. Pet shops must have a licence from the Civic and Municipal Affairs Bureau and comply with some basic rules, but there is no legal requirement for owners to have any training in caring for ani-
A
JUNE 2012
mals. There is no specific law or by-law on pet shops. The Civic and Municipal Affairs Bureau failed to provide Macau Business with the number of licensed pet shops. Vanny Ng is the director of Pet Kingdom, which sells mostly puppies and kittens. “To have pets in my shop, first of all I need to fulfil the criteria laid out by the Civic and Municipal Affairs Bureau. Additionally I have installed an extra ventilation system and an odourcontrol system to ensure proper hygiene levels in my shop,” he says. The pets Mr Ng has on sale come from Hong Kong and Taiwan. He is also about to begin importing animals from Britain and Australia. Mr Ng does not breed animals. He leaves that task to “qualified and licensed breeders, more trustworthy and guaranteed,” he says. Another reason he does not breed animals is that the law here is not clear about breeding for commercial purposes. He says he has customers from all
walks of life, and that their aptitude for caring for animals varies, making it difficult to assess whether they will be good pet owners.
Beware of the man Mr Ng says much needs to be improved in the pet retailing business in Macau, but acknowledges that the matter is not on the legislative agenda. Mr Ng did not want to comment on the practices of his competitors but says the number of complaints made to the Consumer Council about pet shops is low. Consumer Council data shows only one complaint about a pet shop last year. But the head of Anima – the Society for the Protection of Animals, Albano Martins, says some pet shops engage in improper practices. “We’ve already been to pet shops with animals in very small cages. Some stay there almost their entire lives and when they come out they are not even able to move freely,” he says. Yoko Choi Wing Chi, co-founder of
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the Abandoned Animals Protection Association of Macau, says some pet shops keep their animals in squalid conditions. Eventually they develop serious illnesses, including skin problems. “We want it so that puppies younger than three months old cannot be sold,” she says. Veterinarian Rachel Choi also bemoans the lack of regulation of pet shops, saying some fail to care for the animals properly, and do not work together with vets. Vet Francisco Galvão says pet shops have been improving their standards. “Some are already vaccinating the puppies before selling them. Some have agreements with veterinarians’ clinics.” Lewis Lee owns two pet shops under the name Animals Club. One concentrates on rodents and the other also sells cats and reptiles. “I have a shop because I love animals,” he says. His shops do not sell dogs because “other animals get stressed with the barking”. He says many of the animals in his stock are let out of their cages
once or twice a day. Most Animal Club customers come from Macau. Mr Lee says he tries to assess whether or not a prospective buyer is fit to own an animal. He says that if the answer is negative, he will not sell. “This is a pet shop, not a toy shop. Some come here just saying they are rich, have money and want a pet.” A typical customer is aged between 30 and 40, employed with decent pay, and has no children. “Animals make them smile,” he says.
Cathouse blues Mr Lee has more than 100 animals in his shops. He says they usually sell rapidly. “All the cats are bred by me,” he says. The purpose is to ensure that they are properly vaccinated and healthy. “If I don’t know their history, I won’t sell them.” Other animals in the Animal Club shops are imported from the United States and Europe.
Mr Lee says he also catches stray cats that he feels are unfit to stay on the street and takes them to a warehouse he owns. There they breed, on average, once a year. “Many people are waiting for the kittens. When they are born I call them,” Mr Lee says. Anima’s Mr Martins says the lack of regulation of animal breeding is a problem. His association has detected some illegal breeding farms. “We’ve already caught a situation of breeding cats. Animals were in the street, in cages, and were about to be sold to a restaurant.” With proper regulation, Mr Martins says, illegal breeders would find it harder to do business and pet shops would need to have a list of licensed suppliers. Mr Lee says many people also go across the border to buy pets, but that some animals die shortly after arriving Macau. In the mainland, he says, there are many people breeding cats and dogs in poor conditions. “They give cats medicine to breed more,” he says. JUNE 2012
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Human Resources
Let’s talk business
JUNE 2012
The preferred language of international business is English; how does Macau’s workforce measure up? BY ALEXANDRA LAGES
117 acau is a city of contrasts, not least in the degrees of proficiency in English of its resident workforce. Although the government harps on about the city being an international hub, and more and more nonChinese people choose to live and work here, the city is not proficient enough in English, the world’s lingua franca, businessmen and teachers say. It is a concern for the director of the Small and Medium Enterprises Association, Kenneth Lei. “English is very important in Macau, not only in the business environment, even in the government context. For Macau to really become an international city, all of us should put more effort into improving the level of English,” Mr Lei says. He says most owners of SMEs have concerns about their workers’ standard of English. Companies want to improve their corporate image and boost the ability of workers to communicate but the shortage of skilled labour is a problem, he says. Even so, proficiency in English is not on top of most businessmen’s agendas, Mr Lei says. “More than half of the visitors come from the mainland. So, nowadays, the SME owners don’t feel this is as a very serious problem. But in the future, if the structure of visitations changes, SME owners will have to change their minds.” The head of the British Business Association of Macau, Henry Brockman, says one cannot succeed in the city speaking just one language. Mr Brockman, who speaks English and Portuguese fluently, says youngsters must acknowledge that to take the opportunities Macau has to offer, they need to speak several languages. English and Chinese are equally important in business, but it is not easy to find workers sufficiently proficient in both, he says. “If you are offering a good job, with good career prospects, yes, it is easy. If you are in the service industry and the job does not require managerial skills, it is very difficult.”
M
Horses for courses Jiji Tu, the managing director of human resources company MSS Recruitment and the employment website hello-jobs. com, says a command of written English is becoming more important. Finding workers with a good standard of English is hard, even among university graduates, but workers with a basic standard are easier to find, she says. Carolina Nogueira, who coordinates
language courses at the Institute for Tourism Studies, says English proficiency is correlated to the positions employees hold and the tasks they perform. “I believe the English skills of many people are adequate to deal with routine tasks, but they might find it difficult when they need to speak English for either work or socialising with non-local colleagues,” Ms Nogueira says. “Of course, there are also many fluent English speakers. They are normally hired for positions which need to have close contact with English-speaking clients or co-workers,” she says. Mr Brockman says improving the English of the resident workforce is important, and he urges the government to change its policies on importing labour to make it easier for companies to get staff with a good command of English and Chinese. Mr Lei says shortcomings in the education system are at the root of the shortcomings in the English of the resident workforce. Schools here have different standards and do not push students to improve their English, he says.
Back to school Mr Lei suggests that adult training centres hold a variety of English courses meant for various kinds of occupation. But Ms Nogueira says that convenient part-time courses are hard to arrange because of the long hours, shift work and continually changing work rosters that prospective students must cope with. “Though they have the interest and motivation, at times students have to miss classes because of work or they come in looking exhausted. For this reason, many students prefer short English courses to long ones. However, short English courses are not as effective in improving students’ fluency and proficiency.” The government-backed Macau Productivity and Technology Transfer Centre has seen demand from enterprises for courses in commercial English increase by almost half in recent years. “We have been receiving lots of requests from private companies to organise professional English courses, such as banks, hotels and insurance companies,” says the manager of the centre’s general affairs department, Rosita Gaspar. “Most local students need to use English after they graduate. More and more we have international hotels and offshore companies in Macau and they need to communicate in English,” Ms Gaspar says. JUNE 2012
118
Human Resources
The Education and Youth Affairs Bureau recently announced a three-year, MOP11.7-million (US$1.5 million) programme of subsidies for teaching foreign languages in private schools. Most schools in Macau are private schools. The goal is for high school graduates to be able speak at least one foreign language fluently.
Outsourced work Member of the Legislative Assembly José Pereira Coutinho calls this a short-term stunt. He urges the government to force private schools to have at least one foreign language in their curriculums. At present they are not obliged to do so if they are teaching in one of the city’s two official languages. Mrs Gonçalves and Mr Ferreira both teach English. Their professional experiences are quite different. Mr Ferreira teaches English as a foreign language to 100 students divided into five classes at a school in the north of the peninsula. The ages of his students range from 15 to 20. “Around 80 percent of my students are really bad at English. More than half cannot answer a simple question. Some cannot conjugate the verb ‘to be’,” he says. Mrs Gonçalves teaches English to 10 classes or a total of 250 students. The ages of her students range from three to 13. She says their English proficiency level is above average. “I’ve taught English in Portugal and it’s a completely different experience here. The Macau level of English is better with regard to small children,” she says. The main reason for the good English of her students is that most belong to middle-class families and live in a multicultural environment. “Many children have a helper at home that is usually from the Philippines and they communicate in English.” Mr Ferreira says that in the north of the city there is a “general disinterest in schooling”, mainly because most of the students belong to poor or dysfunctional families. Mrs Gonçalves says the standard of English among adults is sub-par. “They often know many words but have difficulty building sentences. That is a huge impediment for them to communicate effectively.” Mr Ferreira, who has worked here for five years, says there has been a big improvement in the standard of English spoken in Macau. “It’s becoming easier to communicate in English, even though it is still very difficult in the northern part of the city,” he says. “Among the youth, there are more and more people speaking English.” JUNE 2012
WHEN IN ROME M
acau’s expatriates increasingly regard proficiency in Cantonese or Mandarin as a route to a better job, and not just here, but worldwide. Architect Maia Sampaio left her job to focus on learning Mandarin. In Macau for one-and-half years only, Ms Sampaio took on Mandarin classes nine months ago. She attends classes five times a week. She says she took Mandarin rather than Cantonese because she was told it was easier to learn. “As much as I thought that for those living in Macau Cantonese is obviously more useful, later I realised that Mandarin is more widely spoken in China and would be a great asset for the future,” she says. “If I can speak Mandarin well enough, that will make me a competitive person in the Chinese market, and also in the rest of the world where people do business with China since few master the language.” Joey Nelson came to Macau from Las Vegas and plans to stay for at least for two years, working on Wynn Macau Ltd’s new casino resort in Cotai. Because Mr Nelson deals daily with
The demand for Cantonese courses for foreigners is increasing. Students are mainly foreigners working for Macau companies
Chinese contractors who cannot speak English, he decided to learn Cantonese. He signed up for a part-time course, learning the basics in classes he attends twice a week. “It helps to communicate with them. I want to learn how to say times, dates, numbers,” he says. He is still thinking about whether he will pursue his learning to the next level. “I want to see how I do first and try to absorb what I learnt.” The demand for Chinese courses for foreigners is increasing. The Jingdou Language Centre provided three courses in Cantonese and Mandarin last year, with 16 students. “There are more foreigners coming to Macau for business or work. They may be involved in businesses in the mainland while staying in Macau so, they will need Chinese to manage their way around,” a spokesperson for the centre says. The Macau Productivity and Technology Transfer Centre says demand for Cantonese courses increased by about one-third last year. The manager of the centre’s general affairs department, Rosita Gaspar, says there is more demand among expats for Cantonese courses than for Mandarin courses. “Mandarin is more spoken in the mainland. Cantonese is the local language and they want to learn it.” Students of Cantonese are mainly foreigners working for Macau companies. Most come from the Philippines, Thailand, Myanmar or the United States. The Youth and Education Affairs Bureau is also seeing strong demand for Cantonese courses for foreigners. The bureau’s language centre has so far this year held two courses in Cantonese for foreigners, with 57 students, and one course in Mandarin, with 12 students.
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June Date: Event:
August 25th – 27th
Hong Kong Gold Investment Forum 2012
Venue: Renaissance Harbour View Hotel, Hong Kong Organiser: Beacon Events Address: 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong Tel: (852) 2219 0111 Fax: (852) 2219 0112 Website: www.hkgoldinvestmentforum.com E-mail: info@beaconevents.com Date: Event: Venue: Organiser: Tel: Website: E-mail: Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
25th – 27th
7th Asian Hairdesigner Festival
Venetian Macao-Resort-Hotel Asia Hairdesigner Association (86) 21 6136 3196 www.aha06.com priscilla.liu@aha06.com 27th – 28th
SAGSE Gaming Panama
ATLAPA Convention Center Monografie S.A. Av. Alvear 1883 Loc. 21, (C1129AAA) Cdad. Aut. de Buenos Aires, Argentina (54) 11 4805 4623 (54) 11 4805 4791 www.sagsepanama.com info@monografie.com
July Date: Event: Venue: Organiser: Address: Tel: Fax: Website: E-mail:
6th – 8th
Macao Franchise Expo 2012
Venetian Macao-Resort-Hotel Macao Trade and Investment Promotion Institute World Trade Centre Building, 1st & 4th Floors, 918, Avenida da Amizade, Macau (853) 2871 0300 (853) 2859 0309 www.mfe.mo ipim@ipim.gov.mo
Date: Event: Venue:
2nd – 5th
2012 Guangdong & Macao Branded Products Fair
Macao Fisherman’s Wharf Convention & Exhibition Centre Organiser: Macao Trade and Investment Promotion Institute and Department of Foreign Trade and Economic Cooperation of Guangdong Province Address: World Trade Centre Building, 1st & 4th Floors, 918, Avenida da Amizade, Macau Tel: (853) 2871 0300 Fax: (853) 2859 0309 Website: www.guangdongmacaofair.com E-mail: ipim@ipim.gov.mo Date: Event: Venue: Organiser: Tel: Fax: Website: E-mail: Date: Event:
17th – 19 th
Asia Adult Expo 2012
Venetian Macao-Resort-Hotel Vertical Expo Service Company Ltd (852) 2528 0227 (852) 2528 0072 www.asiaadultexpo.com info@asiaadultexpo.com 20 th – 22nd
Gaming, Racing and Wagering Australia
Venue: Sofitel, Sydney Organiser: Beacon Events Address: 20/F Siu On Centre, 188 Lockhart Road, Wanchai, Hong Kong Tel: (852) 2219 0111 Fax: (852) 2219 0112 Website: www.gamingdownunder.com E-mail: info@beaconevents.com September Date: Event:
3rd – 5th
Macau Hospitality Furniture Fair 2012
Venue: Venetian Macao-Resort-Hotel Organiser: Worldexh International Co Ltd Address: 5/F, Yinhai Building, No 1 Yixin Road, Daliang Shunde District, Foshan City, Guangdong Province, China Tel: (86) 757 2238 1859 Website: www.hf-expo.com E-mail: yu@worldexh.com
If you know of an event that you believe should be listed with Macau Business, please drop us an e-mail: calendar@macaubusiness.com. In the subject bar, type in “List me as an event”. JUNE 2012
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Arts & Culture
DARK
PL ACES A RICH STEW OF THE OCCULT, MUSIC, FARCE AND MYSTERY SUPPLIES AUDIENCES FOOD FOR THOUGHT
JUNE 2012
ow often do you find yourself surrounded by problems of your own creation? For Jacob Stage and Kasper Ravnhoj, the directors and founders of Danish physical theatre company Mute Comp. Physical Theatre, it is a quirk of human nature that people like to “somehow make their lives a living hell” and that our real strength lies in “making life so much harder than it needs to be”. It is a cynical and depressing
concept that has given the two agent provocateurs endless inspiration in creating “Grasping the Floor With the Back of my Head”. This is a humorous performance where audiences are expected to find their own answers to the origin of the scores of day-to-day problems we all face. The performance is a combination of dance, theatre, live music, acrobatics and, of course, a corrosive satire on human nature and warped perceptions of reality. The 90-mintue show does not have a storyline that can be followed or understood in a linear sense. Instead, it is divided into more than 20 vignettes, incorporating drama, farce, modern dance, acrobatics, live music and ancient Nordic poetry. It was first performed in 2008 to a measure of critical acclaim, and a slew of awards have followed. The government-linked Danish Arts Foundation is among the bodies that have awarded “Grasping the Floor With the Back of my Head” for its unusual concept. “The functions of the different performers receive equal weight and
121 form a poetic synthesis,” the foundation said in the award speech. “The result is a highly professional performance.”
Occult adventures Mute Comp is at the foreground of the Danish dance theatre scene. Founded in 1999, it is known as a troupe of “unpredictable” creatives. Led by Stage and Ravnhoj, the duo has a “special ability to spot the grotesque in the ordinary” the critics have written. They manipulate everyday movements, turning them into symbolic artistic expressions, matched by the full spectrum of musical genres, theatre and contemporary dance. The company has toured in Syria, Sweden, the United States, Russia, France, Ireland, Lithuania, Egypt and Bulgaria. For “Grasping the Floor With the Back of my Head”, Stage and Ravnhoj were inspired by the 22 “trump cards” in the Tarot, the Major Arcana. The cards are anchored in equal serves of mystery and prosperity, referring to human nature and destiny.
‘The Emperor’, for example, represents accomplishment, and ‘The Fool’ is said to signify unlimited possibilities. When the card appears in reverse, it represents its opposite meaning; the reverse Emperor representing immaturity and the backwards Fool hesitation. In the idea of a reverse, perverse alternative line of thought in life, Mute Comp found inspiration. The cards symbolise stages of learning as one goes through life. The theme of the occult and the Tarot lends the performance a whiff of mystery.
GRASPING THE FLOOR WITH THE BACK OF MY HEAD COMPANY
Mute Comp. Physical Theatre (Denmark) VENUE
Macau Cultural Centre – Small Auditorium DATE AND TIME
June 29 to 30, 8pm LENGTH
90 minutes with no intermission
Musical mythology “Grasping the Floor With the Back of my Head” is also rich in colourful Nordic mythology. Danish band Valravn provides live music. They fuse rock and roll with Nordic folk tunes. They are not playing just accompaniment, but also take part
LANGUAGE
Performed in English with Chinese subtitles TICKETS
MOP140, available at the Macau Cultural Centre and Kong Seng outlets INQUIRIES
+853 2870 0699 or email enquiry@ccm.gov.mo
as musician-spectators or outright actors. Lead vocalist Anna Katrin Egilstrod’s psychedelic lyrics and defiant voice blends seamlessly with the performance. Among the ensemble in this occult circus, is Sigrid Kandal Husjord. Her work on stage brings out the dynamism and precision of dance and body movement, to express the contrast between her physical appearance as a little person, and pure honest emotions. She brings power to a portrayal of a melancholic woman’s refusal of her companion’s expressions of love, or a proud queen. She also brings hilarity to the theatre that eventually manifests in a more intense expression of misfortune and sorrow. The role won Husjord a nomination for “Best Female Performance” at the Cairo International Festival for Experimental Theatre, and the Dublin Fringe Festival. Challenging to watch? Perhaps. Complementary? Always. Mute Comp will enjoy its Asian debut in Macau. Before the curtain comes up, both performances will be complemented by two, free admission, pre-performance talks that will unveil the mysteries behind the melting pot of art that forms this unique performance. JUNE 2012
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Moments
FRIENDS, FUN... PARTY! Macau Business celebrated its eighth birthday last month. We couldn’t have made it this far without all our readers, subscribers and partners. As a sign of our sincere appreciation, we threw another of our now-customary parties, which included a raffle draw thanks to the support of our great partners. Over 200 guests joined us at Grand Hyatt poolside, in an event sponsored by Melco Crown Entertainment. We would like to extend a special thanks to: Hutchinson Macau; Morton’s The Steakhouse; Malo Clinic; CTM, SJM – Grand Lisboa; Macau Golf & Country Club; Pacific Cigar; Caesars Golf, Galaxy Entertainment Group; Sofitel at Ponte 16; Mandarin Oriental, Macau; Venetian Macao; Westin Resort Macau; MGM Macau; Wynn Macau; Grand Hyatt Macau; Melco Crown; City of Dreams – Hard Rock Hotel; and Louis Vuitton. Here’s to another eight fantastic years! Paulo A. Azevedo thanks guests for another great year
António José Menano and Gabriel Hunterton
The Macau Business team
Bina Gupta, Kylie and Cris Rogers
Frank McFadden, Mimi Chan and José Braz-Gomes
Katharine Liu and Grant Bowie JUNE 2012
Rafael Gama, Luis Melo and Nuno Calçada Bastos
Anabela Barros and Raymond Lo
123 Photos by John Si
Raymond Bell, Jonathan Lai and Dorothy Lok
Mafalda Mesquita de Melo and Katya Klikunova
Xenia Choi, Stephanie Chu and Vanessa Estorinho
Rens Breur and John Catt
Guests take the opportunity to network
Nathan Drane and Bina Gupta
Andrea Leung, Ada Chio de la Cruz and Reddy Leong
Frederico and Margarida Rato with Camila Oliveira and Pedro Cortés
Neila Chang, Li Wei and Jeniffer Chan
Niall Murray and Bolormaa Ganbold
Beth Doherty and Henry Brockman
Charles Ngai and Louisa Wong
‘Bibito’ Henrique Silva and Frederico Conde
Pedro Lobo, Muhammad Cohen and Andrew Macaulay JUNE 2012
124
Moments
Our very own Paulo A. Azevedo presents Ivone de Jesus with the Louis Vuitton prize
Andrea Leong hands the MGM Macau prize to Simon Broad
João Pedro Costa wins the prize from SJM – Grand Lisboa presented by Tiffany Chan
Mimi Chan takes home the City of Dreams – Hard Rock Hotel prize presented by Charles Ngai
José Reis hands Trevor Martin the CTM prize
On behalf of Venetian Macao, Melina Leong hands Jiji Tu the prize
Raquel Dias presents the Sofitel at Ponte 16 prize to Martin Schinder
Raymond Lo is presented the Wynn Macau prize by Katharine Liu
Lily Cheng takes home the Malo Clinic prize awarded by Nuno Teotónio
JUNE 2012
125
Emme Un receives the Pacific Cigar prize from Dickson Yip
Katharine Liu takes home the Westin Resort Macau prize presented by Stephen Winkler
Melina Leong is given the Mandarin Oriental Macau prize by Martin Schnider
Brian Cheng receives the Grand Hyatt Macau prize from Carleton Chan
The Caesars Golf prize went to Diana Massada, presented by Neila Chang
Katya Klikunova receives the Hutchinson prize presented by Derek Man
Raquel Dias gives Macy Chan the Morton’s The Steakhouse prize
On behalf of Melco Crown, Charles Ngai presents Joanne Kuai with her prize
Mark Allibone wins the Galaxy Entertainment Group prize given by Gabriel Hunterton JUNE 2012
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Moments
Photos by Greg Mansfield
TEE OFF FOR CHARITY The 5th Charity Morton’s Golf Classic was successfully held last month, gathering over 80 golfers at the Macau Golf and Country Club in Coloane. As much as MOP90,000 (US$11,250) in charity funds was raised during the daylong event that was followed by a reception and dinner at Morton’s restaurant. Proceeds were forwarded to the International Ladies’ Club of Macau and will, in turn, go towards the charities the group supports.
Third-consecutive time champs PPMS team: Phil Clarke, Phil Hornby, Sher Limbu and Mike Turner
Beautiful swing by Beth Doherty
Teams make a game of it
Players relax ahead of the play
Golfers and event organisers smile for the camera JUNE 2012
Tee ‘em up and play ‘em down
127
BROKEN RECORDS
FAILURES FIND FEET FOR FUNDS CTM, the city’s biggest telecommunications provider, suffered its second major service outage in less than 100 days last month. Thousands of mobile customers were unable to receive or make calls for about two hours. The most recent meltdown was unfortunately timed, coming just days after the company’s chief executive Vandy Poon had assured reporters that CTM had learnt its lesson after the first blackout in February. And they had. CTM restored its service much more quickly this time around. Some mobile customers told Frozen Spy that about two hours after services were restored, the company was sending through e-bills, business-as-usual style. To prove that its mobile network was fully functional, CTM made sure text message reminders about unpaid bills went out to subscribers early next morning.
Secretary for Social Affairs and Culture Cheong U is a brave man. He recently said the government would not allow the Taipa campus of the University of Macau to be used for business once the institution relocates to a new site on Hengqin Island. The newspapers reported Mr Cheong as saying the site was earmarked for “educational and cultural use”. Frozen Spy knows the city’s top officials are not allowed to gamble but we would like to offer a sporting bet that he will be proven wrong. Readers just need to be reminded of what officials once said about Coloane. It was referred to as “Macau’s green lung” and we were told that construction there would be kept to a minimum. The government was the first to launch into its destruction. It conveniently used Seac Pai Van’s public housing complex as an excuse to open the door to construction and then extended the red carpet to private developers.
HARD-HEADED SAFETY The government has unveiled a plan for scooters to have a dedicated lane on the Sai Van Bridge. The trial should begin in the middle of August and will hopefully improve safety for scooter riders and motorcyclists travelling between Macau and Taipa. The trial was announced after two serious scooter accidents, one fatal, on the Friendship Bridge earlier this year. Any move to improve road safety should be applauded but what will the change mean for traffic? Just think about the negative impact that taking out one lane of the Sai Van Bridge in each direction will have during rush hour. Let us ignore the ridiculous engineering that meant the lower deck of the Sai Van Bridge was built without adequate ventilation and lighting to handle traffic all year round. Perhaps two-wheeled traffic could be diverted there, instead of the lower deck being used just on typhoon days. But if the government really wants to improve traffic safety for scooter riders and motorcyclists, when will it approve a set of mandatory standards for motorcycle helmets, covering design and safety requirements? That should have taken place in 2007 – five years ago – but the standards are yet to be enacted. With some scooter riders happily wearing bicycle helmets for protection, everyone’s safety on the roads is at stake.
SEA-SICK BLUES For two weekends last month, the Maritime Administration ran boat tours around Macau. Demand sharply surpassed supply, as these events are one of the few opportunities most people have to get up close with the Pearl River. Although Macau is historically a fishermen’s city, there are a growing number of barriers separating residents from the shoreline. Buildings, construction sites and metal pedestrian barriers prevent people from reaching the shore. The government has mentioned several times that it wants to bring people closer to the water’s edge. Outwardly it seems to have done little to advance that idea and is instead putting up more barriers. There is a groundswell of people that feel the economic boom has damaged the city’s once laid-back lifestyle. It may yet take the sea from us too.
HISTORY REPEATS The opening date for Cotai’s new public hospital has been pushed back by three years from 2014 to 2017. Authorities say they “underestimated” the time needed to plan the project. Frozen Spy was caught off guard by this surprising announcement. How can it be that the city’s officials could not accurately forecast the hospital’s opening date in the first place? They are typically on the money when it comes to planning public infrastructure – except for the delays in building the Taipa ferry terminal, the light rail system or budgeting for the new University of Macau campus. Who should be pleased with this news is the privately owned University for Science and Technology, where the government has installed a public emergency ward and is renting the facilities. While the new hospital is being built, the university will receive an additional three-plus years of rent and the government will even take more space there to install temporary healthcare facilities.
JUNE 2012
128
Aristocrat
Page 85
www.aristocratgaming.com
Bally Technologies
Page 95
www.ballytech.com
BNU
Page 15
www.bnu.com.mo
Business Daily
Page 31
www.macaubusinessdaily.com
Canon Hong Kong
Page 19
www.canon.com.hk
Galaxy Entertainment Group
Pages 05 & BC
www.galaxyentertainment.com
Goldfish
Page 87
www.goldfishmacau.com
Icon Communications
Page 89
www.icon-communications.com
Interblock
Page 99
www.interblock.eu
Macau Cultural Centre
IBC
www.ccm.gov.mo
Macau Post Office
Page 33
www.macaupost.gov.mo
MGM Macau
Pages IFC & 17
www.mgmmacau.com
MGTO
Page 07
www.macautourism.gov.mo
Morton’s The Steakhouse
Page 65
www.mortons.com
Palatium Fine Wines
Page 61
www.palatiumwines.com
PokerStars Macau
Pages 02 & 03
www.pokerstarsmacau.com
Sands China
Page 12
www.sandschinaltd.com
Seapower Trading
Page 93
www.seapower.mo
SJM
Page 45
www.sjmholdings.com
Sports Development Board
Page 21
www.sport.gov.mo
Zung Fu Motors – Mercedes Benz
Page 01
www.zungfu.com.mo
To advertise call 28331258 or email us at pub@macaubusiness.com Go to www.macaubusiness.com/advertising for media kit
JUNE 2012