Interview | Tai Kin Ip | Director of the Macau Economic Bureau
By Tony Lai and Nelson Moura
Photos by Cheong Pan
In an interview of slightly over an hour in late December with Tai Kin Ip, Director of Macau Economic Bureau, several themes recurred; namely, the Guangdong-Hong Kong-Macau Greater Bay Area, integration, and strengthening co-operation. His tone reflects how much importance the government attaches to co-operation across the border for the development and growth of local small-and-medium sized enterprises (SMEs), young entrepreneurs, and the city’s economy in general.
“We’ll maintain our efforts to support SMEs to integrate with the Bay Area,” he said. “They also need to look at the greater market that can bring in a lot of opportunities for them to explore.”
According to the Bureau’s plan for this year it will help SMEs get a grasp of the development opportunities of the Bay Area via measures such as various SME aid schemes, creating conditions for them to make good use of cross-border e-commerce, and facilitating Bay Area business registration.
The Bay Area – an initiative envisioned by the central government to bring closer integration between the two Special Administrative Regions and nine cities in Guangdong Province – comprises a region that rivals similar bay areas across the globe in terms of economic power.
Apart from SMEs, the economic bureau also strives to help young local entrepreneurs seize opportunities arising from the region, with Mr. Ip pledging: “We will continue to help local youth start-ups get a foothold in the Bay Area to strengthen their connections with enterprises there.”
The city has already inked co-operation agreements with Guangzhou, Shenzhen, Zhuhai and Zhongshan on providing two-way professional consultation services to young business starters, while it will also seek to pursue similar pacts with the remaining five Guangdong cities in the Bay Area – Jiangmen, Huizhou, Dongguan, Fushan and Zhaoqing.
The Bay Area not only presents more career paths for local youngsters but could be the answer to the manpower predicament faced by local companies in a city of low unemployment.
“If we consider today’s globalisation, in terms of production it is always separate . . . [with] multiple sources,” he said. “Some companies can relocate their resources [from Macau] to the Bay Area.”
He also noted that the recent opening of the Hong Kong-Zhuhai-Macau Bridge, which shortens land transportation time in the region, could facilitate further exchanges between the three parties.
“This will help the movement of persons and exchanges . . . between various sectors,” he continued. “Some companies [when] they have limitations, maybe they need more innovative ways of management.”
Aware of trend
In addition to billions of public coffer dollars showered upon local SMEs – which comprise more than 90 per cent of companies here – via different aid schemes, the economy bureau has also worked to improve their business environment and practices. One of the latest initiatives is to encourage small merchants to accept electronic payment, which has become a predominant trend in Mainland China in recent years.
“As long as there is Internet, [e-payment] will be the new trend of consumer behaviour,” said Tai. “We [need to] help them to upgrade themselves to increase their competitiveness.”
In 2016 and 2017, the government partnered the local business community and third-party payment service providers to launch promotional campaigns to increase the awareness of local merchants to this new means of payment. A programme was also launched encouraging local SMEs to install e-payment devices, subsidised by both the authorities and service providers.
“From the very earliest stage, we saw some resistance . . . [as small merchants] had doubts about the safety of the payment,” he said. But concerns about cashless payment have gradually been eroded, while the payment processing cycle – the time it takes for the service provider to pay back the merchants the money it has received from customers – has been shortened from a week to about a day.
“After two years’ effort, we now see some results coming in,” he noted.
Some 10,000 more e-payment devices were installed for local merchants in the past year, with the city now offering 17,000 devices that can accept all types of e-payment. The economy bureau now does not see the need to continue subsidising SMEs to install such devices as they have become “quite aware” of this trend, added Tai.
Not only does the business world here accept e-payment, so do government departments. The Public Security Police Force, for example, has started to accept MPay, the digital wallet of local stored value card Macau Pass, since December for electronic traffic fines.
Mr. Tai, who says the economy bureau will also start accepting MPay in January for the pubic to settle service charges, added: “We foresee a lot more government bureaus accepting this tool [in the near future].”
Some critics say e-payment channels in Macau have so far only provided convenience for tourists, particularly Mainlanders, while residents have benefited less because they cannot use popular Mainland third-party payment tools such as Alipay and WeChat Pay to settle transactions with retailers here due to Mainland currency control. The economy bureau director apparently does not share this view.
“As long as there is Internet, [e-payment] will be the new trend of consumer behaviour,” said Mr. Tai. “We [need to] help [SMEs] upgrade themselves to increase their competitiveness.”
“Sometimes people complain about having no tools to pay electronically,” he said. “As of now, 160,000 residents have enrolled in mobile payment [apps],” he confided, referring to MPay.
“This pace is increasing very fast: I can say it [is] not a linear increase; there [has been] an exponential increase during the last couple of months,” he stressed.
Concerning SMEs, the economy bureau now offers three credit and aid schemes, including one that provides an interest-free loan of up to MOP600,000 for a maximum repayment period of eight years. Since the aid scheme was launched in August 2003, the government has provided over MOP2.89 billion in 9,857 cases as of November 2018.
Although the scheme was revised in 2017 to enable SMEs to apply for a second time after fully repaying the first loan, the threshold of MOP600,000 has not been updated since 2012. Asked whether the Administration has plans to adjust the amount, Tai only responded that they would “monitor the needs of SMEs.”
One down, more up
In addition to the SME aid and credit programmes, the Bureau established the Young Entrepreneurs Aid Scheme in 2013, offering an interest-free loan of up to MOP300,000 for young local businessmen. Over MOP300 million has so far been granted in more than 1,300 cases. Nonetheless, Mr. Tai revealed in a Legislative Assembly session in November that 204 enterprises granted loans, or up to 15 per cent of the total, have since closed.
Tasked about this in the December interview, the director said that the failure rate of young entrepreneurship in the city is quite low compared to other regions and countries as local youngsters focused on low-risk sectors such as retail, restaurants and services, adding: “[This also] parallels our economic structure, which is a tourism-based, service-based economy.”
“If we consider today’s globalisation, in terms of production it is always separate . . . [with] multiple sources,” said Tai Kin Ip, Director of Macau Economic Bureau. “Some companies can relocate their resources [from Macau] to the Bay Area.”
Understanding public concern about the failure rate, he reassured that about half of the dissolved young start-ups have fully repaid the loans extended. Given the city’s low unemployment rate, it is not difficult for affected youngsters to find a job in other areas – or they might simply try entrepreneurship again.
“Just like nature; if you see one company go down, maybe they will open two or three more businesses with other partners,” he said, while pointing out that entrepreneurship is a good type of training for youngsters to hone their skills. He added that young entrepreneurs supported by the aid scheme have hired more than 3,000 employees over the years.
On the basis of the aid scheme, the government has also set up the Macau Young Entrepreneur Incubation Centre, providing services to foster potential young local start-ups. In a bid to offer more comprehensive services, the Centre has been run by government-controlled Parafuturo de Macau Investment and Development Ltd. (PFM) since October 2017. Moreover, the Bureau also launched the China-PSCs Youth Innovation and Entrepreneurship Exchange Programme in 2017 to encourage the exchange of ideas among young entrepreneurs from Mainland China, Portuguese-speaking countries and Macau.
According to Mr. Tai, the programme has so far supported 26 young Macau entrepreneurs wishing to locate to an incubation centre in Lisbon, Portugal.
“So far they have expressed that their experience [there] is quite good; they have learned a lot and established contact [with the Portuguese business community],” he said, adding that the Bureau plans to expand coverage of the programme to other Portuguese-speaking countries in 2019 to enrich its effectiveness.
Shine bright like a diamond
The diamond trade represents another focus of the Bureau this year. An international trading centre for diamonds and rough gems, Macau-China Diamond and Gem Exchange was set up in the city in October, supported by the Shanghai Diamond Exchange, which is the only diamond trade market in Mainland China and the world’s fifth largest diamond trading centre.
This initiative is also supported by the Macau Government as the international diamond trade could inject new momentum into the local financial industry and manufacturing sector. Secretary for Economy and Finance Lionel Leong Vai Tac signed an agreement in October with the General Administration of Customs on the Mainland for the city’s application to the Kimberley Process Certification Scheme, an internationally recognised regime for the trade of rough diamonds.
According to the Bureau, the government embarked upon preparatory work in 2017, including formulating the legal framework and regime in relation to the implementation of the Kimberley Process in Macau, those engaging in this type of economic activity, the trade and transhipment procedures of rough diamonds, and the relevant penalty system.
“The rough diamond trade is important,” said Mr. Tai. “Not only [does it] help the trade sector, it also [helps] our manufacturing sector upgrade to higher value added purpose.”
He continued that the development of the diamond trade here – which can also leverage the city’s ties with Portuguese-speaking countries such as Angola, which is renowned for its diamond exports – will also benefit other sectors such as ‘featured finance’ and conventions and exhibitions.
More to come
Indeed, the ‘featured finance’ and conventions and exhibitions industries are among a few sectors highlighted by the Macau Government that can help facilitate the appropriate economic diversification of the city from the gaming industry.
Although the city’s economy is still reliant upon casinos, Mr. Tai points out that there have been some results, for instance, in the conventions and exhibitions and traditional Chinese medicine (TCM) industries, validating the government’s efforts. According to the Bureau, the added value of the conventions and exhibitions industry was MOP3.54 billion in 2017, representing a hike of 147 per cent from two years ago, while 25 conventions have been held in Macau with 1,000 attendees or more in the first 10 months of 2018, up nearly half from a year earlier.
“This pace [of e-payment growing in the city] is increasing very fast: I can say it [is] not a linear increase, it [was] an exponential increase during the last couple of months,” said Mr. Tai.
Regarding the TCM industry, in 2011 the governments of both Guangdong Province and Macau committed to developing the Guangdong-Macau Traditional Chinese Medicine Technology Industrial Park (GMTCM Park) on nearby Hengqin in a bid to facilitate the internationalisation and standardisation of TCM and help the economic diversification of Macau.
Apropos the GMTCM Park, Mr. Tai noted that of 108 companies currently registered with the Park 26 firms originate from Macau.
“The Park size is about 500,000 square metres with the planned construction area 900,000 square metres,” he said. “Up to now, we’ve completed one third of the Park size and [there is] still far more to go. It is still [too] early to [attribute] the benefits arising from the Park.”
He is optimistic that with the continuous development of the Park, however, that more benefits will be seen in the Macau economy, observing: “This is a huge project that will benefit all of society, not those SMEs alone but also for youth in general.”
“Just like nature, if you see one company go down, maybe they will open two or three more businesses with other partners,” said Mr. Tai when talking of the failure rate of young local start-ups.
According to GMTCM Park Development Co. Ltd., the firm managing the area, the public service part of the project – including the research and development headquarters, GMP-standard production base, inspection centre and other ancillary facilities – came on stream in September 2017.
With more development of the Park in the wings, Mr. Tai revealed that a museum showcasing Chinese medicine technology would be inaugurated in 2019 to educate the public about the health benefits of TCM.
Stepping into 2019, many institutions have predicted the city’s economy will remain on an upward curve despite global economic uncertainties – namely the continuous rippling effects of the ongoing trade war between China and the United States. The International Monetary Fund (IMF) predicts that Macau could grow 6.1 per cent this year while international rating agency Fitch forecasts a 4.6 per cent growth for the gaming enclave.
Asked specifically about the impact of the trade war upon Macau, Tai is careful in his choice of words.
“We have concerns about everything; everything that can affect our economy we will take into account,” he remarked. “Also, we’re preparing ourselves for any possibility of challenges and also opportunities . . . External instability is still a major threat . . . [but] we also have good things like the Bay Area and a bigger area of business development.”
There are no doubts about his faith in the need to forge closer integration across the border.
With a Bachelor’s degree in Economics and a Master’s in Government Studies, Tai Kin Ip has worked in the Macau Economic Bureau for more than two decades.
Becoming a senior technician in the Bureau in 1995, he has served in various positions over the years, including acting as head of research and Deputy Director. He was appointed by the Chief Executive in 2016 to replace Sou Tim Peng as Director of the Bureau.
“[GMTCM Park] is a huge project that will benefit all of society, not among those SMEs alone but for youth in general,” said Mr. Tai.
Speaking of his achievements in leading the Bureau for nearly three years, Mr. Tai assumes a humble tone.
“The major effort that I have undertaken in the Economic Bureau is to promote the dynamic within our team,” he said. “Nowadays we are living in an interconnected community [and] globally, with knowledge very important for the competitiveness of any organisation . . . I graduated in knowledge management [for my Masters] . . . I just used my Masters study knowledge to help this Bureau keep a very coherent, knowledge-sharing team . . . to improve our services provided to [the public].”
An internal guideline of the Industrial and Commercial Development Fund will be publicised in the near future to enhance the transparency of the Fund in the wake of a scandal about the now defunct low-cost carrier Viva Macau, said Tai Kin Ip, Director of the Economic Bureau.
The Fund, managed by Tai’s bureau, grants large sums of public monies to companies, entities and organisations every year in support of activities designed to propel the city’s economic development. The Fund recently appeared on the public radar after legislators last year criticised how the government had handled the Viva Macau case.
The Fund granted a five-instalment loan to Viva Macau between 2008 and 2009 amounting to MOP212 million (US$26.22 million) to support its operation during the global financial crisis, authorised by then Macau Chief Executive Edmund Ho Hau Wah. The Fund has so far failed to pursue the shareholders of Viva Macau to repay the loans in the past decade after the airline went bankrupt.
Local businessman Kevin Ho, a nephew of Edmund Ho, was an Executive Director of Viva Macau at the time and held management roles with Eagle Airways, a guarantor of the loans. Over the years, this personal connection has led the public to challenge the rationale and legitimacy of the loans.
Addressing the Viva Macau case, which he has already responded to several times in the past year, Tai stressed that the loans were “very exceptional assistance provided by the government” and that there has not been any other case like the now defunct airline sine.
The Fund has already had an internal guideline in place a “for long time” regulating its granting practices, which could be publicised “in the near future” to enhance its transparency, he added.