MB 99 | July 2012 by Macau Business

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

50 Economy & Finance 24 Sure thing The insurance industry is back to double-digit growth

Greater China 30 Tough job ahead Know who is who in the new Hong Kong government 34 Best buddies China is spreading its influence to neighbour Tajikistan 36 In search of a safe haven Beijing is buying up shares in Japanese firms

Transport 38 In gear, at last Bus operator Reolian survives a tough first year of operations

Property 42 Not negotiable The housing market has been hit by wave after wave of rent increases 44 Top-tier transformation After a lacklustre start, the FIT Centre’s occupancy rate is going up

JULY 2012

MB Report 50 Cosmetic surge Plastic surgery is a thriving business in Macau

Gaming 56 Cotai dawn: peninsula’s dusk? As the centre of gaming shifts to Cotai, the peninsula faces new challenges 60 Wild side “Taboo” show debuts at City of Dreams 62 Coupon revolution FutureLogic’s bet on promotional couponing systems 64 Time for fine-tuning Konami wants to increase its footprint in Macau 66 Backstage player Paltronics’ slot and media gaming systems are powering several local casinos 68 “Eurovegas” in jeopardy Las Vegas Sands is hesitating before going ahead with a casino strip in Spain 70 Pacific bet New owner for Tinian casino in the Northern Mariana Islands

78 Hospitality 72 A retreat to beat Travellers have recently picked Pousada de Coloane as one of China’s top hotels for relaxation

Business 78 Caffeine rush A number of new, hip cafes are opening their doors to coffee lovers

Environment 82 Green shoots stunted Taking the pulse of Macau’s environmental protection industry 86 Ignition switch A new study sheds light on energy efficiency in the business sector

Technology 88 Tera-disaster threat Most Macau companies see little point in disaster recovery planning

Human Resources 92 Helping hands The number of non-resident workers has again passed the 100,000 mark 98 A pregnant pause Legislators, jurists and trade union leaders call for an increase in the minimum amount of maternity leave

JULY 2012

Corporate Social Responsibility 101 Visualising a bright future Orbis celebrates its 30th anniversary with a special dinner

Arts & Culture 103 Hoards of treasure Macau is home to a few serious art and antique collectors 106 Heavenly attraction The Cultural Centre is to welcome the Cloud Gate Dance Theatre of Taiwan

Opinion 11 From the publisher’s desk Paulo A. Azevedo 13 Editorial Emanuel Graça 23 Apportioning blame José I. Duarte 29 Unbridled arrogance Bill Kwok-ping Chou 37 Couple’s counselling for the U.S. and China Yao Yang 49 China’s Afghan game plan Shlomo Ben Ami 77 Satisfy me Gustavo Cavaliere 90 The ill wind from the West Jaswant Singh 102 Nothing smart about Macau’s development Keith Morrison 108 Asia’s next axis Yoon Young-kwan

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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 Nº99

pazevedo@macaubusiness.com

Editor-in-Chief Emanuel Graça emanuel.graca@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 info@muhammadcohen.com

Beijing Correspondent Maria João Belchior

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

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Manila Correspondent Max V. de Leon

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Advertising Agents Bina Gupta bina@macaubusiness.com

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Photography António Mil-Homens, Carmo Correia, Greg Mansfield, Gonçalo Lobo Pinheiro, John Si, Manuel Cardoso, MSP Agency, Agencies

Agencies AFP, Lusa

Illustration G. Fox, Rui Rasquinho

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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 JULY 2012

A culture of crying wolf IT IS TERRIBLY DISTRESSING TO WITNESS HOW EASILY collective hysteria takes over at the smallest, alarming sign in Macau. It has an almost instant impact on stock prices, investor sentiment, the opinions of financial analysts and the media. I have a deep-rooted distrust of many analyst forecasts for Macau, specifically in the gaming sector. I have written about it more than once. I know how these studies are conducted: in a “scientific manner” that is almost as accurate as the method followed by government-sponsored studies. They lack objectivity, often because they are based on circumstantial analysis, coffee talk or mere speculation. Some members of the press have to bear responsibility for boosting the collective hysteria. They speculate too often about changes to the policy for individual travel visas or the cooling down of the mainland economy – which is real – and its impact on tourism and gaming. I understand Beijing may be worried about capital leaving the country, only to be spent in casinos. What I do not understand is why it should be worried exclusively about Macau, a part of China. It has been reported elsewhere, but not confirmed through either official channels or simple observation, that officials want to limit visas to Macau. Why would they do that and not limit visas to other gaming destinations as well? Visas can be political weapons because they have an immediate impact. But only the most distracted would think it possible that Chinese authorities would use such an instrument frequently and exclusively against Macau, as if the people with power in Beijing were masochists. I am fully aware that this type of speculation will continue. Hysteria is fought with quality information, which is, unfortunately, not always abundant. Still, the least people could do is look at the numbers, which reveal the city’s casinos are immensely profitable. Gross gaming revenue last month was MOP23.3 billion (US$2.9 billion). Sure, that was less than May’s figure but what do I care if it means a 12.2-percent increase year-on-year? Macau has posted record gaming revenue growth for years. As the figures grow, it is only natural that yearon-year comparisons of the percentage increase should narrow. That should not necessarily be translated as a slowdown in the overall rate of growth. How many years of record-breaking gross domestic product results could we expect, especially in a small city

Macau will continue to grow. It will continue to have periods where growth cools. For better and for worse, this is the centre of the gaming universe with significant structural, mind-set and legal problems? Macau will continue to grow. It will continue to have periods where growth cools. For better and for worse, this is the centre of the gaming universe. This is where massive investments are being made in industries that grow together: hotels, retail, entertainment, exhibitions and conventions. Fortunately, we live in a part of the world that tends to band together. People in the Pearl River Delta understand that we have everything to gain by growing in concert, as is the case with the regional transport network and the development of Hengqin Island. The latter is already attracting “good” and “bad” investors. Tighter surveillance is needed to avoid the usual scams and misuse of public funds that is also common in our flourishing part of the world.

The moral versus the lobby

I understand why legislators are worried about the chronic lack of information on public expenditure. The government uses only a fraction of its annual capital expenditure budget and most public projects end up costing much more than initially estimated, as legislator Ng Kuok Cheong recently pointed out. The forecast overruns occur even though the initial project budgets already include provisions for inflation, and for increased costs of manpower and materials. That is precisely why we appreciate legislator Ung Choi Kun asking for more power for the Legislative Assembly to oversee spending on big public projects. At the moment, the assembly votes on the government budget before the start of the fiscal year and again on a review of the budget at the end of the year. Greater oversight would be completely advisable under the rule of law and I mean full, not partial, supervision. Unfortunately, some legislators have a temptation to use their status to lobby the government for personal goals. Despite being censurable, it is a common practice in democracies. In Macau, it is condemnable given the city’s unique standing. Until the political system is substantially revamped, we are left to “choose the lesser of two evils”. JULY 2012

1313 13

Emanuel Graça Editor-in-Chief

emanuel.graca@macaubusiness.com

Reshuffle cabinet now CHIEF EXECUTIVE FERNANDO CHUI SAI ON has reached the middle of his term. With all signals pointing to him being re-appointed in 2014 for a second term, now is the right time for a cabinet reshuffle. The reasons are several. More than half of the government team, including Mr Chui himself, has been in power since the handover – that is, for more than 12 years. If people like Secretary for Economy and Finance Francis Tam Pak Yuen or Secretary for Administration and Justice Florinda da Rosa Silva Chan played a significant role in shaping the first 10 years of the Macau Special Administrative Region, they now seem to have neither the tools nor the will to play a similar role going into a second decade. Take the case of Mr Tam. He, alongside former Chief Executive Edmund Ho Hau Wah, was pivotal in the liberalisation of the gaming industry. He also successfully oversaw the city’s economy through a string of international crises. But 10 years since the gaming industry was opened to competition, Mr Tam has been unable to promote the city’s economic diversification. He has yet to provide a clear definition of what the government understands by “economic diversification”. Mr Tam has shown similar incapacity in bridging the gaps between employee associations and employers’ representatives. They are deadlocked in areas ranging from the enactment of a minimum wage to the revision of the labour law and the regulation of parttime jobs. Last but not least, the lack of a clear-cut imported labour policy has led many small and medium enterprises to go belly up. This is despite the monetary authority having first warned that the city had reached full employment in January last year.

Secretary for scandal Ms Chan also scored important victories for the government (and Beijing) during her 12 years in power. The most important was the regulation of article 23 of the Macau Basic Law, which calls for the enactment of anti-subversion laws. In Hong Kong, similar moves led to the resignation of Chief Executive Tung Chee Hwa in 2003. She was also crucial in ensuring the government had its way in the political reforms of 2008 and this year. The battles have taken their toll on Ms Chan’s popularity, starting among civil servants, who are

If Fernando Chui Sai On wants to leave a legacy bearing his own signature, he first needs to reshuffle his cabinet and get himself surrounded by a newer generation of officials under her portfolio. She was also hit by the case involving the perpetual lease of several plots at the São Miguel Arcanjo Cemetery, some of which were given to one of her close legal advisers. Although the graft buster found no proof of any abuse of power by Ms Chan, it said the process seemed “tailor-made” to benefit her aide. Nevertheless, shuffling out Secretary for Transport and Public Works Lau Si Io is the priority. He is the weakest link in the government. Just think of the latest scandals: CTM’s double telecom service meltdowns, followed by one from Hutchinson; the La Scala mess, with pre-sales for the luxury project authorised, although it was already known to officials that the project’s land deal would be included in a new corruption lawsuit against former Secretary for Transport and Public Works Ao Man Long; the string of traffic accidents involving public bus operator Reolian; and the decision to move a traffic safety information centre in Taipa to the wetlands nearby the Taipa-Houses Museum. The list goes on and on. All are areas under Mr Lau. When he was brought into the cabinet from the Civic and Municipal Affairs Bureau, by Mr Ho, Mr Lau was already a lacklustre official. But the times following Mr Ao’s arrest were hard, and it proved even harder to find someone above suspicion willing to fill the shoes left vacant by Mr Ao. So Mr Lau’s appointment was tolerated. Five years have passed since Mr Ao’s downfall, the scars have healed. It is time to have a “doer” commanding Macau’s public works and transport instead of a flabby official. Let there be no doubt, if Mr Chui wants to leave a legacy bearing his own signature, he first needs to reshuffle his cabinet and get himself surrounded by a newer generation of officials. These are urgently needed for areas like housing, public works and traffic management. Otherwise, Mr Chui will continue to be the caretaker of Mr Ho’s gang. And he will be remembered as the short-sighted politician unable to provide Macau with a better future, despite its huge cash reserves.

JULY 2012

TAXI START-UP FARE TO INCREASE

NATURAL GAS CLOSER TO REALITY

It is official: the government has approved a taxi start-up fare increase of MOP2.00 (US$0.25) starting this month. That means the taxi flag fall will increase to MOP15 from MOP13. The rate of MOP1.50 for every 230 metres after that is to remain unchanged. The taxi industry has slammed the start-up fare rise, saying it is insufficient to cover soaring operational costs. The last taxi fare increase took place in September 2008.

Government expected to ink natural gas distribution deal with Nam Kwong soon

The government is set to sign a natural gas distribution deal with Nam Kwong Natural Gas Company Limited soon. According to a notice published last month in the Official Gazette, Chief Executive Fernando Chui Sai On has authorised Secretary for Transport and Public Works Lau Si Io to ink the deal with Nam Kwong. In 2009, Nam Kwong won the public concession tender for natural gas distribution in Macau, but technical issues and further negotiations with the government have delayed the contract signing. The Official Gazette notice did not disclose the deal’s conditions. Supply is forecast to start early next year. The natural gas distribution network is expected to cover the whole city within five years. Meanwhile, Sinosky Energy (Holdings) Co Ltd wants its natural gas supply concession agreement revised in order to be able to hike its prices by 60 percent. The company already submitted a request to the Energy Sector Development Office.

SUBSISTENCE INDEX REVISED UPWARDS

The minimum subsistence index will go up roughly around 5 percent starting this month. For a one-member household, the value will be increased to MOP3,360 (US$420). The minimum subsistence index was last updated in January. It establishes an income ceiling for a minimum living standard in Macau, allowing people under that to apply for government support. The 5-percent increase is however not enough to cover the inflation hike that has occurred since the previous minimum subsistence index revision was enacted. From January to May alone, Macau’s inflation rate increased by 6.47 percent year-on-year.

JULY 2012

JCDECAUX’S PROFIT UP

JCDecaux (Macau) Ltd posted a MOP3.1 million (US$387,000) profit for last year, the company’s annual report shows, published last month. That represents a sharp increase over 2010, when the company recorded a MOP2.16 million profit. JCDecaux (Macau) Ltd is a joint venture between France’s JCDecaux SA and Macau-based HN Group. It has had a presence in Macau for over 10 years, having been granted a 20-year street furniture advertising concession in 2001 by the government. In 2003, JCDecaux (Macau) Ltd was officially granted the airport advertising concession. The current contract will last until 2018. Recently the company added bus body spots to its portfolio.

JULY 2012

2G MOBILE SERVICE EXTENDED UNTIL YEAR-END The move is intended to offer more time to prepare for the service phase-out

The government has postponed the 2G mobile service phase-out date, it was announced last month. Mobile telecom service providers will be allowed to offer 2G services to Macau residents until December 31. The previous phase-out date was to have been July 9. The postponement is intended to offer more time to both residents and telecom operators to prepare for the service phase-out. As of May-end, there were still over 30,000 2G service subscribers in Macau. The announcement came on the heels of a report on the 2G service phaseout measure by the Commission Against Corruption, after it received “numerous complaints” from people considering that it was unfair that they were being forced to get new 3G-compatible handsets due to the service transition. The graft buster’s report, sent to Chief Executive Fernando Chui Sai On on May 11, suggested that the government should review the arrangement for the termination of 2G services. The city’s biggest telecommunications provider, CTM, has already welcomed the move.

AIR MACAU USES PROFIT TO PAY ACCUMULATED LOSSES

Air Macau Co Ltd posted a profit of MOP250.8 million (US$31.4 million) last year, up by 8.2 percent from 2011, according to the company’s annual report, released last month. The company decided to use most of the money to cover its accumulated losses, which stood at MOP221.7 million at the end of last year. Air Macau also announced a MOP10-million special dividend to be paid to the Macau government, the company’s second biggest shareholder, for having injected MOP700 million into the airline in November.

AIRPORT COMPANY FULLY REPAYS BANK LOANS

The Macau International Airport Company Ltd – CAM has fully repaid the bank loans that it took out in order to finance airport infrastructure development back in its early stage of construction, the company announced last month. The repayment was made with the cash proceeds from the recent issuance of redeemable preference shares with a total nominal value of MOP1.95 billion (US$243 million), of which the government subscribed 66.97 percent and Sociedade de Turismo e Diversões de Macau SA (STDM) subscribed the remaining 33.03 percent. The repayments of the bank loans “have relieved the company from the burden of the loan interest, creating better conditions for new development of the Macau International Airport,” CAM said in a press release.

AIRASIA LINKS MACAU TO PHILIPPINES

Budget airline AirAsia Philippines will begin flights between Macau and Clark Freeport Zone in the Philippines on July 19. The information was confirmed last month. A report in Business Inquirer quoted AirAsia Philippines chief executive as saying that the flights will help AirAsia tap tourists from Macau to travel to the island nation’s beaches and diving spots. Previously, the budget carrier had said that it would shelve plans for daily flights to Macau, amid a maritime dispute between China and the Philippines over the Scarborough (Panatag) Shoal.

JULY 2012

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SLOWER ECONOMIC GROWTH FOR 2012 Macau’s economy is expected to report a growth of 9.8 percent this year, the Economist Intelligence Unit says The Macau economy is expected to see a growth of 9.8 percent this year and 13.5 percent in 2013, the Economist Intelligence Unit, the research unit of The Economist group, forecasts. According to its latest report, quoted by Macauhub, 2012 and 2013 are also years in which investment is expected to start falling against the previous two years.

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 Economist Intelligence Unit says an expected drop in economic growth in the mainland will impact Macau’s economic performance.

CRIME ON THE RISE FERRY TRAFFIC THREATENS WHITE DOLPHINS

Data from the Public Prosecutions Office shows the number of crime cases handled by prosecutors was up 23 percent in the first quarter of the year. Organised crime increased by a staggering 200 percent, even though the number of cases reported was considerably low, with 18 cases handled between January and March. Theft topped the list of most common crimes, with just under 1,100 reported cases. The overall number of crime cases handled by the Public Prosecutions Office was slightly over 3,500 in the first three months of the year.

JULY 2012

A Hong Kong conservation group says the increasing high-speed ferry traffic in the Pearl River Delta is contributing to a dramatic decline in Chinese white dolphin numbers. Research by the Hong Kong Dolphin Conservation Society showed that catamaran and jetfoil ferry traffic is displacing dolphins from their habitats. “In particular, since the opening of six ferry services at the Sky Pier of Hong Kong International Airport in late 2003, the dolphin number has dropped dramatically in North Lantau waters,” the society said in a statement. There are about 2,500 Chinese white dolphins in the Pearl River Delta.

STUDY ON MINIMUM WAGE YET TO COMMENCE

The long-promised study on a statutory minimum wage for all cleaning and security staff in Macau has yet to commence. This is almost one and half years after the Standing Committee for the Coordination of Social Affairs agreed to commission the research as part of its on-going discussions on the establishment of a statutory minimum wage for Macau. The research has yet to begin and the government is not sure when it will, English-language newspaper Business Daily reported last month. At present the city only has a minimum wage for employees of cleaning and security companies contracted by the government. The study is set to take at least one year.

JULY 2012

TASKFORCE TO STUDY FOOD INFLATION

The government announced last month the creation of a cross-departmental task force to study food price inflation and suggest ways to better tackle it. For the 12-month period ending in May, the average Composite Consumer Price Index, Macau’s gauge for inflation, increased by 6.40 percent from the preceding period. The task force, led by the Economic Services Bureau, also includes representatives from the Civic and Municipal Affairs Bureau and the Consumer Council.

FORMER MACAO DRAGON WORKERS TO GET PAID

BEIJING GIVES POLITICAL REFORM THE THUMBS UP The Standing Committee of the National People’s Congress has approved Macau’s political reform plans

Last month, the Standing Committee of the National People’s Congress approved Macau’s political reform plans. This is the final stage in the process. The political reform will increase the number of directly elected and indirectly elected members of the Legislative Assembly by two each, and raise the number of members of the committee that elects the chief executive from 300 to 400. This is the first time Macau has revised the selection method of the chief executive and the election method of the Legislative Assembly. Now, the government will submit bills to the Legislative Assembly to revise the election laws accordingly. The next election for the Legislative Assembly is scheduled for 2013, while the next chief executive will be chosen in 2014.

Around 70 former workers from Macao Dragon, the bankrupt ferry company, last month saw a Hong Kong court order the payment of the HK$7.4 million (US$954,000) they are still owed. The money will come from the sale proceeds of Macao Dragon’s two catamarans, South China Morning Post reported. The vessels were sold in March for HK$80 million each. Other creditors, including the Macau branch of the Bank of China, which advanced Macao Dragon two HK$160 million loans to buy the ferries, will share the remainder of the sales proceeds after legal fees and other related costs are settled. Macao Dragon ceased operations in September 2011, after just 14 months of service.

MIF TO EXPAND IN SIZE

This year’s Macao International Trade and Investment Fair, or MIF, is expected to post a 14-percent increase in the number of booths. A total of 1,600 booths will be set up covering an exhibition area of over 30,000 square metres. Nepal, Indonesia and Vietnam will join the event for the first time. A total of 120 booths at discounted prices will be available in the Macau Small and Medium-Sized Enterprises’ Exhibition Zone. Applications are open until July 23. This year’s MIF will be held from 18 to 21 October, once again at the Venetian Macao. The event is organised by the Macao Trade and Investment Promotion Institute.

JULY 2012

IN SEARCH OF GROWTH

Macau’s meetings, incentives, conventions and exhibitions (MICE) industry continues to fight for better days. The latest data available shows the number of events held here has again dropped

OVER 3,300 FINED FOR SMOKING

A total of 3,310 people were fined in the first five months of the year since a wide smoking ban was enacted in January, according to a government press release. Close to 1,250 of those fined were tourists. Bars and videogame parlours were the places where more infractions were detected. The fine for smoking in a restricted area ranges from between MOP400 (US$50) and MOP600.

HOME LOANS UP

271

The number of MICE events held in Macau in the first three months of 2012, down by 2 percent year-on-year. The majority were meetings, with just 12 exhibitions held

26%

The year-on-year rise in the number of people who attended MICE events held in Macau during the first quarter, to just under 162,000. Around two thirds were exhibition-goers

The share of professional buyers among the overall attendance of Macau-held exhibitions

2.1

SOURCE: STATISTICS AND CENSUS SERVICE

The average duration, in days, of the MICE events held in Macau in the first quarter of 2012, down by 0.1 days in comparison with one year before

129

The number of commerce, trade and management-related MICE events held in Macau from January to March. They topped the list of MICE events by subject. Health was a distant runner-up, with 31 events held

MOP24.65 million

Expenses associated with the organisation of 11 of the 12 exhibitions held in Macau during the first quarter of 2012. Revenue amounted to MOP3.53 million, coming mostly from exhibition booth rentals – 76 percent of the total

JULY 2012

The monetary authority has started to disseminate mortgage loan statistics on a monthly basis. The first monthly data set, regarding April, shows new residential mortgage loans approved by Macau banks grew 2.5 percent month-to-month to MOP2.8 billion (US$350 million). New commercial real estate loans declined by 59.5 percent to MOP1.5 billion.

INVESTING LESS IN THE MAINLAND

Macau’s foreign direct investment in the mainland dropped by more than onethird year-on-year in the first four months of 2012. According to media reports, investments made between January and April dropped by 34.7 percent, to just US$130 million (MOP1.04 billion). In the first four months of 2012, mainland authorities approved 82 investment projects by Macau companies and institutions, down by 8.9 percent from the same period last year.

23 JOSĂ&#x2030; I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - jid@macaubusiness.com

Apportioning blame GOVERNMENT POLICY, OR THE LACK OF IT, PLAYS ITS PART IN CAUSING PRICES TO RISE nflation is a recurrent topic. Every month, when the latest data becomes available, we read and listen to comments or complaints about rising prices. Almost as often, we listen to references to rising prices in the mainland, especially prices of food, and how they influence inflation here. This then leads to discussion of the appreciation of the renminbi against the U.S. dollar, to which the pataca is indirectly pegged. This appreciation is said to reinforce the upward pressure on prices here, as the city imports most of its groceries from the mainland. In the face of all this, the government immediately proclaims that it is worried about inflation and will strive to protect the people from the ravages of rising prices. Certainly, prices have shown a persistent upward trend lately. At times, the inflation rate seems to be accelerating. These are realities. We must accept that inflation has reached a rate that harms some sectors of society. This is a reasonable matter of concern. I could end this commentary here, concluding that the city has a serious inflation problem, that the causes are well understood and that the government is doing what it can to mitigate the effects. But things are not that simple. First, the rate of inflation is not trivial, but it is not too high by historical or international standards. Besides, bearing in mind rising incomes, one can reasonably expect that the real income of many residents has increased in the past few years. So the rate of inflation requires attention, but not yet urgent attention. Many have forgotten that the inflation rate was higher just before the global financial crisis. In early 2008 it was over 9 percent, a good three percentage points more than the most recent figure.

Erring on the upside Second, the causes of price rises here are more complex than just the cost of food in the mainland and the exchange rate of the renminbi. If prices in the mainland or the renminbi rise, no doubt the cost of imports will follow. And import costs are bound to affect domestic prices. But the transmission is less mechanistic than many assume. Increases in domestic demand as the population and incomes soar put upward pressure on prices. This pressure is strengthened by increases in demand from visitors as their numbers rise. These increases in demand cause prices to rise because in most sectors of the economy supply is slow to catch up. There are periods of relative scarcity of some goods, when prices inevitably rise. Plus, monopolies and oligopolies abound here, and the markets in several sectors are prone to err on the side of, say, rising prices. Even a cursory glance at the data can detect that the links between the prices of goods in the mainland and in Macau are not as strong and immediate as many assume. Prices in any given category of goods tend to rise faster

on this side of the border than in the mainland. In some cases, declines in prices in the mainland are felt here only weakly. In other words, the behaviour of prices here appears to more often reflect domestic factors than import costs.

Made in Macau Government action to counter the effects of inflation has been limited mainly to the indiscriminate distribution of vouchers or money. This is a poor way to fight inflation. Not only does it fail to undo the causes, it perversely contributes to inflation. Handing out money increases aggregate demand, and increasing aggregate demand is not in any economistâ&#x20AC;&#x2122;s prescription for curing inflation. Rising domestic business costs are also putting pressure on inflation. They squeeze the profit margins of companies, which then try to pass on the increases to consumers by means of higher prices. The rise in labour costs in particular is linked to a restrictive government policy and slowness in responding to changes in the economy. Also adding to domestic inflationary pressure are increases in rents, linked to a housing policy that is ill-suited to demographic changes and housing policy measures so long in coming that they actually cause scarcities in the types of housing people need. In sum, a good deal of the upward pressure on prices is linked to purely domestic problems that could and should be solved by timely and appropriate government action. Prices in the mainland, import costs and the exchange rate undoubtedly play a role in inflation. But the persistence of inflation and perhaps its severity can be traced back to policy failures. By accident or design, by commission or omission, government policy and policy measures play a big part in inflation here. JULY 2012

Economy & Finance

Sure thing

Insurance is one industry that is benefitting from the city’s economic boom

sually out of the spotlight, the insurance industry is expanding fast. After taking a hit during the global financial crisis, growth rates in premium income are back to double digits. In the first three months of this year, combined gross premium income grew by 20 percent, data from the Monetary Authority of Macau shows. The authority is the regulator of the insurance sector. Authority chairman Anselmo Teng Lin Seng says growth has been “closely correlated to the economic level of the region and disposable funds of the residents”. The industry is one of the net beneficiaries of the gaming-led boom, which has pushed up demand for insurance, whether life insurance or non-life insurance. In the authority’s annual report for last year, released last month, Mr Teng says: “In the face of uncertainties exhibited in the overseas market environment, practitioners insisted on prudent business operation attitude”. Combined gross premium income was MOP4.35 billion (US$544 million) last year, 15.4 percent more than a year before.

In contrast, the global financial crisis meant the premium income of life insurance companies, which accounts for most of the industry’s business, contracted by almost 8.5 percent in 2009. The premium income of life insurers is now growing again, and the growth is accelerating. Premium income last year was MOP3.14 billion, 16.8 percent more than the year before. In the first quarter of this year it was 23 percent more than the same time 12 months earlier. The premium income of non-life insurance companies has also grown since 2009. It rose by 11.8 percent last year and 16.7 percent in 2010. The premium income of all kinds of nonlife insurance grew last year, that of motor insurance increasing by 33.4 percent and that of fire insurance by 22.4 percent.

Big fish, small fish The growth in premium incomes for motor insurance followed the imposition of new rules that increased the limits on thirdparty liability, leading to an increase of up to 40 percent in premiums in June last year.

INSURANCE INDUSTRY COMBINED GROSS PREMIUM INCOME, 2009-2011 2009

2010

Amount

%Change

Amount

MOP2.33billion

-8.5

MOP2.69billion

Non-life MOP0.93billion

3.8

MOP3.26billion

-5.3

Life

Total

Note: Figures for 2011 are provisional JULY 2012

2011 %Change

Amount

%Change

15.2

MOP3.14billion

16.8

MOP1.09billion

16.7

MOP1.21billion

11.8

MOP3.78billion

15.6

MOP4.35billion

15.4

Source: Monetary Authority of Macau

The premium income of motor insurance increased by 33.4 percent last year

25 Combined gross claims amounted to MOP1.5 billion last year, 6.2 percent less than a year before. Claims on life insurance policies accounted for nearly three-quarters. The result was that insurers made a combined net profit of MOP206 million. This was 41.7 percent lower than in 2010 because of a drop in sundry income. Macau has 23 licensed insurance companies, 11 of them life insurers. Most are arms of foreign insurers, with just eight being incorporated here. Foreign insurers have more than 70 percent of the market. American International Assurance Co Ltd (AIA) is the market leader. It had 28.5 percent of the combined gross premium income last year. AXA China Region Insurance Co (Bermuda) Ltd was a distant second, with 10.5 percent, followed by China Life Insurance (Overseas) Co Ltd, with 8.7 percent. But there are some fast-growing small players. Companhia de Seguros Fidelidade-Mundial SA had only 1.8 percent of the life insurance market last year but its business volume was 93.6 percent larger than the year before. It is the Macau branch of Portuguese insurer Companhia de Seguros Fidelidade-Mundial, part of the Caixa Geral de DepĂłsitos group, which also owns Banco Nacional Ultramarino (BNU). The city had more than 3,200 authorised insurance intermediaries at the end of last year, including individual agents, salesmen and brokers. The insurance industry employed nearly 450 people.

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In recent years the industry has been climbing the value ladder. Last year alone the monetary authority approved 64 new kinds of policies. The authority has drawn up amendments to the law on insurance and reinsurance, and is in the process of drafting amendments to the law on intermediaries. As the industry has grown, so has the number of complaints about it. The monetary authority received 95 complaints last year, four more than the year before. Most were about employeesâ&#x20AC;&#x2122; compensation insurance and motor insurance. Last year, the authority enhanced the minimum requirements for preparing life insurance policy illustrations. From this month the regulator will approve new life insurance policies only if the insurance company explains clearly to the policyholder how much he or she has to pay, and only if it tells the policyholder about the past performance of its policies. Insurers have until the end of October to ensure that policies it has already written meet these requirements.

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rivate pension fund management is a growing part of the insurance industryâ&#x20AC;&#x2122;s business. There were 40 open pension funds and five closed pension funds registered with the Monetary Authority of Macau at the end of last year. They were used to finance more than 700 pension schemes set up by individuals and corporate entities, this number having almost doubled since 2007 as demand from small and medium enterprises grew. The assets managed by the pension funds amounted to nearly MOP7 billion (US$875 million) at the end of December, 12.9 percent more than a year before. The number of people covered by private pension schemes rose by 12.8 percent last year to over 90,000, 85.8 percent of whom were resident workers. This meant 30.6 percent of the workforce in the private sector was covered by some kind of private pension scheme. JULY 2012

Economic Trends by José I. Duarte Real estate

GRAPH 1 - Suply of residential and business units Number of units

Residential units

Business units

210,000 190,000 170,000 150,000 130,000 110,000 90,000 70,000 50,000

Real estate is one of the hottest sectors in Macau. It has been characterised by rising prices for all kinds of properties, across numerous locations and by the significant development of luxury homes – a market segment that did not exist until recently. With a growing population and higher average incomes, the trajectory on property prices is not surprising. The upward pressure on prices associated with that natural increase in domestic demand is further exacerbated by two factors, both of which are largely controllable: external demand and supply. In both cases, authorities have failed to anticipate their effects and act accordingly. GRAPH 1

30,000 2004

2005

2006

2007

2008

2009

2010

2011

GRAPH 2 - Residential units by geographical area Coloane

Taipa

100% 98% 96% 94% 92% 90% 88% 86% 84%

Macau

Graph 1 shows that between 2004 and the end of last year there was a net increase of 17,000 residential housing units, a rise of 9.6 percent. In the same period, the population rose by more than 20 percent. It is obvious that supply did not follow, much less anticipate, demand. The gap was only accentuated by the fact that some flats were bought by overseas investors. No public policy or planning was put in place to deal with the foreseeable effects of the situation. We also know that many new residential buildings built since 2004 were not meant for the mass market but sold to buyers seeking luxury homes. The tale told by tracking new business units is not much different. The economic boom has led to the net creation of more than 20,000 companies between 2004 and the end of last year. The number of places that houses them dropped in absolute terms, albeit marginally. GRAPH 2

82% 80% 2004

2005

2006

2007

2008

2009

2010

2011

GRAPH 3 - Vacant residential units as percentage of residential supply

12%

The geographical area with the highest percentage rise in residential units was Taipa. Between 2004 and last year, housing in Taipa increased by about 18.4 percent. On the peninsula, the number of homes increased by about 8.3 percent. Even after such a substantial increase, by the end of last year, the stock of homes in Taipa stood at less than 15 percent of Macau’s total. Most homes are on the peninsula, with an 85-percent share of the city’s supply of housing. Coloane is a marginal market with about 1,200 units – a tiny drop in the total housing stock of about 195,000 residential units at the end of last year. GRAPH 3

Despite the pressure on home prices, the percentage of vacant residential units is significant. It is currently well below the statistic recorded in 2004, when they represented 11.5 percent of the market. At the end of last year, it was 6.4 percent. Given the tight supply of homes, that number is significant.

0% 2004

2005

JULY 2012

2006

2007

2008

2009

2010

2011

Manufacturing

GRAPH 4 - Value of merchandise exports by major categories (MOP million)

Total merchandise exports

Garment

Other textile products

25,000

The death of the city’s manufacturing sector has been anticipated many times. It seems to be drawing closer, although the end may come later than might have been expected. GRAPH 4

20,000

15,000

10,000

5,000

0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

GRAPH 5 - Value of merchandise exports to leading markets United States

(MOP million)

European Union

Mainland China

Hong Kong

Other markets

12,000 10,000

Manufacturers of garments and other textiles have managed to resist the complete shutdown of their factories for a few years since the international trade in textiles was liberalised in 2005. But 2009 seems to have been the real beginning of the end, as hinted by merchandise exports. The analysis includes data for another two, full years and there is no signal of a recovery. The sector is withering slowly, bringing with it the entire merchandise export sector. After an initial shock in 2005, with the removal of the international garment trade quota system, overall merchandise exports underwent a somewhat surprising recovery in 2006 and 2007. Then came a sharp fall, mainly pushed on by a drop in garment exports of more than 90 percent in just four years. Exports of other textile products, which were always a small fraction of textile exports, have now dropped to almost negligible levels, not even reaching MOP270 million (US$33.75 million) last year. GRAPH 5

The overall decline in manufacturing and in merchandise exports, translated into a contraction of sales to all of Macau’s major export markets, except Hong Kong. Worst affected were the United States and Europe. The total value of annual exports to the U.S. dropped from between MOP9 billion and MOP11 billion between 2003 and 2006, to about MOP556 million last year. Exports to the European Union fell from over MOP4 billion to less than MOP400 million last year.

8,000 6,000 4,000 2,000 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

GRAPH 6 - Share of merchandise exports by leading markets United States

European Union

Mainland China

Hong Kong

100%

80%

Other markets

GRAPH 6

The collapse of demand from the U.S. and Europe is expressed in this graph, where the relative shares of “made in Macau” merchandise sales by destination market are plotted at five-year intervals. From being Macau’s biggest markets, the combined share of exports to the U.S. and E.U. has dropped from almost threequarters of all exports in 2001 to just 13.5 percent last year. The biggest shares belong now to what used to be marginal markets, namely the mainland and Hong Kong. Hong Kong alone took almost 45 percent of all exports last year.

60%

40%

20%

0% 2001

2006

2011

JULY 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 Oct - Dec 2011

29.1 20.7 26.2 18.0

2.1%

Median monthly employment earnings

MOP 10,000

Employed population

339,800 72.9%

11.1 5.5 percentage 1.5 points

Unemployment rate

Labour force participation Non-resident workers (end-balance)

94,028

2011-end Domestic loans to private sector

MOP 161.9 billion

Resident deposits

MOP 291.6 billion

Foreign exchange reserves*

MOP 272.4 billion

5.8%

---

2.0% MOP 11,000

27.7 22.7 43.2 percentage 2.5 points

2011

Year-on-year change (%)

Exports

MOP 7.0 billion

Imports

MOP 62.3 billion - MOP 55.3 billion

0.2 41.2 --

2011

Year-on-year change (%)

Trade balance

Public accounts MOP 112.7 billion

Total expenditure

MOP 49.0 billion

Balance

MOP 63.7 billion

41.5 44.9 29.7 --

2011

Year-on-year change (%)

Total revenue - Tax revenue from gaming

MOP 99.7 billion

Utility consumption Water Electricity Gasoline Liquefied Petroleum Gas Natural Gas

70.5 million m3 3,857 million kWh 81.7 million L 42,908 tons 73.6 million m3

5.1 5.5 9.3 5.3 -52.4

Notes Jan-Mar 2012 Jan-Mar 2012 ---

Year-on-year change (%)

Latest

Year-on-year change (%)

External merchandise trade

27.5 18.4 ---

MOP 70.5 billion

24.0

Money and prices

Inflation rate (full year)

MOP 78.9 billion

Year-on-year change (%)

-0.6 percentage points

Year-on-year change (%)

Latest

-0.6 percentage points

Notes Mar-May 2012

337,200 71.9%

14.6 4.5 --

Mar-May 2012

100,922

20.1

May 2012

Latest MOP 165.7 billion

Jan-Mar 2012 Mar-May2012

Year-on-year change (%)

Notes

6.8%

16.8 18.4 -percentage 1.6 points

Latest

Year-on-year change (%)

MOP 309.7 billion MOP 130.3 billion

MOP 3.3 billion MOP 28.9 billion - MOP 25.6 billion

Latest

18.8 26.8 -27.9 Year-on-year change (%)

MOP 35.1 billion

21.6 25.2 21.9 21.4

Latest

Year-on-year change (%)

MOP 50.6 billion MOP 44.0 billion MOP 15.5 billion

23.1 million m3 6.5 1,165 million kWh 13.5 27.0 million L 8.3 16,390 tons -4.3 -- million m3 -100

Apr 2012 Apr 2012 Apr 2012 May 2012

Notes Jan-May 2012 Jan-May 2012 Jan-May 2012

Notes Jan-May 2012 Jan-May 2012 Jan-May 2012 Jan-May 2012

Notes Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012

Transport and communications 2011-end Licensed vehicles - Automobiles - Motorcycles Mobile telephone users Internet services subscribers

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

209,455 97,144 112,311 1,447,154 216,151

Year-on-year change (%)

5.1 6.0 4.3 16.6 17.4

* A new fiscal reserve system was introduced in January 2012, impacting the way foreign exchange reserves are accounted for JULY 2012

Notes Apr 2012 Apr 2012 Apr 2012 Apr 2012 Apr 2012

Source: Statistics and Census Service and Financial Services Bureau

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

Unbridled arrogance THE POLITICAL REFORM PROCESS AGAIN DISPLAYED MACAU’S GOVERNANCE AT ITS BEST: HIGH-HANDED AND DECEITFUL recently submitted two petitions to two public institutions, both related to the political reform process that ended last month. The way both petitions were handled shines light on the how the government governs: with arrogance and a penchant for trying to deceive citizens, in general, and the media, in particular. In April, I tried to hand in a petition to government-controlled television broadcaster TDM. The petition protested against its Chinese channel’s failure to be objective in reporting on the political reform process. TDM newscasts were unbalanced. They were heavily biased in favour of the government’s political reform proposals, even when all options were still open and the topic was being intensely debated. For instance, most of those interviewed by TDM’s Chinese channel, academics and ordinary citizens alike, supported the government’s proposals to increase the number of directly elected and indirectly elected members of the Legislative Assembly by two each, and to raise the number of members of the committee that elects the chief executive from 300 to 400. TDM seldom broadcast dissenting voices during the process, which ended with the government’s proposals being approved last month by the Legislative Assembly.

News misjudgement When I arrived in April at TDM headquarters to deliver my petition, I was kept out by the security guards. I later tried to hand in the petition during a protest march on Labour Day. A TDM public relations official came down to meet me and agreed to pass my petition to the management. However, she declined to comment on the petition on behalf of TDM. Later, talking to reporters, the head of news on TDM’s Chinese channel, Lo Song Man, rejected any criticism but, strangely, never directly mentioned my petition. She asserted that TDM’s coverage of the political reform process had been unbiased and accurate. That assertion was wrong. For instance, TDM was selective in its coverage of the results of a public opinion survey by the University of Hong Kong, which showed that the government’s political reform proposals lacked mainstream appeal. The results showed that fewer than half of those polled were in favour of the government’s proposals, and TDM failed to highlight this properly. Ms Lo tried to rebut accusations of bias in TDM’s news coverage with flat denials. She explained that on the day of reporting the public opinion survey news, she had to meet visitors and did not oversee the news editing process. This work attitude is irresponsible. She should not have met the visitors if the meeting caused her trouble in overseeing the editing of the news. If this is her priority then she should even quit her job as head of news. She also said that news coverage on public opinion surveys is

difficult. If so, training for TDM journalists should be stepped up. But if those in charge of news at TDM cannot see the relevance of an item of news, they are not qualified to do their jobs and they should quit.

Unusual suspect My second petition was in protest of the handling of a case involving a person arrested by the Judiciary Police for painting graffiti. The graffiti was painted in May and carried a message against the government’s political reform proposals. The graffiti artist was later released because the Public Prosecutions Office deemed that the protester could not be charged with any chargeable felony. Painting graffiti is a misdemeanour punishable only with a fine. In what can be considered a case of political repression, the Judiciary Police clearly abused their powers by illegally arresting a protester. I sent in my petition electronically to the Judiciary Police on May 9, and later that day received a phone call from the force’s public relations staff. I was told that the Judiciary Police director, Wong Sio Chak, would like to meet me the following afternoon. The next day, just a couple of hours before my appointment, the Judiciary Police public relations staff rang me again. I was told that the meeting with Mr Wong had to be postponed until the following day, as he had to attend an important appointment. I had a meeting with some reporters, which I had arranged beforehand, and I told them about the rescheduling of my meeting with Mr Wong.

Police response time Surprise, surprise, later that day Mr Wong unexpectedly held a press conference. Reports in the news media said he gave an assurance that he would still meet with me to discuss my petition. It was not to be. Early the next morning, I received a text message from the Judiciary Police public relations staff telling me that Mr Wong would not be able to make it. He had told the news media only the day before that he would discuss the Judiciary Police’s handling of the graffiti case with me. But Mr Wong went back on his word. Was he deceiving the news media and the public at large? At his press conference, Mr Wong said the Judiciary Police dealt with the graffiti case according to usual procedures. He insisted that the way the force had handled the case had not been politically coloured. But the Judiciary Police should know by now that painting graffiti is not a chargeable felony, if arresting graffiti artists and transferring the suspects to the Public Prosecution Office has been their usual procedure for past similar cases. So why did they still arrest the graffiti artist this time? It seemed they were trying to pull the wool over the public’s eyes. JULY 2012

Greater China

TOUGH JOB AHEAD BY MARY ANN BENITEZ* IN HONG KONG

JULY 2012

Meet the faces of the new Hong Kong government

ew Hong Kong Chief Executive Leung Chun-ying didn’t get his wish for a revamped government structure in time for his July 1 ascension and anointment to the leadership post. That reform has yet to pass muster of pan-democrats at the Legislative Council. So as he took over from disgraced Donald Tsang Yam-kuen, Mr Leung presented his cabinet of one woman and 14 men. With the exception of three ministers from the private sector, the senior officials of the fourth term of government are mostly a mix of political appointees or veteran civil servants who served in Mr Tsang’s government, aged between 48 and 63. There was little surprise as their names had been widely circulated in the media in the weeks before the team was announced on June 28.

THE LINE-UP The only rose among the thorns, she was secretary for development in Donald Tsang’s government. Aged 55.

Carrie Lam Cheng Yuet-ngor Chief Secretary for Administration

“I agree with him [Chief Executive Leung Chun-ying] that we should listen to the people, whose collective wisdom is invaluable. I aspire, like him, that we will build a more inclusive society by striving for greater consensus... The road ahead is going to be rugged. But with a passion to serve, and faith in the people of Hong Kong, I will soldier on.”

He served in the same post in the previous government, having been ﬁrst appointed in July 2007. Before joining the political team in 2003, he had served the government as an administrative ofﬁcer since November 1982. Aged 61.

John Tsang Chun-wah Financial Secretary

“I will not hesitate to spend where and when spending is called for... The government will need to take the lead in promoting economic development in order to raise our city’s overall competitiveness... I shall focus my attention on the key issues of housing and land.” JULY 2012

THE LINE-UP

Rimsky Yuen Kwok-keung Secretary for Justice

Mr Yuen was appointed senior counsel in 2003 after 15 years of practice. He specialises in civil litigation, especially commercial disputes. Aged 48.

He served in the Hong Kong Hospital Authority for more than ten years and has rich experience in the administration of public medical service. Aged 55.

“I appreciate that there are different views about my previous position as a member of the 10th Session of the Chinese People’s Political Consultative Conference (Guangdong). I believe that my previous role as a CPPCC member will not have any adverse impact on the discharge of my duties as the secretary for justice. In any event, along with my resignation from my other public commitments, I have already tendered my resignation as a CPPCC member and my resignation has already been accepted.”

“I will strive to ensure the proper functioning and continued development of the twin-tracked public/private health-care system. Urgent matters that need to be addressed include the long waiting time for patient consultation and special investigations, as well as manpower and workload pressure in public hospitals. In the area of food supply, it would be important to work closely with major supplying areas including the mainland.”

Ko Wing-man Secretary for Food and Health

An architect by profession, he has been promoting green building and building energy efﬁciency over the past years. Aged 48.

He is a former democrat legislator and was the president of the Hong Kong Institute of Education. Aged 59.

Anthony Cheung Bing-leung Secretary for Transport and Housing

“I believe in a balanced approach in housing policy. Within the public sector, we should explore the room to speed up construction of housing units... In the next few years we should consolidate the progress made [on transport infrastructure projects] and achieve a good synchronisation of various modes of transport.”

Wong Kam-sing Secretary for the Environment

He previously held top positions in human resources management in a number of leading multinational corporations. Aged 59.

He was the permanent secretary for labour and welfare under the previous Donald Tsang government. Aged 56.

Paul Tang Kwok-wai

“We will stand ready to defend and protect civil servants if they come under unfair criticism and also resist the politicisation of the civil service. In the next five years, I hope to see that the morale of the civil service would be enhanced.”

“I look forward to engaging the public for consolidating Hong Kong’s green city blueprint. The emphasis is to set the target and update it, together with a road map, so that we can have action-oriented, step-by-step plans for all to contribute towards our common ‘green’ goal.”

Eddie Ng Hak-kim Secretary for Education

Secretary for the Civil Service

“With the education reform, with a new focus on multi-dimensional learning and multi-pathing in terms of further education and the workplace upon graduation, we believe that Hong Kong would be able to aim at not only just being a good talent ground but also a strong talent city. It is particularly important as well that our students will have a much wider scope for their future dreams and be able to make their dreams come true.” He was previously the under secretary for security. Aged 60.

As he took over from disgraced Donald Tsang, Leung Chun-ying presented his cabinet of one woman and 14 men. There was little surprise as their names had been widely circulated in the media

JULY 2012

Lai Tung-kwok Secretary for Security

“The Security Bureau is responsible for wide range policy objectives, from maintenance of law and order, exercising effective and efficient immigration and customs control, rehabilitating offenders and drug abusers, and providing swift and reliable emergency fire and rescue services. These services are essential in the modern society, and amongst the core of Hong Kong’s positioning as Asia’s world city.”

33 He held the same post in the previous government. Previous to that, he was dean of business and management of the Hong Kong University of Science and Technology. Aged 55.

K. C. Chan Secretary for Financial Services and the Treasury

“If there is one difference between now and then, it is that I have gained very valuable experience in government, and I am more than ever clearer about the policy objectives in my policy portfolio... More importantly, we will continue to position Hong Kong as our country’s most competitive global financial centre, and develop Hong Kong as the offshore renminbi centre to support our country’s strategy in renminbi internationalisation and capital market development.”

He was ﬁrst appointed secretary for constitutional and mainland affairs in September last year. Chief Executive Leung Chun-ying reappointed him. Aged 48.

Raymond Tam Chi-yuen Secretary for Constitutional and Mainland Affairs

Mr Tsang was engaged in journalistic work for nearly 30 years. He held the same post in the previous government. Aged 63.

Before joining the government, Mr So was a practicing solicitor. He held the same post in the previous government. Aged 53.

Gregory So Kam-leung Secretary for Commerce and Economic Development

“I pledge my utmost effort to introduce an array of timely and impactful measures as early as possible in light of the global, regional and local environment to accelerate economic growth and to continue to enhance Hong Kong’s competitiveness.”

He served as permanent secretary for development (works) from July 2007 until June 2010, when he retired. After retirement, he was appointed team leader of the Sichuan reconstruction team in the Development Bureau. Aged 62.

Mak Chai-kwong Secretary for Development

“Hong Kong has undergone a period of high-speed growth in the past halfcentury; we are now a mature economy and a diverse city. We are moving ahead to quality and sustainable development. I agree with [Chief Executive Leung Chun-ying] manifesto on ‘seeking changes while preserving stability’.”

“As I mentioned nine months ago when I took up the same post, I deeply understand that the tasks ahead are very challenging, difficult and sensitive, and that the public hold high expectation over them... Seeing from now, the priority tasks include... to conduct various consultative and legislative work for implementing the election of the chief executive by universal suffrage in 2017... [and to] pave way for the election of Legislative Council members by universal suffrage in 2020.”

Tsang Tak-sing

“My priority is to strengthen district administration, to have a better grasp of public opinions and community sentiments, so that the government will be able to keep pace with changes of the society and to meet the needs of the community.”

Secretary for Home Affairs

OTHER PRINCIPAL OFFICIALS

Simon Peh Yun-lu Independent Commission Against Corruption Commissioner

Tsang Wai-hung

David Sun Tak-kei

Commissioner of Police

Director of Audit

Chan Kwok-ki Director of Immigration

He held the same post in the previous government. He was ﬁrst appointed in 2007. Aged 61.

“Poverty alleviation, enhancement of elderly care, protection of labour rights and fostering harmonious labour relations will rank very high on my agenda.”

Clement Cheung Wan-ching

David Sun Tak-kei

Commissioner of Customs and Excise

Director of Audit

Edward Yau Tang-wah Director of the Chief Executive’s Office

Matthew Cheung Kin-chung Secretary for Labour and Welfare

* COPY EDITOR OF THE STANDARD HONG KONG NEWSPAPER JULY 2012

Greater China

Best buddies

China’s influence grows in poor neighbour Tajikistan BY AKBAR BORISOV*

xtending credits worth almost US$2 billion (MOP16 billion), mighty China is spreading its influence to its poor ex-Soviet neighbour Tajikistan in the hope of winning mineral riches and a loyal strategic ally. Tajikistan is the poorest nation to have emerged from the USSR’s collapse, with a gross national income per capita of US$780 per year and around 40 percent of GDP coming from remittances from migrants working abroad, according to the World Bank. Yet the mainly Muslim nation is no longer looking to its ex-Soviet master Moscow to provide crucial assistance in building infrastructure but China with whom it shares a 500-kilometre border across the Pamir Mountains. Analysts say China’s economic largesse is winning the modern day version of the 19th century Great Game in Tajikistan as the West, Russia and Beijing jostle for influence in states neighbouring conflict-wracked Afghanistan. On a visit to China by Tajikistan President Emomali Rakhmon last month, the two sides signed agreements for Beijing to extend US$1 billion to Dushanbe in grants and credits. Some US$600 million alone would go towards building a cement factory. “Relations with China have the position of priority in Tajikistan’s foreign policy,” Mr Rakhmon told Chinese President Hu Jintao, quoted by his press service. This new credit came on top of the US$900 million that China has been disbursing since 2005 to help Tajikistan build new roads, tunnels and electricity lines.

annual gold production to five tonnes in 2016 from the current 1.3 tonnes. According to Tajik political analyst Abdugani Mamadazimov, China wants to see a stable and prosperous Tajikistan, especially as the country borders China’s restive Xinjiang Uighur Autonomous Region, home of the Uighur minority. Beijing also sees Tajikistan as a key transit point for receiving gas supplies in the future from Iran for its energy-hungry population, he adds. “China wants stable and peaceful neighbours... By investing in projects in Tajikistan, China is determining its interests.”

Hope for a better future Cooperation with China represents Tajikistan’s best hope of economic and political stability as it recovers from the civil war that threatened to make it a failed state after the fall of the Soviet Union. It offers the country a chance to develop new sources of income, away from its traditional reliance on production of cotton and aluminium, and the remittances from labour migrants. JULY 2012

Preferred economic partner Tajikistan President Emomali Rakhmon and Hu Jintao

Cooperation with China represents Tajikistan’s best hope of economic and political stability Kyrgyzstan

Uzbekistan

Tajikistan

Afghanistan

China

Pakistan

Tajikistan has leased out some 600 hectares of agricultural land in its south to a Chinese company. The Chinese National Petroleum Company has already started oil and gas exploration work in Tajikistan at the same time as Russia’s Gazprom and Canada’s Tethys, which are also searching for gas. China’s Zijin Mining Group has invested US$200 million into gold mining in Tajikistan. It is hoped that the Chinese-Tajik joint venture will expand

In a sign of Tajikistan’s eagerness to please its new ally, its government last year approved a border demarcation agreement that saw Tajikistan cede 1,122 square kilometres of uninhabited mountainous land to China. The area represented one percent of its territory but the handover ended a dispute that had been running for almost 130 years and was hailed as a triumph in Tajikistan. Trade volumes between China and Tajikistan are US$2 billion, a huge figure for the Central Asian country, which has a population of just 7.5 million. “At the current time China is the preferred economic partner of Tajikistan,” says the director of the Kontent think tank, Zafar Abudullayev. “China is always going to want Tajikistan to remain in its sphere of political influence.” He rejects the idea that China’s growing influence is a threat to Tajikistan’s sovereignty, saying the main threat for the country is internal corruption and poor management. “China in fact is one of the guarantees of independence of the Tajik nation,” he says. “Tajikistan can and needs to cooperate with China on an advantageous basis.” The devastating civil war between Islamists and backers of Mr Rakhmon ended in 1997 after the loss of tens of thousands of lives. Tajikistan is still fighting outbursts of Islamist militancy. AFP NEWS AGENCY

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JULY 2012

Greater China

In search of a safe haven ‘China fund’ turns to Japan amid Europe fears BY HARUMI OZAWA*

urope’s financial turmoil has seen the Chinese government quietly pour tens of billions of dollars into Japan’s stock market, analysts say, despite the neighbours’ lingering historical animosity. For years, the two Asian powerhouses have eyed each other suspiciously with frequent diplomatic spats flaring over territorial claims and longstanding disputes, largely stemming from Japan’s wartime record. But with economic ties improving and Europe in a debt crisis, an ever more practical Beijing is buying up shares of Japanese firms as it looks for safer places to park its mountainous foreign-exchange reserves, the world’s largest. A fund known as OD05 Omnibus, widely viewed as linked to Beijing, was a major shareholder in 174 Japanese firms by the end of March, including names such as Toyota and Nikon, said a survey by the Nikkei business daily. The paper put the value of its Japan investments at a record 3.58 trillion yen (MOP360 billion). The survey showed the fund’s shareholdings have more than tripled since 2008, when the collapse of Wall Street titan Lehman Brothers triggered an unprecedented shock to the global financial system. The ownership of Omnibus, reportedly based in Australia, has never been publicly acknowledged. But dealers view it as being backed by China’s sovereign wealth fund, China Investment Corporation, and charged with helping manage some of Beijing’s more than US$3.0 trillion (MOP24 trillion) foreign currency war chest. “When Europe is in such financial turmoil, Beijing needs to diversify its investment destinations,” said Tsuyoshi Ueno, senior economist at NLI Research Institute in Tokyo. “China has so much in foreign currency reserves and they need to invest it in blue-chip companies.”

Omnibus’s portfolio includes a 1.9 percent stake in Toyota

The China Investment Corporation chairman has reportedly said the fund was scaling back its European equity and bond holdings, telling the Wall Street Journal last month that “there is a risk that the Eurozone may fall apart and that risk is rising”.

Safe port in stormy times Japan’s economy has struggled for years, but it is increasingly seen as a port in the storm for investors, while Europe struggles to rein in its finances and questions swirl about a solid recovery in the United States. Omnibus’s portfolio includes a 1.9 percent stake in Toyota, a 2.2 percent holding in rival automaker Honda, a 1.9 percent share of camera giant Nikon and a 2.5 percent stake in construction machinery maker Komatsu, the Nikkei survey said. A Toyota spokeswoman declined comment on individual holdings of its stock, saying it was “up to investors what shares they invest in”. The Nikkei figures come at a time

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when Tokyo and Beijing forge ever closer economic ties, two years after China wrested the title of world’s second-largest economy from Japan, a long-time export powerhouse. Recent Bank of Japan data showed China has become a major holder of Japanese government and corporate debt, outpacing the United States and Britain. In March, China, which is Japan’s largest trading partner, approved Tokyo buying its government bonds, a move that analysts said appeared to be the first time a major economy had bought debt directly from Beijing. The Asian powers have also started direct trading between the Chinese renminbi and the yen to ease cross-border business, including corporate acquisitions, which have often been completed using U.S. dollars. The agreement – the yen is the only major currency other than the greenback to trade directly against the renminbi – comes as Beijing continues its long-term bid to turn the renminbi into a global unit rivalling the U.S. dollar. *AFP NEWS AGENCY

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37 YAO YANG DIRECTOR OF THE CHINA CENTRE FOR ECONOMIC RESEARCH, PEKING UNIVERSITY

Couple’s counselling for the U.S. and China WHILE CHINA’S ECONOMY IS HAMPERED BY STRUCTURAL DIFFICULTIES, THE U.S. IS NOT FREE OF SIMILAR CHALLENGES hina has undoubtedly benefited from the world system created and supported by the United States. Indeed, Richard Nixon’s journey to China in 1972 opened the door for China’s return to the international community. Most of the next two decades were a honeymoon for SinoAmerican relations. On the economic front, the U.S. not only granted China most-favoured-nation trade status, but also tolerated China’s mercantilist approach to international trade and finance, notably its dual-track exchange-rate regime. In the 1990s, bilateral economic ties continued to expand. American support for China’s integration into the world system culminated with the country’s accession to the World Trade Organisation in 2001. Since then, China’s exports have grown five-fold. Of course, China’s inadequate intellectual-property protection has damaged relations (a shortcoming that may be harming Chinese firms more than U.S. firms by deterring American – and other advanced countries – companies from deploying new technologies in China). And the role of China’s state-owned enterprises and official Chinese support for technological “national champions” (privileged companies that almost certainly use government money carelessly) has also hurt relations. In fact, China’s approach is akin to gambling against the odds. Successful hi-tech innovations are random events that follow the law of large numbers. When left to the market, many firms and individuals try to innovate, so the overall probability of success can increase dramatically. The market allows the law of large numbers to work, whereas concentrated government support for a few favoured firms undermines it.

China’s wasteful foreign reserves

But neither of these flaws, nor the exchange rate, is at the root of today’s global imbalances. Consider the exchange rate. The United Kingdom maintained a current-account surplus for the century before World War I and the U.S. did the same for about 80 years before 1980. But neither country, apparently, did so by manipulating its exchange rate. Moreover, the economies that managed to narrow their external gaps with the U.S. substantially after World War II, notably Germany, Japan, South Korea, Singapore and Taiwan, ran current-account surpluses throughout their rapid-growth periods. This contradicts American economists’ conventional wisdom that fast-growing countries should borrow today against their larger future shares in the world economy. One possible explanation is that the relationship between gross domestic product growth rates and a country’s currentaccount position is not linear. Compared to countries with very slow growth rates, countries with reasonably high growth rates should borrow. But when a country’s growth rate continues to increase, its saving rate would increase faster than its investment rate, so it is more likely to run a current-account surplus. For “catch-up” countries, like China, rapid growth is often accompanied by brisk structural change that moves factors of production, especially labour, from low-productivity activities to economic sectors with much higher productivity. This adds to the surplus by increasing firms’ profitability. China’s exchange-rate policy is problematic not because it promotes exports, but because it has forced the country

to accumulate a huge pile of wasteful foreign reserves. The Chinese government’s reluctance to allow faster exchange-rate appreciation may reflect its aversion to large, unforeseeable fluctuations, particularly given its determination to make the renminbi an international reserve currency.

The root causes of the crisis

While China’s economy is hampered by structural difficulties, the U.S. is not free of similar challenges. Frankly, I am always struck by U.S. economists’ reluctance to discuss the structural problems that caused the current crisis and that hinder America’s recovery. Most seem to believe that the crisis resulted from bad monetary policy and lax financial-sector regulation; some even blame the savings accumulated by Asian countries, especially China. That may be true of the immediate causes of the crisis. But its eruption was far more deeply rooted in the American version of capitalism, which aims at high levels of competition, innovation, returns and compensation. While this model has, of course, helped the U.S. to become the world’s leading economy, it has also delivered severe structural problems. For example, to sustain high innovation, the U.S. has maintained the most flexible labour market among mature economies. But this does not come without costs. Companies often lay off a whole department of scientists to shift to a new product, destroying not only human capital but also human lives. Moreover, flexible labour markets imply adversarial labour relations, particularly when compared to northern European countries. These countries are less innovative than is the U.S., but their economies and societies may be more resilient. Meanwhile, the jewel of American capitalism, the financial sector, caused the crisis and is underpinning the U.S. currentaccount deficit. Oil exporters aside, countries running currentaccount surpluses, such as China, Germany and Japan, have stronger manufacturing sectors relative to their financial sectors, while the relationship is reversed for countries running external deficits, such as the U.S. and the United Kingdom. Finally, America’s global hegemony has proven to be a curse as well as a blessing. The U.S. dollar accounts for 60 percent of world trade and the U.S. has the strongest military in the world, making it a safe haven for global investors. But, while large capital inflows reduce borrowing costs, they also tend to cause current-account deficits: lower costs of capital boost asset prices, with the wealth effect then prompting people to consume more than they earn. The policies adopted or discussed by American policymakers and scholars nowadays – quantitative easing, fiscal-stimulus packages, government-deficit reduction – seek to cure only the symptoms of a deeper malaise. As a first step to recovery, the U.S. must undertake serious financial-sector reforms. As Lenin pointed out, financial capitalism is the highest form of capitalism – that is, it is the end of capitalism. Lenin may have gotten the underlying analysis wrong but today we know that his conclusion may have been right for another reason: financial capitalism forces a country into unsustainable indebtedness. Unfortunately, America’s financial reforms have been half-baked at best. For three decades, “reform” was a word reserved for the Chinese side of the Sino-American relationship. The U.S., one hopes, will grow to like the sound of it. JULY 2012

Transport

In gear, at last Bus operator Reolian had a rough start, capped by a net loss, but nearly a year later the company is running more smoothly BY SARA FARR

JULY 2012

39 he city’s new bus system will be one year old next month. The establishment of the system allowed a new bus operator into the market: Reolian Public Transport Co Ltd. Since day one, all eyes have been on the company’s green buses, and the scrutiny has been intense. Reolian posted a MOP58.5 million (US$7.3 million) net loss for 2011. The company says it had to bear greater costs than it had expected, due to a rise of 20 percent in the price of fuel and the need to pay higher salaries to attract drivers. After a bumpy start, the company finally got some good news last month: the government said it would increase the amount of money it pays bus operators for their services by 23 percent. The three bus operators – Reolian, Macau Urban Transportation Co Ltd (Transmac) and Macau Collective Transportation Co Ltd (TCM) – had asked for an increase to cover a surge in operating costs. The increase will have no effect on bus fares. The government pays the bus operators per kilometre of bus route served, and in exchange the bus operators give the government the fares they collect. Reolian is a joint venture between France’s Veolia Transport RATP and Macau’s H. Nolasco Group. The company first bid to run bus services here in November 2009. The government awarded it a number of routes in January 2010, and the company was meant to begin serving them in October that year. But the outcome of the bidding was muddled by lawsuits by TCM contesting its exclusion from the process. TCM had been excluded on the grounds that it delivered its bid four minutes late. The government settled the dispute by taking back almost one-third of the routes it had given Reolian and giving them to TCM.

Photo: Manuel Cardoso

Driverless buses Reolian eventually signed a seven-year contract with the government in January last year, agreeing to start servicing its remaining routes the following August. Considering the delays, “to be able to start on August 1, 2011 was a feeling of achievement,” the company’s general manager, Cedric Rigaud, recalls. But the delays entailed extra costs, estimated by the company at MOP8 million, and by the time it began operating it was already in the red. Its troubles had only just begun – troubles that kept Reolian in the spotlight for all the wrong reasons. “We developed with a wrong, chaotic start. I recall at the beginning we were lacking 150 drivers, and we only had capacity to respond and improve the services on September 1,” Mr Rigaud says. Reolian had aimed to have 400 drivers before it began operating. Given a shortage of licensed candidates – driving a bus is an occupation reserved for residents only – Reolian joined forces with the Labour Affairs Bureau to train prospective drivers. It was not enough. The company resorted to poaching drivers from other bus operators by offering higher salaries. The average salary of a Reolian JULY 2012

Transport

Photo: Carmo Correia

driver is now between MOP15,000 and MOP20,000. Salaries make up 55 percent of the company’s operating costs. “The only way you can recruit drivers is from the market, so these are the consequences,” Mr Rigaud says. The company now has about 400 drivers but needs 30 more.

Bus-less routes Another teething problem was that Reolian underestimated bus journey times, meaning it could not keep to its timetables. “We realised that the road conditions have deteriorated and there has been a 10 percent increase in car usage in one year. That has affected the operations,” Mr Rigaud says. “We had to review and revise our schedule according to this.” Reports in the news media two months ago said the Transport Bureau had fined Reolian MOP50,000 for delays of up to 45 minutes in bus frequency. Mr Rigaud says this fine was for shortcomings in the frequency of its buses last August, and not for more recent failings, as some reports had suggested. The company will appeal the fine “because it’s unfair treatment” given the initial challenges that Reolian faced, Mr Rigaud says. He denies any knowledge of an inJULY 2012

The number of accidents involving Reolian buses has fallen by half since last August, says the company’s general manager, Cedric Rigaud quiry by the Transport Bureau into three other complaints about the company, which may mean more fines. Safety has also been a concern. Reolian buses have been involved in two fatal accidents this year. One accident killed an elderly pedestrian and the other killed a scooter rider. Also this year, an elderly woman had one leg amputated after a Reolian bus ran over her while she was alighting. The company suspended the driver and he is now working in its depot. Macau Business asked the police for bus accident figures, but they had failed to reply by the time we went to press. Nevertheless, 80 bus accidents were reported in the media in January alone, 50 of them involving Reolian vehicles. Mr Rigaud says the number of acci-

dents involving Reolian buses has fallen by half since last August.

Clueless passengers Mr Rigaud says his company only appears to have a higher accident rate than other bus operators because it reports to the Transport Bureau every incident on the road, even those that are not brought to the attention of the police. He says Transmac and TCM report only those accidents that the police know about. “If the figures are to compare operators, we have to revise the way we report things to the government. But if the figures are here to tell the truth, the whole [Reolian] system is much better and more transparent,” he says. Mr Rigaud says that in interpreting its accident rate the company takes into consideration the routes, the state of the roads and the volume of traffic. “Internally, we know the [accident] rates in Taipa are much lower than in Macau. When you have high-density routes, then there is a higher risk of people falling, and higher risk of injury. Different patterns affect this.” The company has created a new position, that of safety officer – a first in Macau. It posts these staff at the busiest

41 bus stops to keep everything safe and orderly. Mr Rigaud says that at some stops passengers fail to queue up on the pavement and instead crowd the roadway. “Sometimes the driver is too scared to stop closer to the bus stop. It was a mess. And having safety officers helps educate both drivers and passengers,” he says. Since many of its drivers were inexperienced last year, Reolian created an in-house training programme to hone their skills. “When you start a new job and are not fully familiarised with your work, you need time,” he says. “We have a very thorough, systematic approach on safety issues and this works. We’ve had some results and this mechanism pays off, overall.”

Nevertheless, investing The training is recurring, the intervals between sessions depending on the results of regular assessments. “If a driver is assessed and is good, he can have a longer period without needing training. But if someone’s ha ving difficulty, then he’ll be sent to training,” Mr Rigaud says. This year, the company will apply for an ISO18000 certificate, “which proves our commitment to safety, to minimise the risk,” Mr Rigaud says. Reolian buses servicing its H1 route to the hospital were criticised for being difficult for the elderly or people with disabilities to use. “That’s why we revamped the three buses on line H1,” Mr Rigaud says. The company rearranged the seating and aisles and added more handrails. Reolian says it is proud of the quality of its 245 buses, serving 27 routes. The company is also proud of its operations control centre, which monitors the progress of its buses along their routes using GPS. To help passengers, the company has joined forces with Google to offer an online journey planner. Reolian is in negotiations with the government about buying new buses without paying import duty, a privilege accorded to other bus operators. Reolian paid import duty on the first batch of buses it bought. The government later refunded the amount to the company. Reolian expects its investment here to total MOP200 million.

bizintelligenceonline.com JULY 2012

Property

Not negotiable Renting a home is costly and will only become increasingly expensive in the medium term BY LUCIANA LEITÃO

f the lease on your flat has expired and the landlord is asking for an increase in rent of more than 20 percent, you are not alone. Welcome to today’s market for rented accommodation. Since the casino boom began in 2004, the housing market has been hit by wave after wave of rent increases that have far outpaced the inflation rate. Industry analysts say that in the first half of this year rents rose by an average of 10 percent. Strong demand by expatriates arriving here with the advent of new casino-resorts meant that last year the average rental value of high-end homes grew by 22.6 percent year-on-year, says

JULY 2012

estate agency Jones Lang LaSalle. The average rental value of mid-market and mass-market housing rose by 25.3 percent. The annual rate of inflation was 5.81 percent last year. One in every four households lived in a rented home last year, the latest census found. The number of households in rented homes increased by almost two-thirds between 2001 and last year, to more than 41,000. Last year’s census found that the average rent was MOP4,169 (US$521) a month. The median rent was MOP3,204 – a figure that is three times higher than a decade ago. Rents in newer buildings are considerably higher. In the high-end

One Central complex, rents can be up to HK$40,000 (US$5,156) for a 210-square-metre flat. At Taipa’s Nova City, it is almost impossible to rent a flat for less than HK$12,000 a month, data provided by estate agencies show.

Inflation island Portuguese national Nuno Miguel Pires lived in the same flat in La Cité in Areia Preta for four years. After his landlord warned him about an increase in rent, he decided to move, only to find the asking prices of rents were much higher than the HK$6,500 he was paying. “We saw a three-bedroom unit in La Cité, considerably smaller than ours, for HK$13,000, plus the garage, which

43 community, in terms of networking and daily necessities, and it may be difficult for them to move out,” says Mr Wong. The upward pressure on rents is not expected to abate any time soon. Mr Wong says most of the supply of housing in the pipeline is for the high end of the market. He acknowledges there is little a tenant can do about rent increases, except adjust their expectations. “People may need to relocate to smaller units, away from the core district, maybe away from Taipa,” he says.

Zhuhai beckons Ronald Cheung Yat Fai, who heads estate agency Midland Macau Ltd, says rents are especially high in the NAPE area, close to the One Central complex and L’Arc building, which contains upmarket flats. Rents have gone up by an average of 10 percent this year, in part because of an increase in the number of imported workers, he says. “If people buy an apartment for HK$3 million or HK$4 million, they prefer to only rent it out for HK$10,000 or more. Otherwise, it’s not worth it.” Rents will keep rising for middlemarket and affordable homes. Rents for high-end homes may also increase, but probably more slowly because demand is weaker and the supply greater, according to realtors. Taipa is where the increases are expected to be steepest. “If demand doesn’t drop, rents will continue to go up,” Mr Cheung notes. He says the government is partly to blame for the increases because it takes cost HK$1,900,” he says. Eventually, Mr Pires moved to Taipa. Jones Lang LaSalle’s head of residential property in Macau, Jeff Wong, says rents are rising because there is insufficient supply to meet demand. He says the number of homes for rent is limited, and there is strong demand from expatriates destined for jobs in Cotai’s sprouting casinos. Taipa is a preferred destination for expatriates. Mid-priced accommodation is in short supply there and rents have risen faster than elsewhere. “Taipa is also more internationalised, with expatriates living there for years. They have established their own

too long to give approval for construction and permission for occupation, thus constricting supply. The alternative may be to move to Zhuhai, he says. It is an option that many people are apparently looking into.

Sticky problem Mr Wong says the rent increases reflect market conditions. A landlord typically proposes a double-digit increase after the first two years of the lease. If that is the case, Mr Wong says many tenants will choose to start looking for somewhere else to live. “Most likely, they will not be able to find better options. So, they either pay the rent increase and renew the contract, or relocate to a smaller-size and inferior unit, both in terms of location and building age.” Rose Lai Neng, an associate professor of finance at the University of Macau and a real estate expert, says the fastest-rising rents are for mid-market homes in Taipa and in prime areas of the peninsula. The problem with rents is that they are “sticky”, Ms Lai says. “When one unit is successfully rented out at a higher rental, other landlords will ask for the same high rental, even if that might translate into longer periods of waiting [for an amenable tenant],” she says. Ms Lai says the law does little help to tenants. Many are unaware of their rights, and others just prefer to avoid legal disputes that consume time and money, she says.

BEWARE RAPACIOUS TENANTS, SAYS AGENT E

state agency Jones Lang LaSalle’s head of residential property in Macau, Jeff Wong, says revision of the rules on letting property would be good but only for providing better protection for landlords. The aim should not be to curb rent increases because they merely reflect market conditions. “If there was government intervention, there would be a side effect. Most people wouldn’t want to put up apartments for rent,” he says. Mr Wong says there should be greater protection for landlords. “Many people, when they buy apartments, they are not so willing to lease – only to big companies. It is difficult to recover possession of the premises based on the current legislation,” he says. Mr Wong says rules making it easier to evict tenants would help correct the imbalance of supply and demand and unlock some of the city’s vacant homes. Last year’s census found that 7 percent of homes were sitting empty. Ten years ago, 19.2 percent of all residential units were empty. JULY 2012

Property

Photo: Manuel Cardoso

Top-tier transformation The Nam Van district is vying to become the Manhattan of Macau. The FIT Centre wants to play its part BY ALAN TSO

ore and more white-collar professionals are commuting to work in the high-rise office blocks around Nam Van Lake. The area is meant to become the city’s new business hub and the Finance and IT Centre, or FIT Centre, wants to play its part in the transformation.

JULY 2012

After a lacklustre start, only having been granted its occupation permit in March 2011, the FIT Centre’s occupancy rate is going up, the developer says. The occupancy rate is now around 50 percent, although this is still below that of other important office buildings in Macau, where it is 90 percent or more.

“At present we are in talks with several potential tenants, which are also big names in the corporate world. And I believe our occupancy rate can soon hit 70 percent,” says Alex Li Chin Hung, general manager of Lai Keng Van Property Investment Ltd, developer of the FIT Centre.

“Our occupancy rate can soon hit 70 percent,” says Alex Li Chin Hung, from Lai Keng Van Property Investment Ltd

The redevelopment of the rundown Yang Cheng Commercial Centre as the FIT Centre cost around MOP400 million (US$50 million). The 37,000-squaremetre, 24-storey building has more than 160 offices or shops, a clubhouse and more than 300 parking spaces. Its tenants include corporations that own internationally renowned brands such as Louis Vuitton, Hermès and Cartier, and the Angolan ConsulateGeneral. Rolls-Royce Motor Cars Ltd has a showroom there.

New momentum The average rent is HK$16 (US$2.10) per square foot per month, putting the FIT Centre in the top tier of the office

market. Jones Lang LaSalle manages it. “Our tenants include an embassy and five banks. Their security needs are bigger and therefore they expect better building management services,” says Mr Li. Less than seven years ago the Nam Van district was on the fringes of the office market. The plan to make it a business district dates back to the 1990s, but first the Asian financial crisis of 1997 and then the return of Macau to Chinese rule in 1999 meant delays in putting the plan into action. But with the economic boom that followed the liberalisation of the gaming market, several international companies set up branches here, boosting demand for high-quality office space. The reincarnation of the International Gateway building as the 22-storey AIA Tower in 2006 brought new momentum to the growth of grade-A office space. The building was finished in 2001 but remained mostly empty until Morgan Stanley Real Estate Funds, Pioneer Global Group and Wachovia Bank acquired it in 2005. Even with all this development, the city still has only five grade-A office buildings, Jones Lang LaSalle says. Three are around Nam Van Lake: the Bank of China Tower, the AIA Tower and the FIT Centre. The Fortune Business Centre, or FBC Tower, near the New Yaohan department store, will soon join them. The FBC Tower will add 37,000 square metres of office space to the market. Construction was suspended for several years because of a lawsuit in-

volving the developer, but work resumed last year. Mr Li says the development of office buildings is a long-term investment since the space in them is usually for rent rather than sale, unlike the space in residential buildings. For the same reason, the development of offices involves the complex issue of building management. “A residential project can give you quick returns on your money. But if you embark on an office development project, you are meant to be patient and wait for the long-term returns,” he says.

Edge over NAPE Mr Li is confident about the prospects for high-end commercial projects here, expecting a steady rise in office rents in the near to medium term. For this reason Lai Keng Van Property Investment Ltd has declined offers to buy the FIT Centre. Office rental values grew by 16 percent last year and office capital values grew by 35.5 percent, Jones Lang LaSalle data show. The company expects demand for office space to continue to gain momentum, boosted by the public and private sectors alike. AIA Tower was sold last year for HK$1.26 billion. Since 2008, it had belonged to investment fund Speymill Macau Property Co Plc, which sold it to American International Assurance Co (Bermuda) Ltd. The 39 Macau building, which also contains grade-A office space, was sold last year to a group of Hong Kong investors for HK$970 million. Two vacant plots next to the Grand Emperor Hotel are expected to change hands soon so they can be used for more high-end office developments. Mr Li believes the Nam Van district has the edge over the NAPE district in the competition to become the city’s central business district because the Nam Van district is close to many government offices. “Location is very important and the proximity to government departments and other retail facilities will definitely make life easier for office tenants,” he says. Looking at the bigger picture, he urges the government to improve the transport facilities and pedestrian access in the Nam Van district. For example, a footbridge from the FIT Centre to the other side of Avenida Dr Mário Soares has been proposed to make access easier for commuters. JULY 2012

Property Statistics

Construction - private sector

Year-on-year change (%)

2011

1,387 1,099 231 38 19 2,159 2,053 86 3 17

Building units completed - Residential - Commercial and offices - Industrial - Others Building units started - Residential - Commercial and offices - Industrial - Others

-69.4 -73.0 -45.9 --44.1 148.2 162.9 8.9 200 88.9

Transactions (1)

- Residential - New building - Old building Resident buyers (as percentage of total buyers)

4.6 144.5 -3.1

2,196 269 1,927

- Commercial - New building - Old building Resident buyers (as percentage of total buyers)

42.9 10300.0 27.3

932 103 829

- Offices - New building - Old building Resident buyers (as percentage of total buyers)

-6.7 -17.8

194 7,126

- Industrial - Others Total value of total units transacted (2) - Residential

Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012

-52.6 -80.0 -49.5 8.8 percentage points

93.2

80.1 40 1,181

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

-15.6 -19.4 -14.9

Jan-Apr 2012

-13.8 percentage points

Jan-Apr 2012

-53.5 -64.2

Jan-Apr 2012

Jan-Apr 2012 Jan-Apr 2012

Jan-Apr 2012

28.1 41.0 5.4 84.0 88.0 83.6 128.8 --115.7 -0.7

MOP16.6 billion

-49.3 -56.7 -17.3 -15.5 --62.0 24.3 70.0 -35.8 -20.6

Jan-Apr 2012

MOP0.9 billion

- Old building

MOP8.7 billion MOP3.0 billion

--MOP0.9 billion MOP3.8 billion

MOP11.5 billion MOP5.1 billion MOP3.0 billion

--MOP0.8 billion MOP0.1 MOP0.7 MOP0.2 billion MOP1.3 billion

Average transaction price of residential units (3) Year-on-year change (%)

2011 MOP45,027 /m

Macau

Jan-Apr 2012

MOP58.9 billion

- New building

- Others

Jan-Apr 2012

MOP9.7 billion

- Industrial

Jan-Apr 2012

-43.5

MOP17.5 billion

- Old building

Jan-Apr 2012

MOP21.8 billion

- Old building

- New building

Jan-Apr 2012

34.4

MOP41.4 billion

- Offices

Jan-Apr 2012

MOP76.3 billion

- New building - Commercial

6.8 percentage points

90.1

179 25 154

-11.6 percentage points

80.0

-52.2 -48.2 -60.1 -32.8

500 21 479

-2.3 percentage points

86.9

Notes

Year-on-year change (%)

6,068 4,168 1,805 2,363

-1.7 percentage points

87.8

-90.4 -89.6 -91.6 --50.0 -58.6 -69.2 -16.7 -150.0

Latest

-6.7 -4.5 26.8 -20.7

27,624 17,176 7,783 9,393

Total units transacted

55 36 15 -4 53 33 15 -5

Year-on-year change (%)

2011

Year-on-year change (%)

Latest

- Macau Peninsula

MOP43,569 /m2

- Taipa

MOP41,501 /m2

- Coloane

MOP68,208 /m2

21.6 32.9 1.4 6.4

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

Year-on-year change (%)

Latest MOP53,083 /m

Jan-Apr 2012

MOP50,973 /m2 MOP54,359 /m2 MOP71,216 /m2

0.8 2.2 3.1 -3.8

Notes May 2012 May 2012 May 2012 May 2012

(1) The data covers transactions with stamp duty paid during the reporting period, including transactions exempted from stamp duty (2) Figures are rounded, therefore they may not add up exactly (3) The data covers transactions with stamp duty bill issued during the reporting period, including transactions exempted from stamp duty JULY 2012

Source: Statistics and Census Service and Financial Services Bureau

DISTRIBUTION RATIO FOR PUBLIC HOUSING ANNOUNCED The government finally announced last month the distribution ratio for Macau’s 19,000 public housing units due to be completed by year-end. Of those, 10,000 will be for social housing, while close to 9,200 will be for economic housing. The government’s public housing policy includes social housing for rent, and economic housing for sale at controlled prices under the home ownership scheme. The government first announced in 2007 plans to build a total of 19,000 units until 2012-end. However, just a fraction of the total is already complete.

PROPERTY FUND SECURES TWO NEW LOAN FACILITIES

WORKS SUSPENDED AT LA SCALA Chinese Estates says it has already invested approximately HK$2.8 billion in the project

Chinese Estates Holdings Ltd announced last month that it has temporarily suspended the construction work and the presale of the La Scala residential project. Resumption of work is pending the government’s final decision on the land where the project is being built. The announcement was made after the Hong Kong developer received notice of a preliminary hearing from the Lands, Public Works and Transport Bureau on this matter. Chief Executive Fernando Chui Sai On has already approved initiation of the procedures for declaring invalid the land transfers made in 2006 involving the site in Taipa on which La Scala is being built. Those deals are being disputed after the Court of Final Appeal found that then-Secretary for Transport and Public Works Ao Man Long received HK$20 million (US$2.6 million) from Chinese Estates boss Joseph Lau Luen Hung and BMA Investment chairman Steven Lo Kit-sing in 2005 to ensure they would get the land. The site was previously divided into five parcels, held by companies controlled by the government. Chinese Estates says it intends to “strongly oppose” any government decision to declare the land deals invalid. If that is the final outcome, the developer says it may consider entering into cancellation agreements with unit purchasers of La Scala and refund deposits received. The company says it has already invested approximately HK$2.8 billion so far in the project, and will seek compensation for possible losses if it loses the plots.

Macau Property Opportunities Fund Ltd, managed by Sniper Capital Ltd, announced last month that it has agreed to two new loan facilities totalling a combined US$32 million (MOP256 million). The two new loan facilities will allow the property fund to restructure the loans taken out to finance One Central Residences and The Green House projects. Macau Property Opportunities Fund is also in discussions to extend the loan arrangement for its residential development The Fountainside. Meanwhile, it “continues to progress negotiations on an attractive pipeline of sites totalling approximately US$500 million in combined acquisition value,” the fund said in a press release.

ONE GRANTAI STILL WAITING FOR OCCUPANCY PERMIT Although ready for some months, the One Grantai luxury residential complex in Taipa is still waiting for the occupancy permit, English-language newspaper Business Daily reported last month. The Lands, Public Works and Transport Bureau said the developer failed to submit the necessary paperwork and that the project still needs to be inspected. A spokesperson for the bureau told Business Daily that the One Grantai developers revised architectural plans several times, which impacted on the occupancy permit granting process. There is currently no schedule for when the permit is likely to be issued.

JULY 2012

48 48

Property | Market Watch

Notable residential property transactions - 16/05 to 15/06, 2012 District

Property

Unit

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

One Central Lake View Tower One Central Lake View Tower One Oasis Cotai South One Central One Central One Grantai Lake View Tower One Grantai One Grantai One Central Nova City The Residencia Macau One Oasis Cotai South The Buckingham Pearl On The Lough Lake View Tower Villa De Mer La Baie Du Noble The Residencia Macau Villa De Mer Flower City Edf. Golden Bay Prince Flower City Nova City Nova City Villa De Mer Kings Ville La Baie Du Noble La Cité The Bayview La Cité Prince Flower City Villa De Mer Villa De Mer Villa De Mer

Block 4, H/F, unit A L/F, unit Q Block 4, M/F, unit A H/F, unit P Block 3, M/F, unit K Block 1, H/F, unit F Block 1, H/F, unit E Block 3, M/F, unit I M/F, unit M Block 5, M/F, unit V Block 5, M/F, unit V Block 7, H/F, unit G Block 7, M/F, unit A Block 5, M/F, unit B Block 2, M/F, unit A M/F, unit E Block 2, L/F, unit H M/F, unit G Block 2, M/F, unit B Block 3, L/F, unit M Block 3, H/F, unit C Block 2, M/F, unit B M/F, unit D M/F, unit C Block 2, M/F, unit J Block 13, M/F, unit U Block 13, H/F, unit W Block 1, H/F, unit F Block 3, H/F, unit G Block 5, M/F, unit W Block 5, L/F, unit D Block 5, H/F, unit E Block 3, H/F, unit A Block 2, L/F, unit J Block 4, H/F, unit C Block 5, H/F, unit A Block 3, H/F, unit A

Source: Centaline

Floor area (sq. ft) 2,326 2,517 2,326 2,108 2,320 1,842 1,833 2,300 2,236 2,158 2,158 1,178 2,503 1,696 1,936 1,873 2,055 1,590 1,695 2,095 1,559 1,695 2,066 1,703 1,645 1,628 1,561 1,459 1,599 1,597 1,707 1,603 1,511 1,645 1,371 1,475 1,475

Sale price (HK$) 22,100,000 16,500,000 16,200,000 15,810,000 15,080,000 14,750,000 14,500,000 14,500,000 12,968,800 12,800,000 11,869,000 10,000,000 9,740,000 9,500,000 9,390,000 8,600,000 8,450,000 8,200,000 8,000,000 8,000,000 7,980,000 7,800,000 7,800,000 7,480,000 7,380,000 7,300,000 7,070,000 7,000,000 7,000,000 6,880,000 6,800,000 6,780,000 6,680,000 6,680,000 6,500,000 6,500,000 6,500,000

Price per sq.ft. (HK$) 9,501 6,555 6,965 7,500 6,500 8,008 7,911 6,304 5,800 5,931 5,500 8,489 3,891 5,601 4,850 4,592 4,112 5,157 4,720 3,819 5,119 4,602 3,775 4,392 4,486 4,484 4,529 4,798 4,378 4,308 3,984 4,230 4,421 4,061 4,741 4,407 4,407

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

Notable residential property rentals - 16/05 to 15/06, 2012 Type

Property

Unit

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

L’Arc One Central Lake View Tower Nova Taipa Nova City The Buckingham The Buckingham The Buckingham Kings Ville Nova City Nova City Nova City The Greenville The Residencia Macau Hellene Garden Hellene Garden La Cité Edf. King Xiu Garden Edf. Golden Bay

H/F, unit B Block 7, H/F, unit F L/F, unit H Block 27, H/F, unit F Block 12, L/F, unit E M/F, unit C M/F, unit F M/F, unit A Block 2, M/F, unit F Block 6, M/F, unit A Block 6, L/F, unit A Block 6, L/F, unit A Block 1, M/F Block 4, H/F, unit D Block 2, M/F, unit D Block 2, L/F, unit D Block 2, H/F, unit E M/F, unit B M/F, unit F

Source: Centaline

Floor area (sq. ft) 2,803 1,301 1,507 1,880 1,318 1,080 1,186 1,186 1,423 1,081 1,088 1,088 1,368 1,209 1,663 1,663 1,719 850 1,686

Rent price (HK$) 50,000 27,500 22,000 15,000 14,500 14,000 14,000 13,500 13,500 13,000 12,500 12,500 11,500 11,000 11,000 11,000 11,000 9,800 7,800

Price per sq.ft. (HK$) 17.84 21.14 14.60 7.98 11.00 12.96 11.80 11.38 9.49 12.03 11.49 11.49 8.41 9.10 6.61 6.61 6.40 11.53 4.63

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

JULY 2012

49 SHLOMO BEN AMI ISRAELI FORMER FOREIGN MINISTER

China’s Afghan game plan AFGHANISTAN IS OF VITAL STRATEGIC INTEREST TO CHINA, YET IT NEVER CROSSED ITS LEADERS’ MINDS TO DEFEND THOSE INTERESTS THROUGH WAR n his latest book, “On China”, Henry Kissinger uses the traditional intellectual games favoured by China and the West – ‘weiqi’ and chess – as a way to reveal their differing attitudes toward international power politics. Chess is about total victory, a Clausewitzian battle for the “centre of gravity” and the eventual elimination of the enemy, whereas ‘weiqi’ is a quest for relative advantage through a strategy of encirclement that avoids direct conflict. This cultural contrast is a useful guide to the way that China manages its current competition with the West. China’s Afghan policy is a case in point, but it also is a formidable challenge to the ‘weiqi’ way. As the United States prepares to withdraw its troops from the country, China must deal with an uncertain postwar scenario. Afghanistan is of vital strategic interest to China, yet it never crossed its leaders’ minds to defend those interests through war. A vital security zone to China’s west, Afghanistan is also an important corridor through which it can secure its interests in Pakistan (a traditional ally in China’s competition with India), and ensure its access to vital natural resources in the region. Moreover, China’s already restless Muslim-majority province of Xinjiang, which borders on Afghanistan, might be dangerously affected by a Taliban takeover there, or by the country’s dismemberment. The U.S. fought its longest-ever war in Afghanistan, at a cost (so far) of more than US$555 billion (MOP4.44 trillion), not to mention tens of thousands of Afghan civilian casualties and close to 3,100 U.S. troops killed. But China’s strategy in the country was mostly focused on business development and on satiating its vast appetite for energy and minerals. The U.S. Defense Department has valued Afghanistan’s untapped mineral deposits at US$1 trillion. But it is China that is now poised to exploit much of these resources.

Soft power Indeed, China’s development of the Aynak Copper Mine was the largest single foreign direct investment in Afghanistan’s history. China was also engaged in constructing a US$500 million electric plant and railway link between Tajikistan and Pakistan. Last December, China’s state-owned National Petroleum Corporation signed a deal with the Afghan authorities that would make it the first foreign company to exploit Afghanistan’s oil and natural-gas reserves. Once China’s enormous economic and security interests in Afghanistan are left without America’s military shield, the Chinese are bound to play an even larger role there, one that Afghans hope will reach “strategic levels.” China would prefer to accomplish this the Chinese way – that is, essentially through a display of soft power – or, as the Chinese government put it on the occasion of Afghan President Hamid Karzai’s official visit to Beijing in early June, through “nontraditional security areas.” Judging by China’s behaviour in other parts of the world,

any military cooperation is likely to be extremely modest and cautious. China has already made it clear it will not contribute to the US$4.1 billion multilateral fund to sustain Afghan national security forces. Rather, the two countries’ recently signed bilateral cooperation agreement is about “safeguarding Afghanistan’s national stability” through social and economic development. China is especially keen on combating drug trafficking, as Badakhshan, the Afghan province bordering on Xinjiang, has become the main transit route for Afghan opium. But preventing the spill over into Xinjiang of Taliban-inspired religious extremism remains a high priority as well. China went to great lengths to present the recent summit in Beijing of the Shanghai Cooperation Organisation, which includes China, Russia and major Central Asian countries, as an attempt to create a fair balance of interests among regional stakeholders. Moreover, the Shanghai Cooperation Organisation sought a consensus on how, in Chinese President Hu Jintao’s words, to guard the region “against shocks from turbulence outside the region.”

Chess and ‘weiqi’ Yet, however focused it is on soft-power projection in Afghanistan, China will likely find it difficult not to be drawn into the role of policeman in an extremely complex and historically conflict-ridden region. China’s regional outreach, moreover, clashes with that of other regional powers, such as Russia and India. Nor is its own ally, Pakistan, particularly eager to confront terrorist groups that threaten the security of its neighbours, China among them. Pakistan might find it extremely difficult to reconcile the security of its Chinese ally with its ‘de facto’ proxy war with India. China might then be forced to bolster its military presence in Pakistan and in tribal areas along the Afghan border in order to counter terrorist groups such as the Pakistan-based East Turkestan Islamic Movement, which the Chinese believe is responsible for attacks in Xinjiang. The preferred Chinese way would be that of co-optation and dialogue. Indeed, Chinese diplomacy has been busy lately in trilateral talks with Pakistan and Afghanistan aimed at achieving reconciliation with the Taliban. Nor is China interested in stirring up the conflict between its Pakistani allies and its Indian rivals. On the contrary, China has argued for years that the main problem affecting Afghanistan’s stability is the India-Pakistan proxy fighting, and that peace in Kashmir is therefore the key to peace in Afghanistan. The task of defending its interests in Afghanistan after U.S. withdrawal is a truly formidable challenge for Chinese diplomacy. It is inconceivable, though, that the Chinese would enter into the kind of massive U.S.-style military intervention to which the world has grown accustomed in recent years. For China, the Afghan contest will most likely turn out to be a very measured combination of chess and weiqi. JULY 2012

mbreport PLASTIC SURGERY 50

COSMETIC SURGE

Society’s quest for the perfect body is driving a thriving business for Macau’s plastic surgeons BY ALEXANDRA LAGES

osa (not her real name) was unhappy with the body she saw in the mirror one year after her daughter was born. “My breasts were too big,” says the Brazilian, who was living in Europe at the time. She opted for breast reduction surgery. “I went to Brazil, where we are very advanced in plastic surgery,” she says. That was her first surgery. Later, after moving to Macau, she decided on a second round, again in Brazil. She went for liposculpture – a procedure that uses liposuction to sculpt and accentuate the torso. Rosa says she did not consider having surgery here because Brazilian doctors enjoy a reputation for their cosmetic surgery skills. But Macau’s plastic surgeons argue that the city has caught up with the rest of the world when it comes to the nip and tuck of cosmetic surgery and related treatments. They say more people choose to undergo cosmetic surgery in Macau instead of the private hospitals in Hong Kong, Thailand or further afield.

The latest official data shows demand for plastic and reconstructive surgery grew by 12 percent in 2010, and rising demand has meant growing revenue for private clinics. Plastic surgeon Leong Sao Ieng is busy at work in her clinic in the NAPE area. She is attending to a middle-aged Western man, while his blonde partner, who looks like she could be a top model, waits outside. “Casinos have brought us some customers,” Dr Leong says after finishing the procedure. She says she treats many expatriates working in the gaming industry who “used to do similar treatments back in their home countries”. She was the first plastic surgeon to open a private clinic in Macau. That was in 2003, a year after the liberalisation of the gaming market.

Nose for business Dr Leong’s surgery has grown at an impressive rate, with revenue climbing by 10 percent in 2005. The annual rate of growth has slowed but business continues to increase, she says – although she declines to give figures.

mbreport PLASTIC SURGERY 52 Business depends on the global economy, Dr Leong says. “There was a downturn because of the global financial crisis of 2008 to 2009, but the economy got better in 2010 and 2011.” She expects business to be sluggish this year, affected by the global slowdown. It makes people more conservative with their money, and they do not want to spend it on surgery, Dr Leong argues. Macau’s once traditional society is changing, plastic surgeons say. Most of their patients are women. For some, looking younger and more attractive is an asset in their search for better pay. For others, the city’s economic boom has provided the disposable cash to spend on looking good. The Dr Face group opened its first cosmetic treatment clinic in 2004. “We only had one clinic with 140 square metres and two workers. But now we have four clinics with more than 30 people and three doctors,” says plastic surgeon Kevin Cheng Chi Keung, the director of the Dr Face group.

Eye-popping revenue Dr Cheng says the group’s revenue has increased 10-fold since 2004. “Back then, plastic surgery and especially cosmetic surgery were not well developed in Macau. That was because Macau was a quiet city and people were more reserved in comparison with those from Hong Kong and Korea,” he says. The group’s annual turnover is now MOP9 million (US$1.1 million). Dr Cheng is expecting growth this year of up to 6 percent. The Malo Group from Lisbon is one of most recent arrivals to the market, but is already one of its biggest players. The Malo Clinic Spa in the Venetian Macao opened its medical facilities in March 2010, although the spa amenities opened in July 2009. The facility covers 12,000 square metres and cost MOP360 million to build. The Malo Group hopes to break even on its investment this year. The initial projections indicated that this would happen in 2014, says Paulo Maló, who heads the group. Revenue from plastic surgery and cosmetic treatments grew by 40 percent last year. In the fourth quarter, revenue reached MOP7.6 million, 63 percent more than the same time the year before. The clinic has a number of specialJULY 2012

Favoured therapies are the non-invasive type of cosmetic treatments. The top sellers are injections of Botox and dermal fillers

ties, including dermo-cosmetics or specialist cosmetics that have a medical use in treating skin conditions, for example. “We are the only international clinic that is operating in Macau,” Dr Maló says. “Cosmetic and plastic surgery is one of our core businesses.”

Cash injection In Dr Maló’s team is João Peixoto. The Portuguese national was the founder of the plastic surgery unit in Macau’s public hospital in 1986, which he directed until 1992. After over a decade working in Portugal, he returned to Macau in

53 2010 to join the Malo Clinic Spa. Dr Peixoto says the growth in cosmetic surgery in Macau is in line with a worldwide trend. “It’s growing. There is a demand here as there is anywhere in the world. Before, some people in the community were afraid their friends would find out they had plastic surgery, but this no longer happens. There are no taboos,” he says. The clinics’ plastic surgery patients typically live in Macau, surgeons say. They are of all ages and include both locals and expatriates from Australia, New Zealand, the United States, Portugal and other European countries. The most popular plastic surgeries in Macau are breast enlargements, nose alterations and the removal of excess fat and skin, especially after giving birth. Eyelid surgery is also popular. Younger Asian women want to make their eyelids look more European, while older women want to remove excess skin and fine wrinkles. However, favoured therapies are the non-invasive type of cosmetic treatments. The top sellers are injections of Botox, a toxin that temporarily reduces or eliminates frown lines, creases in the forehead and laugh lines; and dermal fillers, which are injected into the skin to increase volume and flatten wrinkles and folds. “Increasingly, people focus on cosmetics. After I started working in cosmetic surgery and as time went by, I found that more and more people like to get a younger look but most of them hate undergoing surgery,” says Dr Cheng. “We started to progressively develop non-invasive procedures like injections, using laser and high-tech machinery. We can solve problems like wrinkles, spots and acne, and do other things like body shaping.” Dr Leong, the pioneer of private clinics, says non-invasive treatments embolden patients. “Sometimes they try injections first and, if they feel comfortable, the next time they will try surgery.”

Money-suction As the cosmetic surgery sector has expanded in Macau, Dr Leong says, surgery in Thailand and Hong Kong has lost its appeal. “Going abroad is very inconvenient because if there is some side effect, patients have to return. More and more people prefer to stay in Macau because

POSITIVITY FROM PLASTIC T

he plastic surgery unit at the Conde São Januário public hospital seems to be a world apart from the city’s private practices. The hospital’s consultant chief of plastic, reconstructive and aesthetic surgery, Lai Yun Fee, says it could be doing more. “Authorities are still not aware of the importance of plastic surgery to improve the image of the hospital. A modern society requires a good plastic surgery service,” Dr Lai says. He believes the unit could focus on more complex and time-consuming kinds of plastic surgery. “We have enough expertise to do so but we lack enough access to the operating theatres.” The starting point to rejuvenate the hospital’s service is modern equipment. Dr Lai says a laser would create opportunities for tattoo removals, redbrown facial lesions and the treatment of scars. The hospital’s plastic surgery unit focuses on reconstructive surgery. Its patients have typically been involved in traffic accidents or are burns victims. Sometimes they are young

children with congenital abnormalities. The doctors also work with patients that have had life-saving but disfiguring medical treatments, such as some cancer treatments. “The workload leaves us little time to devote to the call of aesthetic surgery,” Dr Lai says. The hospital does help women get back into shape after giving birth by offering tummy tucks. There is often a medical reason behind the operation, to avert infection or other problems due to excessive build up of skin and fat. Breast reduction operations are also common. Rachel (not her real name) had breast surgery at the hospital. “I’m very happy with the result,” she says. “Normally, these surgeries are pricey, but here it was free.” The plastic surgery unit sees 30 to 50 patients per day. On average, a patient waits six to eight months for an operation. Dr Lai says demand for cosmetic surgery is rising. “There is a whole generation of women in Macau that has strong purchasing power, who are in top positions and who are in their 40s and 50s, who want to keep their youthful looks,” he says.

A LA CARTE SURGERY NOSE ALTERATIONS BREAST AUGMENTATIONS DOUBLE EYELIDS LIPOSUCTION BOTOX INJECTIONS DERMAL FILLING

Note: Prices may vary

MOP10,000 to MOP20,000 MOP20,000 to MOP98,000 MOP10,000 upwards MOP5,000 to MOP8,000 per portion of fat removed MOP1,000 to MOP5,000 per unit MOP4,000 to MOP8,000

JULY 2012

mbreport PLASTIC SURGERY 54 the price is not that high and the service is better.” Dr Maló is more sanguine. He says Macau could poach patients from other places that have been betting on cosmetic surgery tourism. “Macau can be a centre for health tourism, because it is an international city, open to the world. The government has yet to give visibility to Macau for health tourism,” he says. Mr Maló says the mainland is already a niche market for his clinic at the Venetian. Dr Cheng says Macau, like Hong Kong, was an early adopter of new technology and treatments, as there is no requirement for such technology and treatments to obtain official approval, unlike in other places. “We don’t need that. Once a new product or machine comes into the market after being tested for safety, we can get it faster than other countries,” he says.

Black market beauty As demand for cosmetic surgery rises, the professionals want stronger regulation BY ALEXANDRA LAGES

Established plastic surgeons say their biggest headache is sometimes illegal competition Established plastic surgeons say their biggest headache is sometimes illegal competition. “There are many beauty salons offering illegal injections and even sometimes surgery procedures. Macau residents aren’t aware that this is not legal so they take the risk,” Dr Leong says. “Several of these clinics advertise heavily.” Dr Cheng says the Dr Face group bets on innovation to stay ahead of the pack. “I have to spend a lot of time going to international conferences, and keep updating myself. Every year we invest a huge amount of money to buy new equipment.” Business continues to expand. The Dr Face group is considering offering more kinds of non-invasive treatment, while Dr Leong is aiming eventually to expand into the mainland. The Malo Clinic Spa’s vision for Macau “has no limit,” Dr Maló says. “At present, our clinic is only operating at 30 percent of its total capacity. Of the five operating theatres, we only have two running.” And the clinic has another 5,000 square metres it could use for expansion, he says. JULY 2012

he recent boom in cosmetic surgery has been matched by an increase in cases of illegal administration of cosmetic treatments. The health authorities are taking the problem so seriously they issued a warning last December. Plastic surgeon Leong Sao Ieng says she has come across cases of botched surgery illegally performed in beauty salons. The patients’ main concern is to

put the problem right, not an enhanced legal framework. “People in Macau are polite and would rather keep quiet instead of reporting to authorities,” she says. The Health Bureau issued a warning last December, after a beauty salon was found to be administering Botox, a popular anti-wrinkle treatment. Beauty salons are not allowed to administer such treatments – only

55 rectified. Patients may need to wait for months until the effects wear off. Lai Yun Fee of the public hospital’s plastic surgery unit says he too has seen such problems. Most were cases of injections of liquid silicone into the breasts or nose. “It is difficult to remove it and it causes serious problems,” Dr Lai says. Malo Clinic Spa’s João Peixoto is concerned by the emergence of illegal clinics. “I did two procedures to remove liquid silicone from breasts after it was found the product used was carcinogenic,” Dr Peixoto says. “It took me two hours to remove the silicone from each breast and I’m not sure if I was able to remove the whole thing.”

Safety concerns

government-certified clinics. The bureau says it received five complaints about misleading advertising by beauty salons last year. Plastic surgeon Kevin Cheng Chi Keung, who heads the Dr Face group of clinics, has also seen cases of illegally administered treatments that went wrong. Most were Botox injections. Dr Cheng says the ill-effects of improper use of Botox are not easily

Doctors say the present penalties are insufficient to deter the illegal administration of cosmetic treatments

Doctors say the present penalties are insufficient to deter the illegal administration of cosmetic treatments. The maximum fine is MOP12,000. They demand better regulations and closer monitoring. The president of the Health Bureau Physicians Association, Choi Nim, says the relatively lax rules governing the use of Botox greatly concern him. The market needs “reasonable legislation and strict supervision” that will enable drugs to be used correctly and patients to get the best care available. Legislative Assembly lawmaker Lee Chong Cheng asked the health authorities in February about the need for stricter supervision and regulation of the beauty salon industry and its advertising. He said the number of beauty salons, medical centres and clinics was growing, offering an increasingly complex array of services and treatments. The Municipal and Civic Affairs Bureau licenses and supervises beauty salons, while the Health Bureau is in charge of cosmetic treatment clinics. The city had 307 officially authorised beauty salons in January, a spokesperson for the Municipal and Civic Affairs Bureau says. The bureau has approved 74 new beauty salons in the past two years. Nobody at the Health Bureau was available to give data on the number of plastic surgeons and private cosmetic surgery clinics. Figures that the Health Bureau recently gave the Portugueselanguage newspaper Jornal Tribuna de Macau show that the city had about 10 certified plastic surgeons and 10 licensed cosmetic treatment clinics about this time last year. JULY 2012

Gaming

Cotai dawn: peninsula’s dusk? The development of mega-resorts in Cotai means more variety but may threaten the traditional centre of tourism and gaming on the peninsula BY MUHAMMAD COHEN

he growth of Cotai is changing the urban and business landscape. As the centre of mass tourism and mass gaming shifts to Cotai, the peninsula faces new challenges. “Macau has developed into a destination that can offer two different kinds of experiences to tourists,” says Success Universe Group Ltd’s deputy chairman and executive director, Hoffman Ma Ho Man. One experience is provided by Las Vegas-style resorts in Cotai, “where everything happens inside the box”. Mr Ma is also deputy chief executive of the Ponte 16 casino resort on the peninsula, which focuses on the alternative experience. “We’re targeting people who want the cultural side, the European side,” he says. Operated by a joint venture between SJM Holdings Ltd and Success Universe Group, Ponte 16 is adjacent to the peninsula’s historical centre, with its

JULY 2012

legacy of the era of Portuguese rule, its narrow streets and its busy public areas. “In peninsular Macau, in that dense urban setting, there’s lots of fun, lots of excitement, lots of people. That adds to overall energy levels,” says architect and designer Brad Friedmutter, founder of the Friedmutter Group in Las Vegas. “When you’re isolated, then you need to have more stand-alone units that have to offer more within each property.” Cotai resorts can offer more than their counterparts on the peninsula because Cotai offers something unique in Macau: space. “Land resources are scarce,” says Tommy Lau Veng Seng, a developer and government-appointed member of the Legislative Assembly. “There’s more land in Cotai. Some of the land can be used for non-gaming development.” Cotai’s big-box resorts can include thousands of square

MAKE MINE A MANHATTAN T

en years from now, Cotai and the Macau peninsula will be like the Strip and downtown Las Vegas. That’s what many observers say before they actually see the differences, according to Ricardo Siu Chi Sen, associate professor of business economics at the University of Macau. “The Macau peninsula has more attractions than downtown Las Vegas,” Mr Siu says. The peninsula has its historical centre and a host of modern sights, from Macau Tower to the Science Centre. The peninsula is also the focus of urban life, mixed in with the casinos and their ancillary businesses. It reminds architect and designer Brad Friedmutter not of downtown Las Vegas but of somewhere further east. “I liken downtown Macau to Times Square in New York,” Mr Friedmutter says. “There you have a section of Manhattan that’s crucial to the city and that has become a central tourist attraction. Other businesses benefit when you have that situation.” Hoffman Ma Ho Man, the deputy chief executive of Ponte 16, a casino resort on the peninsula, agrees that integrating tourism benefits the city. “For a lot of international cities, it could make sense to put tourism activities outside of the centre of the city. But in Macau’s case, it’s better to put it in the centre of the city and have it spill out into the local economy,” Mr Ma says. “It’s the nature of the city [that] people will accept tourism as long as it’s not disrupting other activities.”

on either Cotai or the peninsula. “For regular tourists from the mainland, unless they’re on a tour, they don’t go to both sides much on the same trip,” he says. “One of the reasons is the money, not the time. A taxi costs MOP50 [US$6.25] or MOP60. If they don’t see the necessity, they won’t hop between.” A growing array of attractions in Cotai means more tourists remain there and do not visit the peninsula. “There’s a shift of attention from downtown to Cotai as Cotai has surpassed critical mass. Less time is allocated to experiencing local shops in downtown areas,” says a former president of Taubman Asia, Morgan Parker. Taubman Asia was the original developer of the shopping mall in Cotai’s Macau Studio City, but dropped out of the project as the delays mounted. Since most businesses in Cotai are owned by outsiders, a shift from the peninsula to Cotai could hurt Macau-owned businesses, especially small and medium-sized enterprises. “We are feeling it,” says Adriano Neves, the owner of A Lorcha, a restaurant in the Inner Harbour area of the peninsula. “Our business is off 15 to 20 percent.” metres of space filled with non-gaming amenities such as shopping malls, convention centres and entertainment venues to go along with the casinos and hotels. That fits in with the government’s plan for economic diversification. It also gives visitors a wider variety of choices, whether among resorts or between Cotai and the peninsula.

No-hop stop Ponte 16 has found that its customers do not just want one kind of experience. “We have 22 to 24 percent return guests. We know they stay with us and stay in Cotai sometimes, depending on their mood,” Mr Ma says. “I think both [Cotai and the peninsula] can coexist and visitors can experience more variety.” Mr Ma says that on each visit, a tourist usually focuses

Shop evolution “We can’t fight with the giants,” Mr Neves says, when asked for his reaction to the challenge posed by Cotai. “We will keep doing things our old way.” Other sources say that the effect of Cotai’s growth on Macau-owned businesses has been less severe than A Lorcha’s example suggests. “Honestly speaking, the impact is not so big,” says the director of the SME Association of Macau, Kenneth Lei Chi Leong. Mr Parker, who is now a retailing consultant, says: “There are more people coming due to critical mass [in Cotai]. Local shops have at least theoretical access to these visitors. Good local retailers have more customers within reach than ever before.” JULY 2012

Gaming

The peninsula is the focus of urban life, mixed in with the casinos and their ancillary businesses

Mr Parker sees niches where Macau retailers can emerge as winners. “Watch and jewellery stores can benefit because not everyone is going to buy a Rolex or Cartier,” he says. “So can Macanese specialty stores, from tarts to apparel. If you look at Macau shopping from the mainland tourist’s viewpoint, if you’re not looking for Louis Vuitton 30 percent cheaper than at home, you’re looking for something you can’t get at home,” he says. “You’ll see winners and losers. There will be local retail-

GHETTO MENTALITY J

osé Pereira Coutinho, a directly elected member of the Legislative Assembly, applauds the development of Cotai. It is not the integrated resort concept or the lengthening list of non-gaming amenities that pleases Mr Pereira Coutinho, but the growing number of casinos. “Cotai should be the mega-centre for gaming,” he says. “Putting it all in one place is good. It protects local people from gaming.” Mr Pereira Coutinho advocates removing slot machine parlours from residential areas. “They need to move to Cotai,” he says. He believes any harm done to businesses on the peninsula by the shift of gaming and tourism to Cotai will be offset by the benefits of shielding residents of the peninsula from gaming. A government-appointed member of the Legislative Assembly, Tommy Lau Veng Seng, agrees that Cotai’s effect on businesses on the peninsula is minimal, and welcomes gaming development in Cotai. “Facilities on the Cotai strip are going to complement what we have,” says Mr Lau, who is also president of the Association of Building Contractors and Developers. “I’m anxious to see these facilities completed. It’s going to be very positive for Macau.” JULY 2012

ers who get with the programme and succeed. Others will succumb to rising cost structures. This is all part of the natural evolution of the retail ecosystem.” Mr Lei of the SME Association, who also lectures in marketing at the Macau University of Science and Technology, says Cotai is already making some Macau-owned businesses winners. Retailers and restaurants in Taipa Village are benefiting from the increasing number of visitors, he says.

Elevated expectations Mr Lei says they have already profited from the pedestrian overpass above Estrada da Baía de Nossa Senhora da Esperança, nearby Venetian Macao and Galaxy Macau, which links Cotai and Taipa Village. Business organisations suggested the overpass to the government, Mr Lei says. The Light Rail Transit elevated railway, officially expected to begin operating in 2015, will connect the peninsula and Cotai more conveniently and economically than taxis. “Light rail will accelerate the efficiency of travel,” says Ricardo Siu Chi Sen, associate professor of business economics at the University of Macau. “Tourists can check into their Cotai hotel, go to the peninsula via light rail and help sustain the traditional SMEs.” Mr Siu also believes the LRT will help prolong the average stay in Macau. All in all, he thinks Cotai has been good for the city. “The positive is larger than the negative side. For more diversified tourism offerings, we have the world heritage sites and culture on [the] Macau peninsula.” Mr Friedmutter the architect says: “Macau is becoming a world-class destination.” The Friedmutter Group recently opened an office here. “Everybody knows Las Vegas, whether they’ve been there or not,” he says. “Now Macau is like that.”

POLICE BUSTS CASINO SCAM

The Macau police announced last month that they cracked a casino scam syndicate. A total of 19 people were arrested but the police said at least 10 more suspects were at large. The authorities estimate at least three casinos were scammed out of MOP13 million (US$1.6 million). The syndicate used cameras hidden up their members’ sleeves and had collaborators inside the casinos, including croupiers.

WYNN MACAU LOOKS TO RAISE LOAN

MELCO CROWN CLOSE TO SECURE MANILA DEAL Belle has confirmed talks with Macau-based gaming operator over Manila casino

Belle Corp, controlled by Philippine billionaire Henry Sy, confirmed last month that it was in talks with Melco Crown Entertainment Ltd to set up a Manila casino. The confirmation came after news reports saying a deal was close. Belle was discussing the partnership but no final agreement had yet been reached, Belle’s Vice Chairman Willy Ocier told Bloomberg. Belle holds one of four licences to operate a casino resort in the new Manila Entertainment City. Other licence holders include Genting Hong Kong Ltd, Philippine port magnate Enrique Razon Jr. and Japanese businessman Kazuo Okada, who was until recently Wynn Resorts Ltd’s biggest shareholder. Casino research firm Union Gaming Group is not bullish on the possible entry of Melco Crown into the Filipino casino market. Analysts Grant Govertsen and Felicity Chiang say the best deal for the gaming operator would be a capital-light agreement, namely a management services agreement. “Melco Crown can generate better returns on capital elsewhere, namely Macau (Macau Studio City and another hotel tower at City of Dreams), while we think better and lower risk greenfield opportunities exist in likely future markets such as Japan and Taiwan,” they wrote in an investors note. The two analysts are not shy about saying that they are not totally sold on the Manila Entertainment City project. “We are not sold on the concept of the Philippines (and Manila specifically) becoming the second Asian gaming market behind Macau, let alone being big enough to support an additional four major new integrated resorts.”

Wynn Macau Ltd is said to be considering raising its Wynn Cotai loan to US$2.5 billion (MOP20 billion). The gaming operator is looking at increasing the loan after drawing around US$2.7 billion in commitments in the first stage of syndication, two people familiar with the matter told Bloomberg. The initial goal was to raise US$1.5 billion. The first stage of syndication attracted about 15 banks. Wynn Macau will use proceeds from the loan to finance its new project in Cotai, estimated to cost around US$4 billion.

U.S. MUTUAL FUND SELLS MACAU CASINO STOCKS Waddell & Reed Financial Inc, a U.S. mutual fund company, was last month selling shares in Sands China Ltd and Wynn Macau Ltd. The goal was to raise about US$250 million (MOP2 billion), according to terms obtained by Bloomberg News. Waddell & Reed was offering a total of 41 million shares in Sands China, from HK$24.18 to HK$24.68 each. A total of 55.5 million shares in Wynn Macau were also being offered from HK$17.53 to HK$17.90 each. UBS AG was managing both processes, according to the terms.

JULY 2012

Gaming

Wild side Franco Dragone creates “Taboo”, an edgy, sensual show for City of Dreams BY LUCIANA LEITÃO

he latest “Taboo” is in the public’s sights. “Taboo” is a racy floorshow by Franco Dragone, the creator of City of Dreams’ other show, “The House of Dancing Water”. “Taboo” opened last month at Club Cubic and, although on an exclusive run until September 15, there are hopes of turning the show into a permanent feature at the casino-resort that is owned and managed by Melco Crown Entertainment Ltd. “Taboo” is a cabaret-inspired production, with an international cast and some seriously sensual stage moves. Executive artistic director Jay Smith says the team wanted to “create something that is a little bit edgy, a little bit sexy, a little bit naughty”. “It is our long-term goal to contribute to position Macau as a world-class centre of cutting edge entertainment,” says Melco Crown chief executive officer Lawrence Ho Yau Lung. “By bringing this new exclusive performance to town, we are creating greater diversity in Macau’s tourism while stimulating more visits to the city.” The one-hour performance runs from Wednesdays to Saturdays, starting at 10pm. The venue has a capacity of 214 spectators seated at tables. In order to accommodate the show, the main room at Club Cubic has undergone some renovations. Mr Smith says the show is pitched at an audience of residents and tourists. “The idea was to create a cabaret-style show with a contemporary twist,” he says. One of the show highlights is provided by Finnish performer Lucky Hell. Able to swallow a 56-centimetre long sword, Ms Hell says if she was to slip from her stilettos during her performance, she would die instantly. The show’s cast includes a team of about 20 international performers, including 14 dancers from Ukraine’s Freedom Ballet. Wearing the briefest of costumes and high heels, the danc-

JULY 2012

ers tease and seduce with their luscious, dark movements.

Eclectic flavours The cast includes Elena Gatilova, an aerial hoop performer and former world champion gymnast who has the stage name Lucky Moon. Joining her is Jennlee Shallow, a mezzo soprano who was on the world tour of the “Lion King” musical; award-winning flamenco dancer and choreographer Fabien Thomé; and aerial chain acrobat Stephen Williams. “Taboo” even includes its own princess. Princess Rebel is apparently the daughter of a leader of Cameroon’s Malimba tribe. She performs African dance moves. Dragone’s “other” show at City of Dreams, “The House of Dancing Water” has been quite successful so far. The water-based permanent production has a soundtrack featuring Hong Kong singer-actress Sammi Cheng, and is full of themes easily accessible to Chinese and, more broadly, Asian cultures. The new show has no overt influences from this part of the world. It is yet to be seen how a predominantly Chinese audience will react to such an edgy production. “It was not a conscious decision,” says Mr Smith, when questioned why “Taboo” includes neither Asian performers nor Asian elements. “We were looking for unusual and exceptional talent. We had a limit to the length of the show and we selected the most unusual and, probably, interesting acts for an Asian audience to see.” The lack of elements dear to Chinese audiences was one reason industry insiders say Cirque du Soleil’s “Zaia” at the Venetian Macao did not resonate and was cancelled. Neither Melco Crown nor Dragone’s company has announced the budget for “Taboo”. Tickets start at HK$2,000 (US$258) for a tall table for two.

Jennlee Shallow

Lucky Hell

Lucky Moon

Fabien Thomé JULY 2012

Gaming

Photo: Carmo Correia

Eric Meyerhofer and John Edmunds

Coupon revolution In a gaming market averse to carded play, promotional couponing systems are the way to go, says FutureLogic ow can a slot machine promote responsible gambling? Through intelligent couponing, says FutureLogic Inc of the United States, which is principally a supplier of thermal printers for casino equipment. Version 2.0 of the company’s intelligent promotional couponing system, called PromoNet, launched this year, allows a slot’s printer to be used to issue alerts about responsible gambling, based on the time played or amount wagered. FutureLogic decided to give PromoNet 2.0 responsible gaming functions after slot operators showed interest, says Eric Meyerhofer, the company’s chief executive. The aim of the slot operators was to

JULY 2012

give out to players time-limited vouchers for free drinks or meals so that the punters had time away from the machines. Mr Meyerhofer says it is probable that to begin with it will be the regulators that push for the introduction of responsible gaming functions in slots. His company is not actively lobbying for this. “We are just trying to stay neutral,” he says. “How well it is applicable in Macau or in the Asian market, I don’t know. It will depend on what the regulatory view is, how the operators want to get involved and work with the regulators on that.” FutureLogic opened a sales, service and distribution centre in Macau in 2006. Mr Meyerhofer says the com-

pany has the dominant position in the market here for thermal printers for the gaming industry. He estimates its share at 80 percent.

Like printing money “We did get the lion’s share of the market. Now it is about bringing added value,” Mr Meyerhofer says. That is where intelligent promotional couponing systems come in. Thermal ticket printers in slot machines are used mainly for “ticket in, ticket out” purposes, or TITO. In TITO mode, a slot machine prints out a winnings coupon instead of spewing out coins. The coupon can be taken to a cashier or a TITO self-redemption kiosk

63 and exchanged for money. Or it can be inserted in the slot for banknotes of another slot machine and the value can be gambled with. Mr Meyerhofer says slot machine printers can do more than this. They can be used for marketing by having them print out promotional coupons not only at the slots, but also in hotels, restaurants, shops and theatres. “One of the keys to doing a lift on slot revenue would be to capture a number of potential players that already walk though a casino” but don’t gamble, he says. “The Venetian, for example, has a massive number of retail shopping customers. If it could get some of those people down to the casino floor through the form of a promotional slot credit, the Venetian could potentially move the needle up.”

Paper, no trail Promotional coupons could also be used the other way around, bringing players from the casino to shops and restaurants where they could get discounts. The aim would be for casinos to get punters to open their wallets wider by keeping them on the premises longer. Mr Meyerhofer acknowledges that few slot operators here use slot printers for more than their basic TITO purpose, although most can print a variety of images and languages. But the market is maturing, he says. Intelligent promotional couponing systems can also allow casinos to reward players better, especially in markets where loyalty programmes fail to have much appeal. That is the case here, as many mainland Chinese dislike being tracked through a loyalty card. “What is different about the Macau market is that the mass market is anonymous,” says John Edmunds, FutureLogic’s vice-president for product management and international markets. “How do you segment and identify high-value players and then reward and incentivise them? In the U.S., it is much easier, as you have a higher percentage of carded play,” he says. PromoNet, Mr Edmunds says, is

COMMON CURRENCY F

utureLogic Inc has come up with a new product which will enable gaming tables to dispense “ticket in, ticket out” (TITO) coupons. The company says its new TableXchange creates a common currency across the casino and helps it identify valuable crossover players. John Edmunds, FutureLogic’s vice-president for product management and international markets, says that while table games are a big part of the Asian gaming market, the number of slot machines is increasing steadily. “If you can find a common currency to enable people to move around the whole casino, from tables to slots and vice-versa, it enables the players to try out those new games.” TableXchange is still in development. “We are working with a number of system vendors to bring that to market,” Mr Edmunds says. He says FutureLogic is aiming to introduce TableXchange in Macau late this year or early next, once the regulator has approved it.

the answer. It interfaces with multiple third-party slot-accounting and playertracking systems, enabling slot operators to distinguish carded players from non-carded or anonymous players, and reward them accordingly, instantly.

Material of the future “If you are an anonymous high-value player, we may encourage you to join the loyalty club or give you a reward to stay one extra night in the hotel,” Mr Edmunds says. Coupons could also be used to encourage return play and to shift play to quieter spells. He says FutureLogic is trying out PromoNet 2.0 in a number of casinos around the world, including places in Asia. The company is in talks with some casino operators here about run-

ning trials. FutureLogic was until recently first and foremost a printer manufacturer. Although the world is increasingly paperless, the company’s executives feel paper coupons will be around in casinos for many years to come. “Our belief is that nobody has even really started to leverage the marketing use of the [slot] printer,” Mr Meyerhofer says. “We think couponing is going to prove to be incredibly effective.” He says that in other industries paper coupons have been far more effective than their virtual counterparts. “It is because they are very simple to use.” FutureLogic serves not only the gaming industry. It also supplies printers for petrol pumps and medical devices, among other things.

JULY 2012

Gaming cessful content from the Australian and U.S. markets and bring it here,” he explains. Mr Sutherland says such a strategy has paid off in Europe, South America and in the Philippines, but he admits that it has not been the case in Macau. Konami is also reassessing its organisational structure. The gaming supplier has no subsidiary in Macau. Konami Australia Pty Ltd and Konami Gaming both develop content, which is then distributed here by Konami Australia. Both companies are subsidiaries of the Japan-based entertainment developer Konami Corp.

Photo: Carmo Correia

Game changer

Steve Sutherland

Time for fine-tuning

Konami wants to grow its market share in Macau. To achieve that, it is reassessing its strategy onami is setting the bar high, saying it wants to be one of the top slot machine suppliers in Macau in the long run. But the company acknowledges it has some major decisions to make first. “Konami was a late entrant into the marketplace,” says Steve Sutherland, chief operating officer of U.S.-based Konami Gaming Inc. “I think there is an outstanding op-

JULY 2012

portunity here long-term for Konami to be successful. But to achieve that, we will have to ensure we have the right products and the appropriate organisational structure to support this market.” Unlike other suppliers, Konami has yet to start developing custom-made content for the Asian market. “It is something that is under evaluation,” Mr Sutherland says. “Our strategy has been to take suc-

Mr Sutherland hopes next year will be a turning point for Konami in Macau. The company’s latest gaming platform, called KP3, is expected to be pivotal in achieving that, he says. Konami’s engineers are currently working to bring the operating system in line with the new standards for slot machines, which will be fully in-place by October. “With that platform, there is significantly more power in the electronics for video graphics and sound. We can have real-time 3D interfaces,” Mr Sutherland says. KP3 also includes pinball-side style buttons that he says appeal to the younger generations of players. The KP3 has already been released in the U.S., “so far very successfully,” according to Mr Sutherland. Nine games were released and 50 more are in the pipeline. Mr Sutherland says Konami’s performance in Macau is below the company’s international standard. “We would like to see it more like what we are experiencing in North America, South America or in Europe, where we are a consistent-type performer,” he says. “In those markets, we have come from being probably one of the lower-end suppliers, to today, where we are solidly the number four provider.” Konami is now aiming to become one of the top three gaming suppliers worldwide. “In the Philippines, we have well over 30-percent market share,” says Mr Sutherland. He admits that achieving those numbers here won’t be easy. “You have a number of suppliers [in Macau] that are already well established. It is going to take us time.”

WYNN’S EX-WIFE SUES TO GAIN RIGHT TO SELL SHARES Elaine Wynn is looking to invalidate a stock agreement between her, Steve Wynn and Kazuo Okada Elaine Wynn is taking legal action to gain the right to freely sell her shares in Wynn Resorts Ltd. Ms Wynn is the ex-wife of Wynn Resorts chairman and chief executive Steve Wynn. To achieve her goal, Ms Wynn filed a claim last month against Mr Wynn and a claim against Japanese businessman Kazuo Okada in an existing federal lawsuit in Nevada pitting Wynn Resorts against Mr Okada. She took legal action eyeing to invalidate a stockholders’ agreement between her, Mr Wynn and Mr Okada that locked up their shareholdings and votes, Las Vegas Sun reported. Ms Wynn is arguing that the forcible buyout by Wynn

MACAU SLOT CONTRACT TO BE EXTENDED

Macau Slot – Sociedade de Lotarias e Apostas Mútuas de Macau Lda will have its non-racing sports betting contract renewed for three more years, until June 2015. The announcement was made last month in the Official Gazette. The previous contract ended on June 5. Macau Slot holds a de facto monopoly on non-racing sports betting in the territory, including football and basketball. The contract renewal comes shortly after U.S.-based Cantor Fitzgerald LP, which runs sports betting in several Las Vegas casinos, announced it was seeking to expand to Macau.

Resorts of Mr Okada’s stake in the company “frustrated” the purpose of the stockholders’ agreement. Ms Wynn holds a 9.7 percent stake in Wynn Resorts, Wynn Macau Ltd’s parent company. It is not clear how many shares, if any, Ms Wynn is eyeing to sell. Mr Wynn has already reacted, rebuffing his ex-wife claims. “[The] cross claim filed by my ex-wife Elaine P. Wynn is a legally baseless attempt to drag into federal court a domestic relations matter that was previously settled in family court in Las Vegas,” he said in a statement. “It was at the essence of a property settlement between us that was extensively negotiated while Elaine was represented by a top divorce lawyer.”

JOCKEY CLUB AGAIN POSTS LOSS

The Macau Jockey Club posted a MOP17.8 million (US$2.2 million) loss in 2011, according to the company’s annual report. The company has been losing money for several years. The last year that it was in the black was 2004, when its operating profit was MOP52.9 million. The Macau Jockey Club posted a MOP36.3 million loss in 2010. Horse racing in Macau, organised under a monopoly by the Macau Jockey Club, generated gross revenue of MOP440 million last year, remaining stable in comparison with 2010, according to official data.

CELINA LIN WINS MACAU POKER CUP MAIN EVENT

Team PokerStars Pro Celina Lin captured last month her second Red Dragon title in the 16th edition of the Macau Poker Cup: Red Dragon series. She became the fi rst player to win two Red Dragon titles. Ms Lin beat the 391-player fi eld at the Grand Waldo Entertainment Complex and took home the HK$854,000 (US$110,000) top prize. “I always wanted to be the fi rst female champion,” said the 29-year old speaking about her fi rst Red Dragon title in 2009. “But I thought it was impossible to win it twice.”

JULY 2012

Gaming

Galaxy Macau uses Paltronics’ One Link 3E systems

Backstage player

Paltronics is not a household name for punters, but the company powers jackpots at several Macau casinos

or some companies, being out of the spotlight is not a bad thing. That is the case for U.S.-based casino management solutions provider Paltronics Inc; it means its slot and media gaming systems are running smoothly. Founded in 1992, Paltronics has developed a unified system for bonusing, jackpots and media management. The firm has its products deployed across several casinos here through its subsidiary Paltronics Macau Ltd, which also services other regional markets. “We are using Macau as a hub for the rest of Asia, instead of looking out of Singapore, or the Philippines out of Australia. We have a five-person team here,” says managing director Stephen Cowan. The company has recently introduced its new One Link 3E systems, the next generation of the company’s One Link systems. Paltronics’ One Link 3E Slot System allows casinos to centrally configure, manage and monitor progressive and bonusing events at one or more properties. The One Link 3E Media System, on the

JULY 2012

other hand, gives casinos the ability to centrally create, edit, manage and narrowcast a full range of media content playlists on a multitude of display types at one or more venues.

Regional growth Galaxy Macau casino was the first property here to run both the One Link 3E Slot System and One Link 3E Media System. “There is an upgrading process taking place as well [involving existing clients]. We have products in nearly every property in Macau,” Mr Cowan says. Traditionally, Paltronics’ slot systems were the company’s best-selling product in Macau. “But the media system has been growing every year. It is becoming as important.” Nevertheless, Mr Cowan says operators here could make better use of the power of media systems. “With the current flexibility, you can do a whole lot with media. Most places, for jackpotting, just have a graphic – it does its thing, shows your numbers, but

they don’t change it too much.” Mr Cowan says Paltronics continues expanding in Macau, following the organic growth of the market. Paltronics also expects to grow in the Philippines with the opening of Manila Entertainment City’s four casino resorts. “We already signed up one of the casino for slots and media systems. There is a lot of activity in Manila at the moment,” Mr Cowan stresses. He says he is not worried about Macau’s new technical standards for electronic gaming machines. From October onwards, all machines will have to comply with the new rules. “We have no problem with regulatory processes,” Mr Cowan says. “We actually think it is better to work in a regulated environment than not. It is safer for everybody: it is safer for the consumers, for the venues and for the providers.” Paltronics also supplies jackpot systems. At this year’s G2E Asia gaming expo, Paltronics showcased its Mystery Madness, a mystery jackpot link that can have more than one winner.

JULY 2012

Gaming

“Eurovegas” in jeopardy Las Vegas Sands sweats over bet on Spain

World famed chef Ferran Adria weighed in for Barcelona the previous day, promising to collaborate with the project if the north-eastern city was chosen for the casino. Overall, the 10 to 15 year project would build four complexes with 12 hotels providing 36,000 rooms, nine theatres, three golf courses and convention centres around the casinos. Mr Leven said it could create up to 250,000 jobs. The first, most expensive, phase, would build 12,000 rooms, four buildings and the necessary infrastructure for an investment of about 6.8 billion euros. It could provide 150,000 direct and indirect jobs, he said, recalling that the group had opened similar complexes in Singapore and Macau.

Tax moratorium

Michael Leven

merican billionaire Sheldon Adelson is hesitating before placing his bet on a Las Vegas-style casino in Spain in the midst of a spiralling Eurozone debt crisis. Even as Madrid and Barcelona vie with each other to lure the Las Vegas Sands Corp chief executive, the lack of financing from banks swamped with bad loans from a 2008 property crash may leave them nothing to fight over. Las Vegas Sands is the parent company of Macau gaming operator Sands China Ltd. Mr Adelson’s right-hand man, chief operating officer Michael Leven, con-

JULY 2012

ceded as much as he visited Madrid and Barcelona last month to evaluate the rival sites on offer for a jobs-rich “Eurovegas”. For political and business leaders it is a tantalising prospect: an investment of up to 15 billion euros (MOP150 billion) at a time of recession with nearly one-quarter of the workforce unemployed. They rolled out the red carpet in Barcelona and Madrid. As Madrid regional president Esperanza Aguirre welcomed Mr Leven last month, she was surrounded by top executives from Spain’s flag carrier Iberia, Santander bank, textile giant Inditex and builders such as FCC Construction.

The key, however, is rustling up the stake. Las Vegas Sands says it would stump up 35 percent of the funds for this first phase and it would expect an annual return on investment of at least 20 percent. That leaves 65 percent of the money to find. Mr Leven, speaking to reporters in Madrid after his tour of the two cities, said the group had held discussions with about 30 banks including some from Spain and he admitted some challenges. “I think it’s more difficult today because of the international global situation but it’s certainly not impossible,” he added. “If the project is not able to be financed by the banks, in other words if the world gets worse in the next six or seven months, then of course we would not be able to do the project.” The other obstacle, he said, would be if politicians did not pass the legislation the casino is requesting, including limited exemptions on anti-money laundering and anti-smoking laws, and a 10year moratorium on gambling taxes. Protesters, however, say they fear a Eurovegas would open the doors to prostitution mafia, and they denounced a return to the excesses of the property bubble, which imploded in 2008. “Mr Adelson should listen to the people’s opposition before building this aberration, whose only goal is to profit from and deepen the crisis that we are paying for, handing the profits as usual to the elite who got us into it,” says the platform of “Eurovegas No”, which claims to have collected 35,000 signatures. AFP NEWS AGENCY

Gaming Statistics

Casino gaming 2011 MOP 267.9 billion

Gross gaming revenue

5,302 16,056 34 casinos

Gaming tables Slot machines Number of casinos

Market share per casino operator* 2011 SJM Holdings Ltd Galaxy Entertainment Group Ltd Sands China Ltd Wynn Macau Ltd Melco Crown Entertainment Ltd MGM China Holdings Ltd

29% 16% 16% 14% 15% 10%

Year-on-year change (%)

MOP 23.3 billion

42.2 10.7 14.3 1 casino

5,242 16,102 34 casinos

Year-on-year change (%)

-3 7 -2 -1 --1

Year-on-year change (%)

Latest

percentage points percentage points percentage points percentage point

Month-on-month change (%)

26% 23% 18% 12% 13% 9%

percentage point

12.2 8.0 16.8 1 casino

-3 3 1 1 1 -2

percentage points percentage points percentage point percentage point percentage point percentage points

Notes Jun 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012

Notes Jun 2012 Jun 2012 Jun 2012 Jun 2012 Jun 2012 Jun 2012

Gross revenue from casino games Roulette Blackjack VIP Baccarat Baccarat

MOP783 million MOP2,712 million MOP196,126 million MOP48,669 million

Fantan

MOP211 million

Cussec

MOP4,774 million

Paikao

MOP114 million

Mahjong Slot machines 3-Card Poker Fish-Prawn-Crab

MOP70 million MOP11,425 million MOP190 million MOP51 million

3-Card Baccarat Game

MOP281 million

Craps

MOP151 million

Texas Holdem Poker

MOP277 million

Lucky Wheel Live Multi Game

MOP35 million MOP311 million

Stud Poker

MOP1,309 million

Casino War

MOP225 million

Fortune 3 Card Poker

MOP141 million

Year-on-year change (%)

16.5 18.4 44.6 39.4 15.3 34.3 32.6 105.9 32.6 45.0 -45.2 28.3 -7.4 28.2 9.4 103.3 23.5 43.3 29.4

Latest MOP147 million MOP697 million MOP52,678 million MOP15,131 million MOP65 million MOP1,354 million MOP27 million MOP51 million MOP3,306 billion MOP55 million MOP6 million MOP91 million MOP30 million MOP74 million MOP8 million MOP139 million MOP346 million MOP71 million MOP42 million

Year-on-year change (%)

-21.8 5.1 23.7 43.3 41.3 26.9 -10.0 410.0 21.4 19.6 -66.7 40.0 20.0 10.4 -167.3 14.2 57.8 27.3

Notes Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2013 Jan-Mar 2014 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012

Gross revenue from other gaming activities 2011 Greyhound Racing

MOP297 million

Horse Racing

MOP440 million

Chinese Lottery

MOP6 million

Instant Lottery

MOP0.0036 million

Sports Betting - Football Sports Betting - Basketball

MOP362 million MOP86 million

Year-on-year change (%)

-12.6 0.2 -56.5 -4.7 8.9

Latest MOP54 million MOP88 million MOP2 million MOP0.0002 million MOP102 million MOP36 million

Year-on-year change (%)

-28.9 -24.1 100.0 -66.7 14.6 9.1

* Figures are rounded to the nearest unit, therefore they may not add exactly to 100 percent JULY 2012

Notes Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012 Jan-Mar 2012

Source: Gaming Inspection and Coordination Bureau and industry sources

2011

Gaming

Pacific bet

A Taiwanese company has taken over the Tinian Casino in the Northern Mariana Islands BY MARTIN JOHN WILLIAMS*

Taiwanese building firm has snapped up the struggling Tinian Dynasty Hotel & Casino in the Northern Mariana Islands and is already eyeing extra investment from the mainland. Taiwan-listed Howarm Construction Co Ltd last month secured the US$46.5 million (MOP372 million) deal for the 14-year-old hotel-casino, located on the small Tinian island, and the exclusive right to develop around 3,300 hectares of land on the island. Howarm chairman Liu Yung-hsiung also signed an agreement with Tinian Mayor Ramon M. Dela Cruz to add extra tourist attractions in a “New Migrant Integrated Development Zone” on the island. That will include real estate, a golf course and extra hotel capacity, including an extension of the existing hotel. “Later we will roll out a plan for

business migration, and already there is a lot of interest among mainland investors,” Mr Liu says. Presently, mainland Chinese make up 60 percent of the hotel’s guests, the company said, and scheduled flights from Beijing are expected to begin this month, joining tourist-dominated services from Shanghai, Seoul, Busan and Tokyo. The casino’s operations are expected to be handed over in the third quarter, while payments are expected to be completed by next month or September, Howarm spokesman Lee Chih-kuang told GamblingCompliance.

Unsolved issues The takeover of Tinian Dynasty may inject much-needed cash into the project but fundamental challenges remain. Howarm will inherit a US$30 million

South Korea Japan China Northern Marianas Taiwan

Saipan Philippines

Tinian Rota Guam

Taiwan-listed Howarm Construction Co Ltd last month secured the US$46.5 million deal for the 14-year-old hotel-casino

tax debt with the Northern Mariana Islands government and on-going litigation in the U.S. over labour violations. The Northern Mariana Islands are a selfgoverning U.S. territory. Added to this is the prospect of casino licences for neighbouring Saipan, the largest island of the Northern Mariana Islands. Such a development would threaten the Tinian hotel’s gambling revenue, though political resistance and public scepticism has prevented any changes to the law. Ben Lee, managing partner of Macau-based gaming consultancy IGamiX Management & Consulting Ltd, says transport difficulties will also continue to dog the island, as international guests arriving at Saipan airport must transfer onto a limited number of Cessnas for the brief shuttle to Tinian. Passenger capacity is limited to four to six people per flight, or less with baggage, and hours of waiting lie in store for passengers in larger groups, he says. Mr Lee also questions the appeal of Tinian, which has few tourist attractions and lacks the “critical mass” of Saipan, which itself features “three mothballed hotels” for lack of customers. “When the main island is dying, then what does that bode for the little island?” he says. “The fundamental issues haven’t been fixed. You can’t get your customers there. But even if you have the means to get your customers there, there’s nothing to attract the customers,” Mr Lee says. * GAMBLING COMPLIANCE / MACAU BUSINESS

JULY 2012

DOWNWARD REVISION FOR MACAU GAMING PROSPECTS

Brokerage firms Macquarie, Nomura and CLSA Asia-Pacific Markets have all announced cuts in their estimates for Macau’s gaming industry performance for the whole of 2012. Macquarie analysts Gary Pinge and Elaine Lai revised their growth rate forecast for Macau’s 2012 casino gross gaming revenue to 13 percent from 15 percent. They wrote in a client note that the downward revision was due to a softening in mass-market growth trends, coupled with a slowdown in the growth of VIP gaming. Macquarie cut its 2013 growth estimates from 10 percent to 7 percent. Japanese brokerage house Nomura revised downward its 2012 growth rate forecast to 15 percent from 19 percent, while CLSA now expects a 16-percent growth rate instead of 21 percent. Nomura also reduced its estimates for 2013 to 11 percent from 16 percent.

NO CHANGES ON VISA RULES

The Macau Government Tourist Office said last month it has not received notice of any changes on visa issuing by mainland authorities. The comment came after a report by Chinese-language newspaper Macau Daily News suggesting that mainland authorities were tightening Individual Visit Scheme visas. The majority of VIP players come to Macau on individual visas, and VIP gaming accounts for roughly 70 percent of the city’s casino gross gaming revenue. Several analysts also said that there hasn’t been a change in the mainland’s official visa policy on Macau travel. A major junket operator in Macau contacted by Reuters said they were not aware of any visa restrictions.

ALL GOOD, CHUI SAYS Chief executive backs Leonel Alves in Sands’ Beijing bribery allegations

G2E ASIA ATTENDANCE UP

The sixth annual Global Gaming Expo Asia (G2E Asia), hosted in May at Venetian Macao, welcomed over 6,100 gaming industry professionals, surpassing attendance at last year’s event by nearly 8 percent. The figures were released last month by G2E Asia organisers Reed Exhibitions and the American Gaming Association. Event attendees represented 67 different countries and regions. The 2012 G2E Asia floor featured over 130 exhibitors from 24 countries. The conference programmes welcomed over 600 attendees, the organisers said.

Chief Executive Fernando Chui Sai On said last month that he accepted Leonel Alves’ explanation regarding the alleged payment requests by a high-ranking Beijing official to Sands China Ltd. Mr Alves has rebuffed claims of any wrongdoing in the case. Mr Chui said he accepted Mr Alves’ explanation, but failed to elaborate on its details. According to a government press release, Mr Alves told Mr Chui the news reports on the alleged requests for bribes were baseless. Mr Alves allegedly relayed an unnamed Beijing official’s bribe requests to Sands China, according to a report by the Wall Street Journal, based on emails reviewed by the newspaper. The Beijing official claimed he could help Sands China to gain government authorisation to sell units at its Four Seasons luxury apartment hotel in Cotai. The deal would also include a settlement in the on-going litigation process between Sands and Taiwanese Asian American Entertainment Corporation Ltd, led by businessman Marshall Hao. The amount requested was US$300 million (MOP2.4 billion). Aside from being a lawyer and Sands China Ltd legal adviser, Mr Alves is also a legislator in Macau and a member of the city’s executive council, an advisory body to the Macau government. He is also a member of the Chinese People’s Political Consultative Conference.

JULY 2012

Hospitality

A retreat to beat

Sitting quietly in its secluded spot, the Pousada de Coloane is one of the best hotels for something its patrons crave — relaxation BY SARA FARR

JULY 2012

way from the hurly-burly of the peninsula and the hustle-bustle of Cotai, the Pousada de Coloane is about as far from the casinos as one can get without leaving Macau. It may lack fancy spas or Michelin-starred restaurants but it was recently picked by travellers as one of China’s top hotels for relaxation. It was sixth in the 2012 Travellers’ Choice Awards rankings, compiled by an online hotel reservations and reviews website, TripAdvisor.com. It was ranked above conspicuous hotels such as the Peninsula in Hong Kong and the Westin Resort Macau, which is also on Coloane. Situated in a secluded spot on Cheoc Van beach, the hotel resembles a family-run business in which everyone does their fair share. It has been under new management since last September, and is now run jointly by Barbara Moore and Luís Herédia. The change in management has meant some changes in the hotel, mainly in how it is maintained. “There was a need to upgrade the facilities. With upgrading the facilities we were able to provide better services to our clients,” says Mr Herédia. He says the “little things” needed to be put right, such as the air conditioners in the rooms and the mattresses.

MUTUAL RECOGNITION T

Many Macau residents visit the property at the weekend for afternoon tea or a glass of wine on the open terrace

JULY 2012

Photos: Carmo Correia

he Pousada de Coloane was established in the late 1970s. At the time it had a Portuguese restaurant, which still has, but fewer than the 30 rooms that it has now. The hotel is distinguished by its Portuguese-style tiling and Portuguese-style paving, and by its secluded situation by the seashore. Another thing that distinguishes the Pousada de Coloane is its people, says the assistant resident manager, Barbara Moore. “Customers come here and we recognise them. We have returning customers and they recognise us. It adds a personal touch,” Ms Moore says. Many expatriates living in the mainland come to the Pousada de Coloane for a relaxing weekend away from the big cities. “They come to the Pousada and they are away. There is this western Mediterranean environment here, and they like it.” Many Macau residents visit the property at the weekend for afternoon tea or a glass of wine on the open terrace overlooking the South China Sea. “This is amazing. It’s unique,” Ms Moore says. “But we don’t want to be too complicated in service. We want to provide a family-style, home-run hotel, if possible.”

Hospitality Before, guests used to get discounts of up to 20 percent if something was not up to scratch. “The prices were below the average,” Mr Herédia says. The facelift has meant increases in room rates of up to 40 percent. One thing that has remained unchanged is the hotel’s main purpose, which is to let its guests relax. “We’re not pretentious. We’re not like a casino hotel,” he says. “We’re a four-star hotel – and that’s what we want to be.”

Cosy does it

“There was a need to upgrade the facilities. With upgrading the facilities we were able to provide better services to our clients,” says Luís Herédia

JULY 2012

“Customers come here and we recognise them. We have returning guests and they recognise us. It adds a personal touch,” Barbara Moore says

Mr Herédia says the Pousada de Coloane is not after accolades. It just wants to give simple yet warm-hearted service, “especially to help guests feel relaxed”. At weekends the rooms are usually fully booked, so Mr Herédia and Ms Moore are looking for ways to attract guests on weekdays. One idea under consideration is to give away an extra night for nothing during the summer. The Pousada de Coloane is a money-maker. “It was always profitable,” Mr Herédia says. He thinks it can now perform even better. It may not rake in the kind of revenue that big hotels do, but “the clients, our staff and ourselves, we feel the benefits of being in a small cosy place,” he says. Like the bigger hotels, the Pousada de Coloane is troubled by the shortage of suitable manpower. “That is a challenge small and medium-size enterprises in Macau face,” says Mr Herédia. “We are competing with the largest hotel casinos in the world even just to get two or three chefs.” The seclusion of the Pousada de Coloane may entice guests, but it deters potential employees. Many find it “too far”, he says. Even so, the future looks promising. Mr Herédia says he is not worried about the opening of new casino resorts in Cotai in the coming years. He points to hotel occupancy data from the Statistics and Census Service. Between January and April, the average occupancy rate of hotels and guesthouses was 83 percent, one percentage point more than a year before, even though the number of rooms available increased by 20 percent to around 24,200. The number of guests increased by almost 14 percent to 2.9 million. “They will keep coming to Macau,” Mr Herédia predicts.

WORRYING SIGNALS

MACAU NEEDS MASTER PLAN FOR TOURISM: STUDY

Visitor arrivals decreased by 6.5 percent year-on-year to 2.1 million in May. This was the sharpest drop since July 2009, when tourist arrivals contracted by 15 percent. May was also the second month so far in 2012 that posted a year-on-year drop in the number of tourist arrivals. In the first five months of 2012, visitor arrivals increased by 3.7 percent year-on-year to 11.5 percent.

A study produced by expert members of the Pacific Asia Travel Association, or PATA, says Macau needs to formulate a comprehensive master plan for tourism development. The Macau Government Tourist Office commissioned the study. The results were announced last month. The experts concluded that Macau should bet on a diversified offering, with unique products. The report also said the city needs to boost the frequency and coverage of its air links.

MORE RESIDENTS VISITING TAIWAN

HOTEL CONSTRUCTION BOOM

Visitor arrivals post biggest drop since 2009

Official figures from Taiwan show the Macau and Hong Kong visitor numbers rose 25 percent year-on-year in the first five months of 2012, reaching a total of almost 390,000 people, media reports say. Taiwan authorities don’t provide a breakdown of the individual numbers for Macau and Hong Kong tourists. In April, over 100,000 people from the two SARs visited Taiwan hitting a monthly record. Taiwan’s Tourism Bureau is expecting the number of Macau and Hong Kong visitors to the territory to surpass the 1 million mark this year. Last year, 817,000 people from Hong Kong and Macau visited Taiwan, the highest-ever annual figure.

Macau had as many as 11 hotels under construction at the end of the first quarter, according to a statement released last month by the Lands, Public Works and Transport Bureau. The data is prior to the opening of Sands Cotai Central’s first phase, which included one Conrad and one Holiday Inn-branded hotel. There were another 21 hotel projects in the pipeline, waiting for approval. Overall, the 32 properties were expected to add up to 23,800 rooms to Macau’s hospitality sector, doubling the current offer.

JULY 2012

Tourism statistics

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

11,471,018 6,148,494 5,322,524 1.0 days

12.2 15.6 8.4 --

3.7 1.6 6.1 -0.1 days

Notes Jan-May 2012 Jan-May 2012 Jan-May 2012 May 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 (%)

3.6 9.8 4.0 3.7 11.5 26.0 13.9 7.3 33.9 35.4

Jan-May 2012

131.1 164.2 140.1 191.9 185.6 159.0 151.2 166.8

11,166,468 6,890,366 3,359,193 346,866 242,535 231,064 140,483 202,797 50,860 80,957

20.1 1.6 -6.0 -4.2 20.2 -0.6 4.5 3.0 0.3 8.8

2,849,276 2,915,451 414,366 171,519 184,993 589,773 128,014 107,772 57,398 11,366

7.7 -6.0 -15.2 12.5 12.6 -1.2 4.2 7.5 7.4 21.1

Jan-May 2012

12.4 22.2

Notes

Jan-May 2012 Jan-May 2012 Jan-May 2012 Jan-May 2012 Jan-May 2012 Jan-May 2012 Jan-May 2012 Jan-May 2012 Jan-May 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 (%)

24,211 20.2 2,948,365 13.6 percentage 82.9 1.0 points 1.47 nights -0.06 nights

Notes Apr 2012 Jan-Apr 2012 Jan-Apr 2012 Jan-Apr 2012

Visitor expenditure Year-on-year change (%)

2011 Total spending (excluding gaming) MOP 45.3 billion - Non-shopping spending - Shopping spending Per-capita spending

JULY 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

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

Satisfy me HOTELIERS INCREASINGLY ACKNOWLEDGE THAT QUALITY OF SERVICE IS CRUCIAL, BUT THEY MISS SOME IMPORTANT POINTS IN TRYING TO ACHIEVE IT n any service industry, the customer’s degree of satisfaction is directly influenced by the quality of the service provided – and nowhere more so than in Macau’s hotels, where service quality plays a pivotal role in attracting and retaining customers. The city’s hospitality sector has undergone a huge transformation over the past decade. Part of this transformation was the creation of a culture of quality in the industry. For several hotels here, high quality service has become part of their mission and core values. Even so, satisfying guests, developing relationships with customers and instilling customer loyalty remain big challenges. As Asian customers become more demanding and newcomers to the hospitality industry here raise the bar, there is a need to fine-tune the approach to service quality. Measuring quality of service can be difficult. It is a concept in the minds of consumers. It can be measured only by guests, as it depends on their perceptions. Assessment of service quality by customers is a dynamic process. It is a function of their ever-changing perceptions and expectations, which evolve as time passes and they travel from place to place. Their criteria can be different each and every time they demand service. There are other variables. In the hospitality industry, one set of people serves another, and professionals must take this into account. Customer diversity poses “quality dilemmas”, because each customer demands something different. Employees pose similar dilemmas. Each employee renders a service slightly differently, so each supplies something different. Service quality is also perishable, in the sense that it is time sensitive. Managers and employees have only a small window of opportunity in which to make an impression on guests that will make them loyal customers. Last but not least, service quality is intangible. This makes it harder to come up with ways to improve standards.

Eye opener To deliver high quality service, every hotel must be able to anticipate customer expectations at any given moment. It is a pipe dream that this will happen here any time soon. Visitors to Macau, indeed, have a range of options. Hotels have come up with new offerings and better strategies to keep their promises about the quality of their service. However, they are still missing crucial points. Hoteliers here focus too much on the “hardware”. It is the “software” that determines whether the service is of a high standard or not. Managers need to understand quality better. They too need to encourage their staff to meet quality standards every day. Service quality is far from being just high-flown talk. Consumers have become more demanding than ever before – especially in Macau. Professionals must understand that

It still surprises me that managers of international standing working here in Macau have been unable to come up with a formula for a workforce focused solely on service excellence intense competition and market saturation put even more pressure on them to strive for excellence. The expansion of the Macau hospitality industry since 2002 has led to a boom in new high-end products and amenities. This, in turn, has obliged established players to search continuously for new competitive advantages. In such a fierce, internationalised market, service quality is becoming the single most important distinguishing feature for achieving customer satisfaction. A satisfied guest is ultimately a loyal customer, who keeps coming back. A satisfied customer also advertises a hotel by word of mouth. It still surprises me that managers of international standing working here in Macau have been unable to come up with a formula for a workforce focused solely on service excellence. It is difficult but far from impossible. And the profits to be reaped are worth the effort. In an industry where most are blind, the efforts of whoever has the vision to create such a formula will be crowned with success. JULY 2012

Business

Caffeine rush There are plenty of tasty treats brewing in a new wave of trendy coffee shops BY ALEXANDRA LAGES

JULY 2012

79 t is late in the afternoon on a weekday and people are queuing outside the Kafka coffee shop in Taipa. Inside, the place is packed, with owner and pastry chef Nicole Lei behind the counter busy handling orders and bills. Cross to the peninsula and the scene is similar at the Eiffey cafe, near the Three Lamps district. Here too, people queue outside for a table indoors. The place opened less than a year ago and has become so popular that it occasionally runs out of supplies, obliging it to call it a day before its usual closing time. Freeing coffee drinkers from the shackles of the international chains, a number of new, hip cafes have opened their doors in Macau in recent years. They offer something with more character than what is served up by Starbucks and McCafé. Business is quite good, the owners say. Most of these ventures have been set up either by young resident entrepreneurs or by expatriates, mainly Portuguese. Kafka is one of the latest additions to the list. Mrs Lei and her husband established it in January in Rua de Braga, not far from the Macau Jockey Club racecourse. “We like the environment, because it is not so busy and crowded. It’s quite a nice place for people to relax,” Mrs Lei says. Kafka is a project that puts Mrs Lei’s talents to good use. She left her job in a casino here and went to Paris, where she was trained in French cuisine in general and French pastry-making in particular. Kafka serves French-style desserts and pastries made by Mrs Lei, along with toasts, coffee and tea. This summer it will widen its range of offerings. Kafka has already attracted a broad array of customers, tourists and residents alike. Its Facebook page has close to 4,000 likes.

Macau’s coffee culture has only recently started to blossom. Five years ago, the number of trendy cafes could be counted on one hand

Small is beautiful Apart from the quality of their coffee and food, these new cafes distinguish themselves by the cool design of their interiors. This is the case with Eiffey. Owner Milly Chan, a graphic designer by training, designed it herself, taking her inspiration from France, especially Paris. Ms Chan says she is a fan of the kind of coffee shops you find in Taiwan or Japan. “I used to stay a lot in Taiwan JULY 2012

Business

and there are many coffee shops there. When I came back to Macau, I couldn’t find any similar outlets here,” she says. Most of Eiffey’s customers are young couples or students. The cafe serves coffee and Taiwan-style drinks, along with waffles, pasta and rice. The swift success of the venture has encouraged Ms Chan to make plans for expansion. Macau’s coffee culture has only recently started to blossom. Five years ago, the number of trendy cafes could be counted on one hand. “Business has been growing more and more. You see an increase of small coffee shops in Macau because there is lack of manpower, but a small shop is easy to manage,” says Fernando Marques, an industry veteran. Mr Marques, a Portuguese, owns Café Ou Mun, in the Leal Senado Square area. Recommended in several international tourist guides, Café Ou Mun opened in 2001, and a smaller branch opened in Taipa Village less than one year ago. “If you have a big coffee shop, you need lots of employees and rentals are higher. But in a small coffee shop, you can ask help from your family. It’s more like a family-run business,” Mr Marques says. Taipa Village has acquired a small cluster of trendy cafés for all tastes. Business is fuelled by the growing number of tourists and the flourishing economy.

Treasure island Commercial rents on Taipa are lower than on the peninsula, says Portuguese chef António Coelho, who owns

Taipa Village has acquired a small cluster of trendy cafés for all tastes. Business is fuelled by the growing number of tourists and the flourishing economy

JULY 2012

Kafka has already attracted a broad array of customers, tourists and residents alike. Its Facebook page has close to 4,000 likes

Most of Eiffey’s customers are young couples or students. The café serves coffee and Taiwan-style drinks, along with waffles, pasta and rice

António restaurant in Taipa Village. Mr Coelho established a small coffee shop, Casa do António, just next to his restaurant in March last year. “Rentals in Macau are very expensive and, more and more, Taipa and Coloane are becoming residential areas,” he says. So there are enough people living there to support his business. Things are still taking shape at Casa do António and Mr Coelho declines to talk about revenue and profit. “In business, we have to be patient. We have to go slowly, wait for the shop to get popular. People will start coming,” he says. The purpose of his coffee shop is to supplement his restaurant, one of the most renowned outlets for Portuguese cuisine in Taipa. Mr Coelho aims to achieve this by “offering a little of

everything”, from typical Portuguese snacks to sweets and pastries. He estimates that only around 20 percent of the café’s customers are expatriates. Most are resident Chinese and tourists from the mainland, Taiwan and Singapore. Cuppa Coffee, which is popular among expats, celebrated its fourth anniversary last month. It is at one end of Taipa Village, in Rua de Fernão Mendes Pinto, near several upmarket residential buildings. “Business has been steadily growing, in line with the expansion of the local economy,” says the owner, Cristiana Figueiredo. “This year, being our fourth anniversary, marks our graduation from an experiment into a successful business venture,” the Portuguese business-

Cuppa Coffee, which is popular among expats, celebrated its fourth anniversary last month

Pas-sio-ne opened in December 2010 and is committed to paying serious respect to coffee

woman says. “As long as the population increases, tourism numbers continue on the rise and the economic outlook is positive, we expect growth between 20 and 30 percent [per year].”

it will only be a short-term measure. At Kafka, Ms Lei says: “It is very difficult to hire staff because of competition from hotels.” She has five employees, four of them non-residents. “It was not easy to find staff, even though we published an advertisement in a local newspaper,” she says. Pas-sio-ne has three full-time staff and four part-timers. Pas-sio-ne’s Mr Zheng complains not only about the scarcity of available manpower, but also about the inability of the workers that are available to give a high enough standard of service – an inability due mainly to their lack of proper training. The shortage of suitable manpower and high rents are the two main obstacles that small businesses here must overcome, says Ms Figueiredo of Cuppa Coffee. The government’s measures to stimulate small and medium enterprises are failing to solve these problems, she says. “Imported labour cannot be construed as a threat but should instead be envisioned as a stimulus for local improvement,” she says. “We have arrived at a situation where small business owners are held hostage by employees. Salaries have gone up enormously but skills have remained the same.” Shop rents are “highly speculative”, with many premises empty because the owners set rents high to sustain their valuations, Ms Figueiredo says. Without leases that keep rents stable long enough for commercial tenants to turn a penny, owners of coffee shops could end up with a bitter taste in their mouths, she adds.

Barista blues Competition is not a problem for Cuppa Coffee. “We haven’t really felt any competition from other coffee outlets in Taipa,” Ms Figueiredo says. “We have our own bakery area, which allows us to be creative and dynamic in regards to our offerings. It also makes it possible for us to follow our no-chemical-additives philosophy in our bakery products. That is not easily matched by any other coffee shop.” Just down the street, Pas-sio-ne opened in December 2010 and is committed to paying serious respect to coffee. It offers coffee recognised by the Coffee Association of America and has its own roaster. “We want to serve the best coffee in Macau,” says the manager, Job Zheng. Most of Pas-sio-ne’s customers are residents. But many Hong Kong or Taiwan tourists pop in. Business has increased steadily since day one. Mr Zheng expects turnover to grow by 50 percent this year. Faced with a growing numbers of customers, most cafes find it hard to get staff. At Eiffey, most employees are friends or relatives of Ms Chan, who also works there part-time. “I have problems finding employees so my family is helping,” she says. This keeps the business going, but she hopes

we live inside ideas.

+853 2833 1258 info@goldfishmacau.com www.goldfishmacau.com

JULY 2012

Environment

Green shoots stunted The Macau environmental protection industry is too immature, requiring more government support, aside from just money BY LAURA LAI

JULY 2012

83 he environmental protection industry still has a long way to go in Macau, insiders say. The industry has expanded rapidly in recent years but the lack of government leadership by example is crimping further growth, they say. “Environmental protection enterprises are also commercial businesses. They will never make significant investments without enough commercial incentives or proper profit prospects,” says May Ma, director of the Macau Association of Environmental Protection Industry. The industry here is still in its infancy, Ms Ma says. She says that it will not reach maturity without the government showing determination to protect the environment. “If the government fails to give support to these environmental protection small and medium-sized enterprises that are still in their early development stages, I’m afraid this burgeoning industry may run out of steam sooner or later,” she says. Ms Ma says the latest indicators raise further concern about environmental degradation. She urges officials to take tougher measures which will, in turn, feed the industry’s growth. There are no official figures on the contribution that the city’s environmental protection industry makes to the economy. Membership figures for the Macau Energy Saving Association and the Macau Association of Environmental Protection Industry, the two biggest industry associations, indicate that there are over 100 enterprises in the business. Most are SMEs. They usually sell imported products and technologies that are environmentally-friendly. Some have ventured into other areas such as installation and maintenance, laboratory testing and consulting. Their main customers are big companies, mainly those in the gaming and hospitality industries, and government bodies. Other SMEs and households make up only a small proportion of the customer base.

Anyone for leftovers? A market that has grown recently is food waste recycling, because the Environmental Protection Bureau is running some trials. The goal is to reuse food waste as fertiliser and to minimise the harm to the environment caused by incinerating it. The bureau began a kitchen waste treatment programme in two schools last year, both of which were equipped with machinery to dispose of food waste. Three hotels are taking part in a similar trial, in which the government collects and disposes of their food waste. Ms Ma says the environmental protection industry has been promoting kitchen waste recycling for the past few years. Some companies have even sent staff abroad to study waste management practices in South Korea and Taiwan. She says progress in this and other fields depends mainly on how the government executes its policies. If it does it properly, the community will follow its example, she believes. “It is difficult to achieve anything substantial if only enterprises and citizens are spontaneously involved in the promotion of environmental protection,” Ms Ma says. The Environmental Protection Bureau recently issued green procurement guidelines for the government. But they are optional and their effect has been negligible. The awarding of some government contracts to manage infrastructure that is meant to protect the environment has been challenged in the courts. In the latest case, the awarding of a fiveyear contract to run the wastewater treatment plant on the peninsula is being disputed by companies excluded from the bidding. JULY 2012

Environment

“The problem is, the government never seems to be willing to make a committed decision, always trying to take the easy way out,” Ms Ma says. “Even when the government does try to deal with an issue step by step, the whole process just takes longer than it reasonably should.”

but needs to turn management into an important part of environmental protection. More efficient use of equipment and proper maintenance can help save half of all energy and resources used, he adds.

No flesh, just bones Small improvements are being made. The environmental protection industry is promoting itself as an industry that could help the broader diversification of the economy. Also, the Venetian has hosted the Macau International Environmental Cooperation Forum and Exhibition since 2008. The government-backed forum allows environmental protection enterprises here to exchange views with their foreign counterparts. The number of exhibitors has been increasing over the years, and as many as 50 Macau businesses took part this year, according to the organisers. But green regulations and proper enforcement continue to lag behind, hindering the growth of the environmental protection industry. For example, the city does not conduct detailed environmental impact assessments of the kind required elsewhere. These assessments are compulsory for big projects, according to the environmental policy framework law, enacted two decades ago. But the government has failed to pass the necessary subsidiary legislation, so the law is not applied.

Power down The chairman of the Energy Saving Association, João Ramos, stresses the need for a centre to test and certify environmentally-friendly or energy-saving products. He says that while there is a considerable influx of products billed as being better for the environment, they enter the market untested. Certification issued in a product’s country of origin is the only guide buyers have to its environmental-friendliness and energy efficiency. This makes it hard to compare different products and raises doubts when the certification is issued by authorities that lack credibility. The president of the Macau Association of Environmental Protection Industry, António Trindade, says protection of the environment is “extremely important”, given that the city lacks natural resources. Management and maintenance will play a big part in the development of the environmental protection industry, he says. Mr Trindade says the city already has access to state-of-the-art equipment,

Penny-pinching energy saving The industry points out shortcomings in the MOP200-million environmental protection fund he government approved the creation of the MOP200 million (US$25 million) Environmental Protection and Energy Conservation Fund one year ago, and the money was made available last September. It is supposed to boost the environmental protection sector. But people in the industry say the process of filing applications lacks clarity, and the scope of the fund should be enlarged. The fund’s first purpose is to subsidise the acquisition of environmentally-friendly technology, equipment and products by companies and associations. They have until the end of the year to apply. The fund offers grants of up to 80 percent of the cost, to a maximum of MOP500,000 per grant. But it does not cover construction, installation or refurbishment costs. By end-May, the fund had received more than 500 applications, says the Environmental Protection Bureau. Over 200 had been approved, worth close to MOP30 million. Most of

JULY 2012

the grants are for energy-saving lighting, kitchen extractor hoods, water-saving devices and induction cookers. People in the environmental protection industry say the fund’s rules are not clear enough because they lack guidelines regarding which products are considered environment-friendly, and fail to explain how they are assessed. This makes it hard for the industry to give sound advice to customers. And it takes a long time to get applications approved, those sources add.

Book value The chairman of the Macau Ecological Society, Ho Wai Tim, is enthusiastic about the fund. He says the prices of some environment-friendly products and technologies scare away small and medium enterprises, so any government subsidy is welcome. Take the example of the Seng Kwong bookshop. Its management had long known that light-emitting diode (LED)

“Environmental protection enterprises will never make significant investments without proper profit prospects,” says May Ma, director of the Macau Association of Environmental Protection Industry The chairman of the Energy Saving Association, João Ramos, stresses the need for a centre to test and certify environmentally-friendly or energy-saving products The president of the Macau Association of Environmental Protection Industry, António Trindade, says protection of the environment is “extremely important”, given that the city lacks natural resources

The chairman of the Macau Ecological Society, Ho Wai Tim, says the prices of some environment-friendly products and technologies scare away small and medium enterprises, so any government subsidy is welcome

tubes save energy but each costs 16 times more than an equally bright conventional lamp. The company received a grant from the fund to install around 400 LED tubes. Within four weeks of the beginning of the fit-out, the bookshop had reduced its electricity bill by 20 percent. Mr Ho objects to the fund’s refusal to cover installation or refurbishment costs. He says that in some cases these can account for up to three-quarters of the overall cost of an environmental protection or energy conservation project. So companies may use the fund only to change lighting or electrical appliances that cost little to install, instead of undertaking more radical projects, he says. “Other companies may not need to purchase new equipment. Optimising their current equipment may be enough to generate significant efficiencies,” says Mr Ho. The chairman of the Macau Energy Saving Association, João Ramos, urges the government to give clear guidelines on which products are eligible for grants. Otherwise, “the plan might be abused”, he says. Mr Ramos also says the fund should focus on supporting the acquisition of more advanced environmentally-friendly equipment such as heat recovery systems, rather than on simply giving out money to replace obsolete air conditioners and refrigerators. JULY 2012

Environment

Ignition switch There are some – limited – signs businesses are making better use of energy acau’s business sector is gradually becoming more energy efficient, says a study released last month by the Macau University of Science and Technology. The most impressive energy efficiency gains took place in the retail sector. Last year, compared with 2009, the city’s shops posted a 42-percent reduction in energy consumption per monetary unit of added value, the report found. Compared with 2005, the drop is even sharper. Last year, with the same energy consumption, shops recorded on average four times the output of 2005. But the results may not necessarily indicate more efficient energy use and could be swayed by sales volumes which have increased sharply over the past seven years.

JULY 2012

Unlike manufacturing, there is no direct relationship between output and energy consumption in the retail sector. A shop’s major sources of energy consumption are air conditioning, lighting and electrical appliances. They are not sensitive to sales volume. Data from the Statistics and Census Service says retail sales soared from MOP8.8 billion (US$1.1 billion) in 2005 to a staggering MOP43.2 billion last year. Looking at the overall energy consumption of the business sector, the picture is far less optimistic than that provided by the Macau University of Science and Technology study. Total electricity usage rose by 4.4 percent last year compared to 2010. The gaming industry was responsible for almost half of all consumption.

Even so, the Office for the Development of the Energy Sector, which commissioned the study, is upbeat. “The study shows that the energy efficiency of private businesses in Macau has improved,” it said in a press release.

Chilly shopping Energy consumption per unit of added value in the hospitality sector dropped by 6 percent last year in comparison with 2009. Similar gains were seen in the city’s white-collar sector. Energy consumption per square metre in private-sector offices fell by about 7 percent last year compared to 2009. Food and beverage outlets also posted better energy efficiency results. Their consumption per monetary unit of added value dropped by 22 percent.

87 This was the fourth survey of energy efficiency in Macau. Previous studies were carried out in 2005, 2007 and 2009. About 20 hotels and more than 350 food and beverage outlets, retailers and private offices were surveyed for the most recent edition. The report’s authors have urged the government to set up guidelines that will enhance the city’s energy efficiency, backed by compulsory energy conservation measures. The authors say compulsory measures would strengthen the government’s push to conserve energy. For example, none of the industries in the survey reported setting the thermostat for their air conditioning to the government-recommended setting of 25 degrees Celsius. Food and beverage outlets reported their average thermostat setting was at 21.6 degrees Celsius, while the retail industry set it at around 23.1 degrees Celsius. Significant changes were only seen in the hospitality and private office sectors. Both reported setting the thermostat at an average of just below 24 degree Celsius.

TOGETHER FOR A GREENER PEARL RIVER DELTA M

acau, Hong Kong and Guangdong province have agreed to cooperate to improve the air quality of the Pearl River Delta region, according to a joint statement from the three local governments last month. There will also be more cooperation to promote the wider use of renewable energy products and green transport. “This is the first regional plan jointly compiled by Hong Kong, Guangdong and Macau,” said Hong Kong’s under secretary for the environment, Kitty Poon. “The plan puts forward the vision of transforming the Greater Pearl River Delta region into a low-carbon, high-technology and low-pollution city cluster of quality living, with a view to enhancing its overall competitiveness and attractiveness,” she said.

THE EVOLUTION OF ENERGY CONSUMPTION Category Residential units

(mJ/m2/person/year)

Private offices (mJ/ year/m2)

Retail stores

(mJ/MOP1,000 of added value)

Food & beverage outlets

(mJ/MOP1,000 of added value)

Hotels

(mJ/MOP1,000 of added value)

Energy consumption 2005

2009

2011

109.1

97.7

100.5

56.7

41.9

39.1

305.1

120.3

70.3

1,430.8

1,030.8

803.7

1,010.4

552.8

519.6

Source: Office for the Development of the Energy Sector

JULY 2012

Technology

Tera-disaster threat Most businesses are unprepared for data losses of the kind that a natural or man-made calamity can cause BY ALEXANDRA LAGES

acau is usually regarded as relatively safe from the wrath of nature or man. Nature occasionally sends typhoons or minor flooding our way, but nothing worse. Terrorists are unlikely to target the city. So why should businesses here put money into disaster recovery and data protection planning? Many companies see little point in doing so, but that is a mistake, say experts in the Macau New Technologies Incubator Centre, or Manetic. Manetic fosters small enterprises in the technology sector. The government owns 15 percent of it. Unexpected natural disasters can do severe harm to a business’s valuable data systems. The same can be said of manmade calamities such as terrorism or infrastructure failures like the six-hour

JULY 2012

Internet breakdown that the city experienced this year. After the terrorist attacks on the United States on September 11, 2001, data vulnerability and the need to plan for business continuity leapt onto the agendas of big companies. The attack on the World Trade Centre in New York, where many multinational corporations had offices, led to the loss of terabytes of data on customers, contracts and other matters. Last year’s big earthquake and tsunami in Japan again highlighted the vulnerability of data to natural disasters – the main difference this time being that large corporations and small and medium enterprises alike lost data. The importance of data recovery planning is not widely appreciated in

Macau, says Geoffroy Thonon of Manetic. “Most of the organisations are not very well prepared for it.”

Fire drill Mr Thonon has been involved in organising certified information systems auditor review courses since 2007, and disaster recovery planning is one of the topics. He is also vice-president of the Macau chapter of the Information Systems Audit and Control Association, an international professional association that deals with information technology governance. So far Manetic has received no reports of losses of data here due to natural or man-made disasters. But Mr Thonon is concerned about the lack of awareness of the importance of data recovery planning,

89 89

TIP BOX Three tips to avoid data losses in your business: 1

Have two physically separated backup centres.

At least once a year, review your core activities, and highlight those that are vulnerable to data losses and that lack measures to prevent such losses.

Find the data recovery method that best suits your company. Different companies in different industries have distinct needs.

despite the fact that the world was introduced to the concept in late 1970s. “If your company relies on certain services to be up and ready 24 hours and seven days a week, it’s very important to properly take care of any disaster and continue business. There are customers of yours that depend on that,” he says. Mr Thonon says the city has enough resources to be ready to face any disaster. The problem is that business continuity planning is not a priority. Companies here consider it a waste of money. “Because it’s a preventive measure and is not related to the core business, people put it aside. And that’s an issue. But it’s like a fire drill: you need to know what to do during a fire.” Mr Thonon says the most basic thing is to make sure the company has a plan that allows everything to be put back together quickly in the event of a disaster. Otherwise it will have to start from scratch, at a heavy cost.

Monopoly money Manetic’s executive director, Gilbert Chan, says “there is definitely a need in Macau” for data recovery planning. But the cost of a backup data centre is a deterrent. “The gaming industry has a lot of IT programmes to support their operations and they do build their data centre in just one place,” Mr Chan says. “When they consider drafting a contingency plan, including a backup centre located elsewhere, the problem is that doing that in Macau is quite expensive.” It is not the capital cost of a backup centre that is high, but mainly the fees charged by the city’s sole fixed telecommunications network, CTM, that put companies off, Mr Chan says. “It is expensive compared to Hong Kong and the mainland, and [the connec-

tion speed] is a lot slower. Macau people are used to it but other people find it hard to understand why this is the case.” A spokeswoman for Banco Nacional Ultramarino says disaster recovery planning is paramount for the banking business and that BNU is well prepared to prevent data losses in the event of a disaster. But she bemoans the cost of leasing lines for backup purposes. “The bank is now working on setting up its recovery site,” the spokeswoman says. “The costs involved are significant, namely in terms of the leased lines, which are quite expensive, a problem that the whole banking industry is facing.” The bank has a disaster recovery team, and all its data is backed up daily and stored in a safe place elsewhere. BNU has had an IT contingency plan for several years, to be followed in the event of an untoward incident or disaster.

Banking on trouble The IT contingency plan is an adjunct of the bank’s business continuity plan. The business continuity plan sets out what should be done to keep the bank working if something disruptive happens. It lists the most important business processes, gives instructions on how to get them going again if they are interrupted, and contains a schedule for doing it all. “Both plans are regularly tested and updated in order to ensure that they remain effective,” the spokeswoman says. The casino industry also generates huge amounts of data every day, ranging from records of transactions to surveillance footage to personal data on members of customer loyalty programmes. A spokeswoman for Sands China Ltd says the company has “put a very significant investment, in terms of both budget and human resources” into data maintenance and recovery systems. “Our goal is 100 percent data recovery.” Sands China has advanced systems to ensure that data is constantly backed up in several places. “All critical systems are 100 percent redundant,” the spokeswoman says. “We have multiple fireproofing and waterproofing measures in place” to ensure data centres remain operational at all times, she says. “We also have data safes at every major property and our recovery plan includes tape and data backups, with tape rotation that includes offsite data storage.”

90 JASWANT SINGH FORMER INDIAN FINANCE MINISTER, FOREIGN MINISTER AND DEFENCE MINISTER

The ill wind from the West WITH THE MAJOR EMERGING COUNTRIES, PARTICULARLY CHINA AND INDIA, ALREADY IN TROUBLE, ASIA CAN EXPECT TO BE HIT HARD IF THE EURO SINKS t the nadir of the financial crisis four years ago, many Asian governments came to believe that robust growth had led to a near-“decoupling” of their economies from the West and its on-going problems. But now, as the Eurozone teeters and America’s recovery weakens, Asia, too, is showing signs of faltering. Some Asian politicians will, quite conveniently, blame the West for any softening of growth. But their failure to pursue necessary structural reforms and economic opportunities is equally responsible, if not more so, for the region’s growing travails. Consider India. According to the forecaster International Market Assessment, “capital flows that have dried up are not ... a reflection of global market conditions,” but of a loss in confidence among investors, arising principally from fiscal mismanagement, which has led to “price instability, falling investments and eventually a decline in ... growth.” With the “government in dormancy,” the International Market Assessment concludes, “India is quickly losing the plot.” India’s situation is indeed worrisome. Double-digit foodprice inflation has been accompanied by debate about the share of Indians living below the poverty line and, indeed, where the poverty line should be drawn. Official statistics use an average daily income of 32 rupees (US$0.57) a day to separate the merely poor from the desperately impoverished. Instead of addressing the central paradox of contemporary Indian society – poverty amidst plenty – India’s government has buried its head in the sand. It proclaims bold reforms, which it then repudiates before the ink is dry. Even worse, growing official corruption is sapping private-sector dynamism.

Parallel problems But India is not alone in stumbling. China, too, is fearful of a growth slowdown and rising wage inflation. In response, China’s central bank is lowering interest rates to spur domestic investment and the resulting depreciation of the renminbi’s exchange rate has helped to keep exports afloat. But China’s import figures for the first half of this year have virtually flat-lined, suggesting that Chinese firms are not investing in new equipment – and thus that China’s economy may hit the doldrums soon. Although their political systems are mirror opposites, there are striking parallels in some of China’s and India’s deepest structural problems. Both countries undertook reforms – China in the 1980s and India in the 1990s – that decentralised decision-making and both progressed rapidly. India was compelled by its democracy to pursue a politically decentralising route, yet much economic decision-making authority remained embedded in New Delhi’s ossified bureaucracy, retarding growth. By contrast, China achieved economic decentralisation, but preserved centralised political power, transferring economic-management responsibilities

JULY 2012

largely to provincial officials, which has created its own imbalances. Thus, even as China is compelled to shift from exports to domestic consumption in order to sustain growth, India continues to rely on inward investment, exports of services and raw materials, and lower fiscal and current-account deficits to maintain its growth course. But its most damaging deficit is to be found in governance, as is true of China, where the Bo Xilai scandal has exposed the pathological underside of China’s vaunted technocratic leadership. Elsewhere in Asia, structural problems are also mounting. In Vietnam, inflation has hovered near 20 percent or more, with the government seemingly unwilling to embrace deeper reforms. Thailand’s interminable political imbroglio has left its economy at stall speed; the reformist zeal of Indonesian President Susilo Bambang Yudhoyono has petered out in his second term following the departure of Finance Minister Sri Mulyani Indrawati; and Japan seems to remain in a state of suspended animation.

Seize the policy initiative Europe’s malaise, and the resulting rise of populist politics, suggests that Asia’s governments can ill afford to sit on their growth laurels. Indeed, they should heed a recent comment by Oxford University’s Pavlos Eleftheriadis about a Greek electorate “livid at being led by those who dishonestly caused the problem.” Indeed, according to Mr Eleftheriadis, tax collectors in Greece today are confronted by bull-whip-wielding citizens. That sounds a lot like India nowadays. There are bold ideas in circulation in Asia that could sustain and promote growth. The recent decision by the leaders of China, Japan and South Korea to launch talks on a trilateral free-trade agreement among, respectively, the world’s second, third and 12th largest economies is certainly audacious, though reaching an agreement between two of Asia’s great democracies and China will likely make the failed Doha Round of global trade talks seem simple. But India is nowhere to be seen in all of this. Indeed, with Burma’s economy opening to the world, India ought to be taking the lead in seeking to stimulate South Asian growth and economic integration, for only by doing so can it anchor its neighbour within the region. Yet, when Prime Minister Manmohan Singh recently visited Burma, he had little to offer aside from the usual investment proposals. A bold initiative toward Bangladesh would also yield a strongly positive impact on growth and yet nothing is happening there, either. With the major emerging countries, particularly China and India, already in trouble, Asia can expect to be hit hard if the euro sinks. Before that happens, governments must seize the policy initiative, thereby strengthening global financial markets’ confidence in Asia’s ability to withstand the ill wind from the West.

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

6th – 8th

Macao Franchise Expo 2012

Venetian Macao-Resort-Hotel, Macau 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

August Date: Event: Venue:

–5

2012 Guangdong & Macao Branded Products Fair

Macao Fisherman’s Wharf Convention & Exhibition Centre, Macau 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, Macau 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 Wentworth, Australia 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

Date: Event: Venue:

9 th – 11th

Global Tourism Economy Forum Macau 2012

Macau Tower Convention & Entertainment Centre, Macau Organiser: Secretariat for Social Affairs and Culture Address: Rua de São Lourenço, No. 28, Headquarters of the Macau SAR Government, 2nd floor, Macau Tel: (853) 2872 6886 Fax: (853) 2872 7594 Date: Event:

18th – 20 th

Corruption & Compliance, South and South East Asia Summit

Venue: Hilton Hotel, Singapore 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.corruptionandcompliance.com E-mail: info@beaconevents.com October

Date: 10 th – 12th Event: 8th International Hotel Expo Venue: Venetian Macao-Resort-Hotel, Macau Organiser: Coastal International Exhibition Co Ltd Address: Room 2106, China Resources Building, 26 Harbour Road, Wanchai, Hong Kong Tel: (852) 2827 6766 Fax: (852) 2827 6870 Website: www.hotel-exhibition.com E-mail: general@coastal.com.hk Date: Event: Venue: Organiser: Address: Website: E-mail:

23rd – 27th

Freight Summit 2012

Venetian Macao-Resort-Hotel, Macau Raueber & Walle Solutions Ltd 25th Floor, Tower One, Tern Centre, 237-251 Queen’s Road Central, Hong Kong www.thefreightsummit.com info@thefreightsummit.com

September Date: Event:

3rd – 5th

Macau Hospitality Furniture Fair 2012

Venue: Venetian Macao-Resort-Hotel, Macau 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”. TBA : To be advised |

: A Macau Business partner event

JULY 2012

Human Resources

he number of non-resident workers has again passed the 100,000 mark, the latest data shows. This means at least one in five people living here is an expatriate. The number of non-resident workers was just under 101,000 in May, 1.4 percent more than in April, official statistics released last month show. Analysts think the shortage of available resident manpower means the figure is bound to rise in the short run. Economist Albano Martins says the demand for labour is due to fast economic development. But the city has insufficient resident manpower to do all the jobs available, Mr Martins says. “With a natural population growth close to zero and an aged society, Macau needs to import labour.” The import of labour will continue while casino resorts keep springing up, he says. “Otherwise, new industries and casinos will work below optimum level.” All sectors of the economy will need workers from outside. “We don’t have people,” Mr Martins says. An example is the hotel and restaurant industry. In the first quarter, this industry on its own had almost as many vacancies as the number of people that were unemployed.

There are more than 100,000 imported workers in the city and the number is expected to grow BY LUCIANA LEITÃO ILLUSTRATIONS RUI RASQUINHO

93 93

HELPING HANDS JULY 2012

Human Resources

The workforce is expected to increase this year by up to 30,000 people as the economy grows, according to government estimates. Most of the additional workers will probably be imported. The government has no medium or longterm forecasts of the demand for labour. “The volume of imported labour will skyrocket,” Mr Martins predicts. “Everything that goes against that is a wrong measure, unless there is a sudden explosion of the birth rate,” he says. Even then, a sudden baby boom would take at least 18 years to supply the labour market.

Hidden benefits The highest number of non-resident workers the city has had was 104,000, in September 2008. The number dropped when the government acted to prevent any surge in unemployment among residents due to the global financial crisis in that year. By May 2010 the number of nonresident workers had fallen to 72,000. Then it began rising, and it has kept rising ever since. The unemployment rate has been going in the opposite direction. It had fallen to a record low of 2.0 percent by the first quarter of this year. The city has now had full employment for a year and a half, the Monetary Authority of Macau says. Mr Martins warns that social ten-

lary services, creating more jobs in industries that supply such services.

Economist Albano Martins argues that the import of labour benefits residents in various ways

Opportunity hops

sions may increase in tandem with the number of non-resident workers. Trade unions already accuse imported workers of stealing jobs from residents, and more imported workers may mean more such accusations. But he argues that the import of labour benefits residents in various ways. “Non-resident workers may activate a series of [economic] activities that are now blocked or developing very slowly, and these may absorb resident youngsters finishing their bachelors.” Mr Martins says importing workers qualified for important positions can improve the quality of service, starting with the gaming industry, which is set to keep on expanding in the coming years. There are new gaming projects in the pipeline that will require tens of thousands of workers. These workers are expected to increase demand for ancil-

Jiji Tu, the managing director of human resources company MSS Recruitment and jobs portal hello-jobs.com, warns that the gap between the supply of labour and demand is unhealthy. “The economy is booming and there are new developments, new job opportunities,” she says. But there are not enough people. Ms Tu says the gap is creating bottlenecks in the economy. All the while, employee turnover remains high, she says. “People know there are many job opportunities,” says Mr Martins. “After they are trained, they move – to go to work for other companies. That creates problems and damages the entire economy.” Mr Martins says problems arising from high rates of employee turnover hit small and medium enterprises the hardest. “That is, in fact, a big headache and means considerable costs, mostly for SMEs that are not so able to retain personnel.” Letting in more non-resident workers would ease the problem, experts say. The city’s biggest employers would be able to fill their vacancies with workers from outside, instead of having to poach resident employees from other companies. Zenon Udani, a human resources development trainer and expert, and a

NUMBER OF NON-RESIDENT WORKERS BY INDUSTRY AND COUNTRY OR REGION AT THE END OF MAY Agriculture, farming and forestry Mining and quarrying Manufacturing Electricity, gas and water supply Construction Wholesale and retail trade Hotels and restaurants Transport, storage and communications Financial intermediation Real estate, renting and business activities Public administration

Thailand Malaysia Myanmar Taiwan

Others

Total

4,633

4,797

12,896

1,370

14,371

8,916

354

495

10,008

22,772

3,149

1,458

909

226

213

362

374

108

308

498

30,377

2,216

216

130

203

2,838

377

466

4,267

1,745

147

403

927

182

7,869

197

537

125

198

966

Health and social welfare

1,072

128

1,246

Recreational, cultural and gaming services

2,766

1,408

1,472

1,882

549

1,025

343

427

192

202

868

11,134 *

16,517

Education

Domestic work International organisations and bodies Total

7,366

5,507

3,365

100

60,658

14,547

8,737

5,458

4,258

2,246

854

859

506

642

* Including 2,140 non-resident construction workers that were employed directly by gaming companies JULY 2012

2,157 100,922

Source: Public Security Police

Mainland Philippines Vietnam Hong Kong Indonesia Nepal

Industry

95 teaching fellow at the Honours College of the University of Macau, says imported workers are essential for bringing new skills, expertise and experience to the labour market. This is particularly so in the hospitality, food and beverage, gaming, retailing and other service industries, he says.

Looming reality

Zenon Udani, a human resources development trainer and expert, says imported workers are essential for bringing new skills, expertise and experience to the labour market

Mr Udani says the city cannot do without foreign labour. He argues that there is too much turnover among the resident workforce, and that businesses need employees that stick to their jobs. Non-resident workers, because the law requires them to remain in their jobs if they wish to continue living in Macau, are just what businesses want, the scholar adds. He says demand for more imported labour will continue to grow. “There will always be jobs that residents can’t fill up, either because they dislike those positions or they don’t qualify as potential employees,” Mr Udani says. “The economy is still growing and businesses, especially SMEs, will need talent at more affordable costs.” Reality will eventually make the government change its restrictive policy on the import of labour, he says. But before it can do so it must hurdle some obstacles. “Employers consider [the policy on the import of labour] very restrictive, while labour unions dub it as lax,” Mr Udani notes. He says making employers and unions agree on any easing of the restrictions will not be easy. Mr Udani thinks the communities that non-resident workers have established here add colour to the city. “It’s difficult to imagine Macau without the Filipino community, for instance. They’re working in the hotels, casinos, restaurants, universities, secondary schools, homes, etcetera,” says Mr Udani, who is a Filipino himself. The Macau head of Catholic charity Caritas, Paul Pun Chi Meng, says people easily accept non-resident workers, especially since the unemployment rate is so low. But Mr Pun says residents need to acknowledge the contribution these workers make to economic and social development. JULY 2012

Human Resources

80,000 60,000 40,000

workers, especially low-skilled workers, whose salaries have been lagging behind the inflation rate. â&#x20AC;&#x153;All migrant workers should have a minimum wage,â&#x20AC;? Ms Lin says. Low-skilled workers imported by employment agencies are often victims of abuse. There are reports of agencies requiring placement fees equivalent to 10 times an employeeâ&#x20AC;&#x2122;s salary. Sometimes employment agencies fail to keep their promises and workers are left stranded, with no job. Many stay to work illegally. Ms Lin says communication is a

Jan-12

May-12

Sep-11

Jan-11

May-11

Sep-10

Jan-10

problem for Indonesian workers, as they do not speak Cantonese. â&#x20AC;&#x153;Few understand English, so itâ&#x20AC;&#x2122;s difficult to communicate with the employer or local people.â&#x20AC;? Finding decent accommodation at a reasonable cost is another problem. Mr Pun of Caritas says low-skilled non-resident workers are undoubtedly those suffering the most from heavy workloads and poor living conditions. He says the government should create a special body to deal with imported workers, giving them training and support.

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Most non-resident workers come in search of higher incomes but many find themselves trapped in jobs with long hours, low pay and few benefits. The U.S. State Department has continually criticised Macauâ&#x20AC;&#x2122;s rules for imported workers. It especially bemoans the requirement for a non-resident worker to wait six months to obtain another work permit if he or she resigns or is justifiably dismissed. In this yearâ&#x20AC;&#x2122;s report on human trafficking, the State Department says: â&#x20AC;&#x153;Macau made no changes to the immigration regulation structure, which renders foreign migrants vulnerable to forced labour.â&#x20AC;? Indarti Lin leads the ATKI-Macau group, which brings together workers imported from Indonesia. She says the government should do something about the poor standards of living of imported

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FEBRUARY JULY 2012 2012

Human Resources

A pregnant pause The minimum amount of maternity leave granted to women falls short of international standards, and there are many who want to see this changed BY ALEXANDRA LAGES

baby boom is expected this year. Bearing a child in the Year of the Dragon is regarded as auspicious in Chinese tradition, as the child is believed to be destined to be successful and wealthy. But the decision to have a child in Macau can be a hard one. Although the population is ageing, the labour law is not as kind to mothers here as it could be. Women working in the private sector are entitled to a minimum of 56 days of maternity leave with full pay. It means mothers must return to work when their infants are less than two months old. In Hong Kong, women working in the private sector are entitled to 70 days of paid maternity leave. In the mainland, women in the private sector are entitled to 90 days. The law in Macau grants women 90 days of maternity leave with

JULY 2012

full pay only if they are civil servants. The government is now revising the labour law. Some legislators, jurists and trade union leaders are hoping it will increase the minimum amount of maternity leave. A mere 56 days of leave “does not provide adequate maternity protection”, says Tim de Meyer, a senior specialist on international labour standards and labour law in the International Labour Organisation. “The international standard currently in force advises a maternity leave of, minimum, 14 weeks.” The Maternity Protection Convention of 2000 sets this standard but China has not ratified the convention, so it does not apply to Macau. “The difference of nearly five weeks maternity leave between the private sec-

tor and the public sector has the potential of segmenting and distorting both labour markets,” Mr de Meyer says. He says this could allow the public sector to scoop up a disproportionate share of women of childbearing age, leaving a shallower pool of talent for the private sector to draw on. If privatesector employers do not have adequate insurance policies for staff to draw on, it makes the public sector even more attractive to women.

No resistance Miguel Quental, a legal expert and lecturer at the University of Macau, is also worried by the differences between the private and public sectors. “Nothing justifies that one worker from the public administration has more right to be a mother. Maternity is a social value and

99 must be protected,” he says. Some advocates of increasing the minimum amount of maternity leave want to have it raised to 90 days with full pay in the private sector to bring it in line with the public sector. That is opposed by private-sector employers and Mr Quental appreciates their concern. “We understand why employers refuse to extend maternity leave. It’s because those days are paid. This represents an extra cost for the company, who has to pay the mother’s salary and someone to replace her during the leave,” he says. “However, a number of people have been suggesting the government ensure the payment of the maternity leave through the social security system. If they introduce this, a proposal would not encounter any resistance at all.” Ella Lei Cheng I, vice-president of the Macau Federation of Trade Unions, urges the government to not only follow the lead of other countries and increase the minimum amount of maternity leave, but also to give female employees greater protection before and after giving birth.

ON LEAVE: EAST ASIAN MATERNITY ALLOWANCES Macau: 56 days with full pay in the private sector, or 90 days with full pay in the public sector Hong Kong: 10 weeks with full pay The mainland: 90 days with full pay Singapore: 16 weeks with full pay Japan: 14 weeks with 60 percent of pay Philippines: 60 days with full pay Source: International Labour Organisation

Ms Lei says that while the labour law prohibits employers from laying off an employee while she is pregnant or for three months after she gives birth, the provision lacks teeth.

Sooner or later The law says an employer that lays off a pregnant employee without reasonable grounds must pay her the statutory compensation for being laid off plus extra compensation equivalent to the pay she

would have received for 56 days of maternity leave. This, Ms Lei says, is not much of a penalty. “This regulation clearly contradicts and fails to effectively protect female workers’ occupational interests during their pregnancy. Therefore, in the review of the maternity leave provisions of the labour law, there is the need to add provisions that better ensure the job security of pregnant workers,” she says. Mr de Meyer says Macau is failing to follow the trend in East Asia. “A distinguishing feature of East Asian developed labour markets in the last decade is a sharply increased awareness of low fertility and ageing societies, prompting governments to significantly improve maternity protection with a view to attracting women to the labour market and reconciling work and childbearing,” he says. Henry Lei Chun Kwok, assistant professor of business economics at the University of Macau, says the city will eventually follow the global trend and increase the minimum amount of maternity leave. “I speculate that there will be an increase in maternity leave sooner or later.

JULY 2012

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Human Resources

However, it is hard to say if there will be a full month’s increase in maternity leave. An increase of 10 to 15 days may be more likely,” he says. Several members of the Legislative Assembly have called for the government to increase the minimum amount of maternity leave. One is the New Macau Association’s Paul Chan Wai Chi, who says the city is lagging behind the rest of East Asia.

Bigger concerns The government’s own Women’s Affairs Committee has yet to ask for an increase in the minimum amount of maternity leave. But a member of the advisory body has expressed objections to the meagre amount of paternity leave that the labour law grants, secretary-general Elsa Lam Pui Seong told Macau Business. Fathers working in the private sector in Macau are entitled to two working days of unpaid paternity leave. Those in the civil service are entitled to five working days of paternity leave with full pay. Ms Lei of the Federation of Trade Unions would also like to see more paternity leave. “Male workers’ roles and responsibilities are also indispensable in the care of their families,” she says. In Hong Kong, civil servants are allowed five days of paid paternity leave and the government there is now considering making paid-paternity leave mandatory in the private sector. Again, the proposal has been objected to by employers. They say it would raise labour costs and place an unnecessary burden on them. Mr Lei of the University of Macau says maternity leave and paternity leave disrupt small and medium enterprises more than large ones. The gaps they create in the ranks of employees make the problems caused by the labour shortage worse, he says. “For large firms, given their larger pool of staff, they may have better flexibility in manpower allocation and may not even need to hire extra staff to cover the gap. For SMEs, it may bring about more pressure on them,” Mr Lei notes. He says maternity leave is the bigger concern. “Given that paternity leave should be much shorter than maternity leave, it may bring about less impact on the economy, on labour costs and on labour shortage problems,” he says. JULY 2012

ONE SAR, TWO SYSTEMS C

laúdia Mateus, 33, will give birth to her second child in three months’ time. It will be her first child born in Macau. A civil servant, she says her experience of pregnancy here is totally different from her previous pregnancy in Portugal. There, she was off work for seven months: six months on maternity leave supplemented by one month of annual leave. Here she will be entitled to the 90 days of maternity leave that the law allows civil servants. “Ninety days is too little. It will harm the breast-feeding process, which is fundamental for the baby in the first months of life. If a woman goes back to work while she is still breast-feeding, that will be a problem. Work-related stress often causes women to lose their milk,” she says. Her husband enjoyed 30-days’ paternity leave in Portugal but, by law, he is entitled to just five here. “In Macau, there is a mindset that pregnancy is exclusively a women’s issue. But it’s not like that. The woman needs to get support from her husband,” Mrs Mateus says. The public healthcare system here does not necessarily permit fathers to attend ultrasound scan sessions or the delivery. “There is a very narrow view of what pregnancy is,” she says. “They are depriving the father of getting in touch with the child.” Couples may ask for permission for

the father to attend the delivery. “We will try that.” Carla Ascenção, 37, another Portuguese, works in the private sector as a lawyer. She will have her first baby here. Mrs Ascenção will have the minimum of 56 days of maternity leave that the law grants her. “I don’t know whether it will be enough or not. I guess it depends on many factors; if things go well, and I have someone to entrust the baby to who in order to combine work with motherhood.” She thinks the minimum amount of maternity leave should be increased. “But I’ve also talked with several people who told me that two months is enough. At the outset, it seems reasonable to me but only after I have my baby will I know.” Mrs Ascenção sees at least one advantage in giving birth in Macau. “The distances are short. So, of course, I care less than if I was in Portugal, where the maternity leave period is longer. But, given the size of the country, everything is further away,” she says. Mrs Mateus sees other advantages in giving birth here. “It’s safe, even economically speaking,” she says. For instance, she can find and afford full-time domestic help. “In Macau, to make the decision to get pregnant is easier than in Portugal. In the public administration, we have good working schedules and it is easier to get leave to see the doctor. In Portugal, it is not that easy.” A.L.

Corporate Social Responsibility

101

Visualising a bright future To celebrate its 30th anniversary, Orbis is organising a blindfolded dinner BY SARA FARR

or 30 years it has been dedicated to fighting avoidable blindness in developing countries, but global charity Orbis says it still has work to do. To celebrate the 30th anniversary of the founding of Orbis, its Macau office is holding a string of events at Macau Tower on July 28, dubbed Orbis Charity Day. “We want to share our achievements with the donors and further promote our mission,” says Vivian Lo, Orbis’s director of development in Macau. The day will be topped off with a unique dining experience. Diners will be blindfolded so they can feel what it is like to be sightless. The organisation has held similar dinners before in Macau and says they have been great successes, raising both awareness and money to beat avoidable blindness. This year’s dinner will have an extra frisson as it will be held on the outdoor deck of Macau Tower. The charity hopes to have

BORROW FOR A CAUSE O

rbis is cooperating with Banco Weng Hang SA and the Art for All group in offering a new series of Orbis-themed credit cards. Holders can choose from a set of 30 credit cards bearing likenesses of works by 16 artists belonging to Art for All. The credit cards will be launched on Orbis Charity Day on July 28. For every purchase made with one of the branded cards, Weng Hang will donate 0.3 percent to Orbis. “It encourages credit card holders to spend more, but the bank in turn will also donate more to the cause,” says Vivian Lo, Orbis’s director of development in Macau.

300 guests and to raise as much as MOP500,000 (US$62,500). One cataract or strabismus operation for a child living in a developing country costs about MOP300. This is the kind of treatment the proceeds will go towards. “We have also got a few activities lined up before the dinner takes place,” Ms Lo says, including a presentation by a member of the Orbis medical team telling guests about a recent trip to Lanzhou, in the mainland.

Springing the trap Orbis has 3,500 regular donors in Macau. The Macau office was set up in 2006 to promote the organisation’s mission to save sight. Donations support Orbis’s projects around the world. The organisation and its volunteers help prevent and treat avoidable blindness through hands-on training, community eyesight education and quality eye care. The charity cooperates with health care organisations in the countries where it works. To complement its Flying Eye Hospital aircraft, Orbis has permanent operations in the mainland, Vietnam, India, Bangladesh and Ethiopia, where visual impairment is most prevalent. The organisation has helped treat more than 15 million people in 89 countries since 1982. It has also launched more than 1,000 sight-saving programmes. Orbis estimates that there are still 285 million people that are needlessly visually impaired, of which 39 million are blind. “Blindness can trap a family or an entire community in a cycle of poverty, as lack of sight limits their ability to gain an education or simply independence,” Ms Lo says. She says Orbis helps people overcome these limits, giving them a better future. JULY 2012

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

Nothing smart about Macau’s development BEYOND LOOKING GOOD OR KEEPING IN STEP WITH FASHION, BENEATH THE SURFACE, THIS IS NOT A “SMART” CITY ere is a quick quiz. Close your eyes and give five different meanings of the word “smart”. Then open your eyes and read on. As an adjective, smart can mean intelligent, clever, goodlooking, well-groomed, stylish or fashionable, fast, bright and up-to-date. Smart connotes many positive features. Is Macau a smart city? Does it possess these positive features? Earlier this year, the European Commission launched its Smart Cities and Communities project, http://eu-smartcities.eu/. The commission says that smart cities “distinguish themselves by using innovative solutions for supplying energy more effectively and efficiently, in terms of costs, environmental footprint and/or social impacts”. Though the current project focuses on energy-related matters, it builds on the 2007 edition of the European Smart Cities project, www.smart-cities.eu/model.html, which focused on cities of about 500,000 people – a size similar to Macau. Luxembourg was ranked first, with four Scandinavian cities in the top five. The 2007 project recognised that cities have to face the simultaneous challenges of international competition, globalisation, technological and economic advances, sustainable development and urban renewal. These, in turn, impact on key elements of quality of life in urban areas, including housing, economy, culture, and social and environmental matters.

Lessons learned What do smart cities have that Macau could learn from? The 2007 project judges smart cities on six different qualities. - Smart economy (competitiveness): innovative spirit, entrepreneurship, economic image and trademarks, productivity, flexibility of the labour market, international embeddedness and the ability to transform itself. - Smart people (social and human capital): level of qualifications, affinity to lifelong learning, social and ethnic plurality, flexibility, creativity, cosmopolitan outlook, openmindedness and participation in public life. - Smart governance (participation): participation in decision making, public and social services, transparent governance, political strategies and perspectives. - Smart mobility (transport and information and communications technology): accessibility at local, regional and international levels, availability of information and communications technology infrastructure, sustainability, and innovative and safe transport systems. - Smart environment (natural resources): attractiveness of natural conditions, pollution reduction, environmental JULY 2012

protection and sustainable resource management. - Smart living (quality of life): cultural factors, health conditions, individual safety, housing quality, education facilities, attractiveness to tourists and social cohesion.

Keeping score If you were to judge Macau on these dimensions, with 10 marks available for each, what marks would you award? Here are my votes. Smart economy – 2 out of 10 New tourist developments but poor labour flexibility, lacks real international outlook, limited entrepreneurialism and lacks ability to transform from within. Smart people – 3 out of 10 Qualifications are increasing but low level of creativity, mythical multiculturalism, limited participation in public life and overtly conservative thinking. Smart governance – 1 out of 10 Transparency, political strategies, participation, social services – all lacking. Smart mobility – 2 out of 10 Lots of transport but no apparent system, a self-satisfied telephone monopoly, hopeless Internet services, and an under-developed information and communications technology infrastructure. Smart environment – 2 out of 10 Polluted air, sea and land; vehicle, light and noise pollution; graceless buildings, destruction of Coloane to build apartments, and few green areas. Smart living – 2 out of 10 Low-grade health services, low-quality but expensive flats, high-rise jungles, rising crime rates and massive income differential eroding social cohesion. Not much of a score, really. To me, Macau does not seem to be a very smart city. The six dimensions that Europe uses to define smart and their indicators set a useful agenda for development. But intuitively we already knew that. So why is there so little action? All we have are reports and talk of Macau’s urban planning. The government’s current proposals focus on five areas: land resources management; cultural heritage protection; natural environment conservation; sustainable development; and living standards improvement. It is a narrow view of development. Could Macau become a smart city? Not until there is a broad vision and real action.

Arts & Culture

Macau is home to a few serious art and antique collectors but most keep their collections out of sight BY LUCIANA LEITÃO

Hoards of treasure nterest in collecting art and antiques in the mainland is leading the world’s biggest auction houses and art galleries to set up shop in the neighbourhood. Macau still flies under the radar, with the real number of collectors hidden and no indication of how deep their pockets are. The few figures available reveal a thriving, yet small, market. Trade figures show that Macau imported MOP49.6 million (US$6.2 million) of art, antiques and collectors’ pieces last year. That was more than double the value of 2010’s imports and a huge jump from 10 years ago, when the value amounted to less than MOP2 million. The city has a few serious collectors. They concentrate on Chinese art and antiques. Pieces are usually stored at home, in offices or in strong rooms. Macau Business found that most collections tend to reflect personal interests and are not treated as investments. Most collectors want to be inconspicuous and are unwilling to open their collections to the public. Businessman Peter Siu is one exception. He is not shy about showing his collection of Chinese antiques, which he started some 30 years ago. The collection includes seals, oil paintings, bronze and porcelain pieces, as well as calendars dating back to the 1920s and 1930s. Mr Siu also has a number of works by modern mainland artists such as Ai Xuan, and a few by Macau painters. His passion for antiques and art began in high school, inspired by his teachers. His first acquisition was a landscape by a Guangdong artist. He says he has lost track of the size of the collection and its worth.

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Arts & Culture

Mr Siu has a particular interest in seals from the Qin dynasty. He owns about 2,000 pieces. “In every seal, the writing is different. It’s very beautiful and special,” he says. He began his collection with buying seals in Macau. His first investment in a seal set cost MOP10,000. “I found it in an antique shop.” He relies on several history researchers and fellow collectors to teach him more about each of the pieces he buys. He says he is careful when looking for new additions and buys mostly through renowned auction houses, in antique shops or directly from mainland artists. It is his insurance “to avoid copies”. Mr Siu often travels to the United States, Britain or elsewhere to acquire new pieces for his collection. In Macau, he manages to find furniture from the Ming and Qing dynasties, ancient porcelain pieces and seals. Although his collection is split between his home and a bank vault, he regularly receives requests from people wanting to see it. He has lent several pieces to exhibitions. From time to time he receives offers from potential buyers. A collector from the mainland once offered him “a few million” for a bronze dagger from the Late Warring States period that is over 2,000 years old. Mr Siu rejected the offer. “This is a one-of-a-kind piece in the world. If I sold it, it would no longer exist in Macau,” he says. The fate of his collection has already been decided. “I want it to go to the Macau government.”

Peter Siu is not shy about showing his collection of Chinese antiques

Modern tastes

António José de Freitas owns a collection of Catholic art and relics

Funny and ironic Art collector João Nuno Riquito is a lawyer whose firm has among its clients SJM Holdings Ltd. Mr Riquito started his collection more than 15 years ago and focuses mainly on modern paintings. He owns pieces by artists working in Macau, including Russian artist Konstantin Bessmertny and Macanese brothers Carlos and Vitor Marreiros. His collection has about 30 pieces. Mr Riquito says most are “beautiful, funny and ironic”. His first acquisition was the painting “Violoncelos” by Macaubased Portuguese artist Joaquim Franco. The meeting room in his office in AIA Tower boasts a huge painting which he commissioned Bessmertny to paint on the theme of justice. Bessmertny is one JULY 2012

of few artists working in Macau who has managed to make a name outside the city. Mr Riquito’s approach to art is driven by sentiment, like “having children”, he says. He is not looking for a financial return. A former curator at the Art Museum, James Chu Cheok Son heads the Art for All group, which gathers several Macaubased artists. Mr Chu says expats are the ones mostly buying made-in-Macau modern art. He points to buyers at events run by Art for All. “Ninety percent are foreigners who live and work in Macau,” Mr Chu says. Most work for international corporations with operations here, casinos, government-related bodies and publishing companies. But Mr Chu says few people are buying art regularly, let alone collecting it. “It still needs time and art education. Even though people like it, they may find the price a bit high,” he says. “They also have a lot of doubts: how can I make use of it, how to protect it, what kind of return?”

Eddie Wong Yue Kai’s antique collection has hundreds of pieces, some 1,000-years old

The small group of collectors and buyers explains why the city has few art galleries. One gallery that does operate successfully here is Galerie du Monde. It was established in Hong Kong in 1974 and opened a branch at The Shoppes at Four Seasons in Cotai four years ago. Galerie du Monde’s Dylan Tam says it exhibits mainly modern art by up-andcoming mainland and foreign artists. Mr Tam says most buyers are mainland visitors willing to splash out thousands. “They like art pieces more into realism,” he says. Art that has traditional roots, with Chinese symbolic elements, is preferred to more abstract works. Few residents buy art at Galerie du Monde. “We have one client living in Macau, but he is from Shanghai,” Mr Tam says. The rest of the buyers are expatriates. Although people here are getting richer, they like to spend their money on luxury goods, Mr Tam says. “The Macau rich are not so willing to buy art. They prefer to buy a watch.” One resident who prefers art over jewellery is António José de Freitas. He leads the 440-year-old Holy House of Mercy, the city’s oldest Catholic charity. He owns a collection of Catholic art and relics. Part of it is exhibited at the Holy House’s museum in Leal Senado Square,

105 where Mr Freitas is curator. Mr Freitas has been collecting art and relics for nearly 30 years. He has no record of how much the collection is worth.

Public space Another conspicuous collector is architect and Executive Council member Eddie Wong Yue Kai. His private collection has hundreds of pieces, some are 1,000 years old. Mr Wong used to be a regular at Sotheby’s and Christie’s auctions in Hong Kong, bidding for porcelain and jade antiques. He told Macau Business in 2008: “These houses would hold auctions once or twice a year and I would go to bid for certain pieces, especially imperial porcelain from the Qing dynasty, my favourite.” The biggest private collectors of art and antiques in Macau are the casino operators. SJM’s annual report for last year says the company’s collection of art and diamonds was worth HK$289 million (US$37 million). But it is likely that the collection’s market value is higher, as the figure refers to the aggregate cost of the pieces. SJM concentrates mainly on Chinese antiques, many of which are displayed in the public areas of the Grand Lisboa and Hotel Lisboa. Last year SJM spent nothing on acquiring art. Wynn Macau Ltd also owns a sizeable collection of fine art. At the end of last year it was valued, in conjunction with a single diamond, at HK$234 million, according to the company’s annual report. Its market value is also likely to be higher. Wynn Macau once housed two French Impressionist paintings by Henri Matisse and Pierre-Auguste Renoir, which have since been removed. Now, the casino-hotel is home to a set of four Chinese porcelain vases from the Qing Dynasty, bought last year for more than MOP100 million. The only other comparable set of four vases is in Buckingham Palace in London. Melco Crown Entertainment Ltd’s collection contains several modern Chinese art pieces. At City of Dreams casinoresort, Melco Crown displays works by several leading mainland artists. One of the most striking is Sui Jianguo’s “The Legacy Mantle”, a sculpture that investigates the imagery around Mao Zedong. JULY 2012

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Arts & Culture

CHOREOGRAPHER LIN HWAI-MIN LEADS CLOUD GATE DANCE THEATRE OF TAIWAN IN A PERFORMANCE OF A 20TH CENTURY CLASSIC BY ANNIE CHAU

HEAVENLY ATTRACTION ine Songs” is a fascinating dance piece, a mix of ancient and modern, beauty and angst, belief and denial. It has quite rightfully earned choreographer Lin Hwai-min and his Cloud Gate Dance Theatre of Taiwan a place in the firmament. Macau audiences have the chance to see “Nine Songs”, a performance that has travelled the world and has only recently been brought back to life, at the Macau Cultural Centre on August 10. They will witness a narrative popuJULY 2012

lated by masked shamans, playing the roles of gods and goddesses, holding sacred rites to music from India, Tibet, Java, Japan and the indigenous tribes of Taiwan. A suited man carrying bulky luggage and a young man riding his bicycle remind the audience to embrace the spiritual from the dances of the gods and take them into their modern world. The blend of East and West, past and present, give rise to an aesthetic that has won “Nine Songs” the accolade that it is a “perfect choreographic paradigm for a true intercultural dance form” from Ballet International magazine.

The piece premiered in 1993. It was designed to be a celebration of the theatre’s 20th anniversary. At its zenith, “Nine Songs” was hailed by German newspaper Frankfurter Allgemeine Zeitung as “one of the most important dance works of our time”. After 1,000 shows and across the board acclaim at the Vienna International Dance Festival, the Next Wave Festival in New York, the Kennedy Centre in Washington, the 2000 Olympic Arts Festival in Sydney, and major cities in Germany, Canada and the United States, Lin called a finale in 2007. The next year, disaster. A fire

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NINE SONGS COMPANY

Cloud Gate Dance Theatre of Taiwan DATE AND TIME

10 August, 8pm VENUE

Grand Auditorium, Macau Cultural Centre TICKETS

From MOP100 and up, available from www.macauticket.com INQUIRIES

+853 2870 0699 or email enquiry@ccm.gov.mo

ruined the company’s studio, taking almost every piece of precious property, including scripts, props and costumes. The only surviving props were a collection of masks from “Nine Songs”. Nothing short of a miracle, the company took it as a sign and revived the gods and goddesses of the show. “Nine Songs” would go back onstage.

Historical inspiration Cloud Gate Dance Theatre of Taiwan, named after the oldest known dance in ancient China, began their journey in 1973. Throughout the decades since, the theatre has performed numerous

spectacular productions and toured extensively to international festivals. With Lin’s fruitful experience from his own dance career, he has created a unique fusion of Eastern and Western notions of dance and drama, in which Cloud Gate’s breath-taking technical finesse more than equal dance companies in the West. His work draws on ancient imagery and sensibilities, but creates a thoroughly contemporary ritual. The initial inspiration for “Nine Songs” came from a cycle of poems written by Qu Yuan during the China Warring States Period about 2,300

years ago. He was wrongly accused of treason and banished by the court. The poems were written during his exile in southern China, where he found solace for his disappointment and, in equal measure, frustration in the primitive rituals of the people. Each piece represents a ritual, which celebrate life, nature and an honourable death. Like the poems, the dance reflects the purifying cycles of nature. The first half of the performance cycles through from day to night, from the bright and powerful sun god to the dark gods of fate who bring deceit and abuse to the world. The performance’s second half follows the change of seasons. Spring arrives and finds the goddess of the Xiang River waiting for her beloved. She is a symbol of wasted youth. Summer is represented by the god of clouds, who “dances in air” by dancing on the shoulders of two men throughout the eight-minute section. The physically demanding section is followed by autumn. The mountain spirit wanders in solitude, his mouth open, as if foretelling an impending devastation with his noiseless cries. Winter follows with death and destruction. In “Homage to the Fallen”, dancers in black collapse over each other, as a chain of names of those who sacrificed their lives for fellow humans from ancient China to the recent history of Taiwan, are recited in different dialects. With 800 oil lamps as props each representing the soul of a hero, “Honour the Dead” shows respect for the nature of living and dead and thus brings the ritual to a full circle. Lin choreographs the performance to bring the audience to commune with nature. The stage is flanked with a lotus pond, real flowers and green leaves. Audiences are drawn into the setting and experience nature’s beauty first-hand. Lin believes the setting is essential not only for the performance but also to fulfil deeper needs lacking in a modern life, flooded with artificial objects. Echoing the rich metaphors of flowers and nature in Qu Yuan’s prose, set designer Ming Cho Lee uses the lotus, a symbol of reincarnation, as his main motif. Against the backdrop of an enlarged detail of a lotus painting by the Taiwanese artist Lin Yu-San, blossoms and leaves emerge from a pond built in the orchestra pit. JULY 2012

108 YOON YOUNG-KWAN SOUTH KOREA’S FOREIGN MINISTER IN 2003-2004

Asia’s next axis THE FORMATION OF A CHINA-JAPAN-SOUTH KOREA FREE TRADE AGREEMENT WOULD MOST LIKELY TRIGGER A CHAIN-REACTION n May, the leaders of China, Japan and South Korea agreed to begin negotiations later this year on a trilateral free trade agreement. If the talks succeed, the global trade map will need to be redrawn. An free trade agreement that encompasses, respectively, the world’s second, third and 12th biggest economies (in purchasing power parity terms in 2011), with a population of 1.5 billion, would dwarf the European Union and the North American Free Trade Agreement, or NAFTA, comprising the United States, Canada and Mexico. Indeed, Northeast Asia would become the third major axis of regional economic integration, following the European Union and NAFTA. Until now, the region has been unable to institutionalise economic cooperation as vigorously as Europe and North America have. But if the proposals discussed in Beijing in May are realised, the resulting free trade agreement could surpass NAFTA in its degree of integration and importance to the world economy. In addition, the formation of a China-Japan-South Korea free trade agreement would most likely trigger a chain-reaction. For example, the momentum could expand southward and stimulate the Association of Southeast Asian Nations, or ASEAN, which has bilateral free trade agreements with all three countries, to join the group. Such a turn of events would be equivalent to establishing the East Asia Free Trade Area, which the ASEAN+3 envisioned about a decade ago. If that happened, other countries – Australia, New Zealand and, most importantly, India – might seek to jump on the bandwagon.

Domino effect The U.S. would, of course, need to respond to the conclusion of any trilateral Northeast Asian free trade agreement in order to preserve its own role in global trade – and in the supply chains that dominate the Asian economies. It would likely seek to expand and deepen the infant Trans-Pacific Partnership, the trade agreement that President Barack Obama committed the U.S. to last year. In particular, the U.S. would strongly encourage Japan to join the Trans-Pacific Partnership, because the U.S. might want a united Asia-Pacific economic community, rather than a division between Asia and the Pacific. Because Japan would not want to be disconnected from the U.S. for strategic reasons, it might indeed accept America’s invitation. In this scenario, both Japan and South Korea would have to find some means to bridge a Sino-centric Asia and a U.S.centred Pacific. Despite its smaller economy, South Korea seems to be better prepared than Japan to play this critical role. South Korea has already concluded a free trade agreement with the U.S., after years of difficult negotiations, and plans to negotiate a bilateral free trade agreement with China this year. Thus, the key question is whether and how much Japan will be willing to take on a similar bridging role. Robust Japanese participation would mitigate Asia-Pacific polarisation and JULY 2012

contribute to building momentum for regional integration. But the magnitude of domestic challenges that Japan faces nowadays seems too great for its political leaders to play a proactive international role. Plus, Japan’s governments have been fragile and short-lived for close to a decade. Moreover, Japan’s powerful agricultural interest groups, especially the Central Union of Agricultural Cooperatives, may strengthen their opposition to both a trilateral free trade agreement with China and South Korea and the Trans-Pacific Partnership with the United States. But Japan’s leaders are being squeezed from both directions. If they do nothing while South Korea continues to conclude free trade agreements, Japan will lose markets in the U.S. and China. But if they act, domestic political opposition would likely be so severe as to drive them from power. This is the main reason why it will be difficult for Japan to conclude the proposed trilateral free trade agreement, despite Prime Minister Yoshihiko Noda’s recent endorsement of it. Indeed, only a looser free trade agreement that would exclude each country’s sensitive economic sectors appears to be viable.

Clear benefits For China, political considerations seem to be the strongest motivation for pursuing a Northeast Asian free trade agreement. But using the trilateral free trade agreement to expand its economic and political influence would require China to increase transparency, open its service sector, and remove non-tariff barriers. In essence, it would have to accept a rules-based system for its relations with its two neighbours, something of which China’s government has been wary. One advantage for China, however, in pursuing a free trade agreement strategy is that it is still an authoritarian state, and thus could overrule domestic opposition far more easily than could governments in Japan or South Korea. Finally, South Korea, which has concluded free trade agreements with almost every important economic actor in the world – the U.S., the E.U., ASEAN, India and others – may be better prepared to conclude a trilateral free trade agreement than Japan. But it, too, will have to face strong opposition from domestic agricultural interest groups and manufacturing sectors, which might mobilise even more strongly than they did in opposing the free trade agreement with the United States. If a trilateral Northeast Asian free trade agreement can be concluded, the three countries would be able to generate more market demand domestically at a time of weak demand from the West, and would gain greater influence in the global political economy. A trilateral free trade agreement would also most likely contribute to stabilising the three countries’ troublesome political relations with each other, and could provide a better environment for North Korea’s eventual economic reconstruction. The myriad benefits of a Northeast Asian free trade agreement are clear. The question is whether it is an ambition too far.

Moments

109

SCHOOL’S OUT FEVER Summer has just arrived and with it, a well-deserved two month-long break for all students. Either jealous or nostalgic – or perhaps both! – a class of more senior ‘students’ decided to celebrate the break too, old-school style. “School’s Out” was this year’s theme for the annual British Business Association Ball and participants were not shy to dress (and behave) like they were teenage students all over again. StarWorld’s ballroom welcomed the 260 ‘students’ last month, who showed that they still knew their lessons well – party the night away. And this time around, no tricks were needed to score some booze!

Eileen Stow and Nunu Khan

A happy gang

Patricia Cheong, Keith Lawson and Juliet Risdon

Aprilanne Bonar and Fran Thomas

Trevor and Dale Martin with Angela and Ian Farnsworth

Eddie Lam, Audrey Stow and Margaret Wong Stow

Andrew and Alexandra Macaulay

Guy and Viktoria Lesquoy

Charles So and Rudy Oretti

Sandra Niza Barros and Pedro Miguel Manhão

Lynn Jacobson and Nick Smith

Catherine Bjerke de Herédia and Alexandra Marramaque de Marcos

Thomas Wyatt and Kim Johnson JULY 2012

110 110

Moments

GLIDING DRAGONS The Nam Van Lake again welcomed the annual Macau International Dragon Boat Races last month. This traditional Chinese festival commemorates the heroic poet and folk hero Wat Yuen who protested against corruption in feudal China by drowning himself in the year 278 BC. Close to 140 local and foreign teams took part in the colourful event, with all casino operators represented. In the end, the big winner was the Indonesia National Team, which won the 500-metre Open category. Neck-and-neck competition was a constant throughout the event

A bird’s-eye view of the Nam Van Lake Nautical Centre

Lawrence Ho Yau Lung officiates the blessing ceremony for Melco Crown’s teams

Splashing fun

Team spirit is one of the secrets of dragon boat racing JULY 2012

Galaxy Entertainment Group’s cheerleaders root for their colours

111

TRUE TO THEIR ORIGINS

FOUNTAIN OF MONEY It is good to see this city ahead of its time in at least one thing. While many experts predict that water will be the crude oil of the 21st century, here that is already a reality – at least in some convenience stores. A price check conducted last month by the Consumer Council found the same bottle of water can cost three times as much in some outlets as it does in others. The survey results also show that the prices of the same kinds of beverage are much higher in convenience stores than in supermarkets. The Consumer Council had already said in April that the price of the same grocery product could vary up to 20 percent in different supermarkets belonging to the same chain. Frozen Spy has read a thing or two about economics and is well aware that prices depend on a variety of factors, including demand and shop rents. And, obviously, there is no law against charging different prices for the same item, even within shops owned by the same chain. But at a time when inflation is riding high at more than 6 percent, it would be worthwhile for officials to look in detail at the cowboy movie that Macau’s grocery retailing industry has become. Until then, think twice next time you are thirsty.

FOLLOW THAT CAB As the city prepares to welcome 200 more taxis, officials and cabbies should stop to consider how to improve customer service. Frozen Spy knows just who could teach the local lads a thing or two. We are talking about the Hong Kong taxi driver who last year found a bag containing more than HK$2 million (US$258,000), inadvertently left in his cab by one of his passengers. The cabbie dutifully took it to the police, with no second thoughts. He almost got to the point where he would have been entitled to keep the money, but the rightful owner showed up three months later, and only after he read a news report about the honest cabbie. Curiously, the owner had won the money in a Macau casino. According to reports in the news media last month, the taxi driver raised no objection to the police returning the money to the rightful owner. That is excessively gracious. In Macau, one would be happy if taxi drivers were gracious enough to give way when they do not have priority.

The authorities announced four new inclusions in the list of intangible items of cultural heritage last month. They are religious rituals associated with two of the city’s most popular deities – A-Ma and Na Tcha –, Macanese cuisine and stage plays in Patuá, Macau’s endangered Asian-Portuguese creole. It is warming to see officials recognising part of the heritage that makes the city unique. But the government should put its money where its mouth is. Without fear or favour, the government should start celebrating the city’s culture – and that means splashing some money about. Unfortunately, many government actions, rather than protecting Macau’s rich heritage, make a mockery of it with a view to creating tourist traps. Oh, powers that be, let us stay true to our origins. It is time to ditch the pastiche policy.

BOTTOM OF THE CLASS, REDEFINED Any male expatriate here who wants to boost his knowledge of the Chinese language has heard the wellworn advice to “get a Chinese girlfriend”. A Hong Kong language-teaching website launched a couple of months ago has decided to provide something close to that. “Sexy Mandarin” uses video lessons taught by young women clad only in lingerie and striking provocative poses. The purpose is to make the students pay attention. It is a rather controversial teaching method. The website has been bashed by feminists, who say it promotes Western stereotypes of Chinese women. Frozen Spy is unaware of how good the results of this method are, but is willing to volunteer to be a guinea pig for the sake of the advancement of education. We just wonder if the MOP5,000 (US$625) subsidy the government is handing out to residents to spend on continuing education will cover this.

JULY 2012

112

Aristocrat

Page 07

www.aristocratgaming.com

Bally Technologies

Page 17

www.ballytech.com

BMW

Page BC

www.bmw.com.mo

BNU

Page 19

www.bnu.com.mo

Business Daily

Page 35

www.macaubusinessdaily.com

CEM

Page 41

www.cem-macau.com

Essential Macau

Pages 67 & 89

www.macaubusiness.com/essential

Galaxy Entertainment Group

IFC & Page 15

www.galaxyentertainment.com

Goldfish

Page 81 & 96

www.goldfishmacau.com

Macau Post Office

Page 87

www.macaupost.gov.mo

MGM China Holdings

Page 05

www.mgmmacau.com

MGTO

Page 21

Morton’s The Steakhouse

Page 63

www.mortons.com

PokerStars Macau

Page 03

www.pokerstarsmacau.com

Reed Exhibitions

Page 12

www.globalgamingexpo.com

Sands China

IBC

www.sandschinaltd.com

Shuffle Master

Page 02

www.shufflemaster.com

SJM

Page 99

www.sjmholdings.com

Zung Fu Motors – Mercedes

Page 01

www.zungfu.com.mo

www.macautourism.gov.mo

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

JULY 2012