As Chief Executive Edmund Ho enters the home stretch of his historic time in charge he faces a myriad of challenges. The banker’s final policy address was aimed at tackling them

With this in mind, it’s not surprising that Macau Polytechnic Institute professo Larry So chooses the maintenance of economic stability as the big priority for Ho’s last year in office. In other words, he says: “To ensure there are job opportunities and a relatively stable income.’’.
So adds that whether it comes from the casinos or other sources is not important, but a lot more remains to be done in the political and social spheres.

Golden eggs

So sounds a warning about “hostile political feelings” developing in the community towards foreign investors in Macau, particularly in the gaming industry. These are rising after the massive lay offs announced by Las Vegas Sands. People think the US gaming giant is not living up to expectations and, by choosing to suspend Cotai projects instead of its developments in Singapore, it seems it to be “forgetting about Macau”.
Money earned in Macau does not stay in Macau, they argue. Or, as So puts it: “They are keeping the goose that lays the golden egg, but they are not feeding it.’’
What should Edmund Ho do to prevent this? Simple, says So: “Keep a very strong hand and regulate in a way that companies are obliged to reinvest in Macau. That means at least 50 per cent of their revenues.’’ He recognises this could be seen as a “drastic measure” but he believes it is necessary to maintain social harmony.
As for the future national security law – which is under consultation until the end of November – So hopes the draft is improved, so that it specifically guarantees freedom of speech and clarifies the concept of “preparatory actions”.
However, So doesn’t expect any controversy around the Article 23 proposals.
“Macau is very conservative and pro-China. But one day things will change, I’m optimistic,’’ he says, convinced this will be Edmund Ho’s last job: “He will get the machine going and ‘run away’ ,” says So.
For legal expert Nuno Lima Bastos, Edmund Ho’s team would do better if they were to regulate the Basic Law’s article 27 , which states that Macau residents shall have “the right and freedom to form and join trade unions, and to strike’’. However, nothing has been done on this: “The international crisis could bring an increase in social conflicts, so it would be better to regulate on this subject,’’ says Bastos.

Political development

In terms of the development of the political system, IPM professor So doesn’t believe there will be changes in a near future: “I’m very sure this won’t happen in the next ten years.” But he does hope that in 2009 there could at least be talks on the subject.
Bastos also hopes a few steps can be taken in that direction: “If the government is sincere when it says it will study a future democratisation of the political system – but doesn’t say when – it should at least start some training actions that can explain to people what elections mean,’’ he says. “A plan to prepare civil society for eventual universal suffrage – not in the 2009 elections, of course, but maybe in future ones, would be acceptable,” he adds.
The absence of any moves to increase the number of direct seats in the legislative assembly was “a disappointment” to
Bastos: “Edmund Ho would look good in the picture if he at least could express that wish before he leaves office,’’ he adds.
But the lawyer doesn’t expect much. In his opinion, chief executive Ho didn’t present any road map towards direct elections because, after the corruption scandal that resulted in the conviction of his Secretary Ao Man Long, he needed to please Beijing.
This is why, Bastos argues, no direction towards universal suffrage has been developed, the Basic Law Article 23 is going to be regulated before Hong Kong’s and millions of dollars were donated to Sichuan.
In terms of the justice system, the lack of magistrates is one of the big challenges. But the solution, so far, has not been unveiled by the government.
The training of new local magistrates should be underway, but, as Bastos explains, it will take a long time before the candidates finish the training and gain enough experience.
In the meantime, to deal with all the cases piling up in the court, he makes a suggestion: “There should be courage to recruit some magistrates from Portugal.” Specialists who would come to Macau for four to five years, to help out the local team of magistrates.
Over the past few years the government has said a lot about the civil service. However, there wasn’t much about this in his policy address. Perhaps this is because the ambitious three-year old Pubic Administration Reform plan is still ongoing on and is expected to end in the coming year.
Even so, Bastos points out some matters that should be dealt with by Edmund ho.
One of them is to make sure the career path of new civil servants is clear.
“In some public departments, there are people doing the same job but benefiting from different conditions because of the way they were recruited”, he explains. Individual contracts, he adds, used to be an exception measure to recruit specialists from abroad, under more attractive conditions, but nowadays they have been “generalised in practice” with “a loss in those benefits”.
Bastos also proposes an improvement in the system for evaluating individual civil servants, a process which at present he believes is being applied as a mere formality. He is also convinced that in the last four to five years of the casino-led boom, Macau’s population did not benefit as much as expected.
Development brought more jobs but also an increased cost of living, which for some low income families actually meant a worsening of their conditions.

Home building

Another important policy that has been demanded by several labour representatives is the establishment of a compulsory central security fund. The government is already discussing the implementation of the so called “two layer social security system”, but for many, this is not enough because it is not a mandatory scheme.
“Without government and the private sector investment, I would say forget it, no retirement,’’ So argues, insisting that a compulsory central security system be created as soon as possible.
Housing is another urgent issue which needs to be dealt with: “We should speed up construction and double the number of public houses we build. We have very strong demand and in the future this will grow,’’ warns So.
Legal expert Bastos hopes the government will speed up the pace of public housing construction and perhaps even try to add more projects.

Unhealthy situation

On health, Macau’s condition seems serious due to an illness related to money badly spent and the bad use of time.
Dr Fernando Gomes has a diagnosis for the city’s health system: “During the last eight years it has been a disgrace. No one planned ahead in time, no one thought of the economic boom and the public health sector is bursting at the seams,’’ Gomes, who is vice-president of the Macau Health Services Doctors Association, says, adding that with all the money sloshing around in the economy, this is “unforgivable’’.
Gomes can’t help thinking there has been bad management of the sector – whether or not this was intentional. “Public money has been given away to private health institutions,’’ he argues.
If this had been done under some kind of protocol, with proper auditing, it wouldn’t be a problem, he says, however, he points: “The private service is not any better than the public one and the prices are as high as those in Hong Kong. Plus, almost 80 percent of the population cannot afford to go private, so they have to turn to the public sector.’’
Gomes argues that the public health sector is being strangled because so many people are using it and hard-pressed medical staff cannot cope. The Gomes prescription? A new public hospital in Taipa—which he believes should already be being built—and a review of the medical career regime in a bid to motivate health workers. Also, he says recruitment from outside Macau is needed, adding: “I’ve been waiting for three years for new specialised resident doctors.’’

Class action

Teresa Vong, director of the Educational Research Centre of Macau University, was happy to learn from Edmund Ho’s speech that the government was going to put more into education but she wonders how will it be able to reinforce supervision in the sector.
As Vong points out, almost 85 percent of the schools in Macau are private, so it is difficult for the government to impose rules.
While recognising that “the intentions are good”, she remains worried about the issue of accountability. Not that she believes there should be wholesale government intervention in schools, but, she says there should be some form of accountability mechanism, since these institutions receive public money.
Vong has “a feeling” that the government is moving toward a welfare state with regard to education. But, although subsidies can help institutions and students, the academic underlines that it can also become a significant burden for the administration and therefore needs to be carefully analysed.
In tertiary education, the head of the Educational Research Centre still doesn’t know what the new general law on the higher education will say because no blueprint has been publically presented yet.
However, she is convinced there is a need “to do something to open up the market”. Tertiary education in Macau, she says, has changed dramatically in the last few years, but in two or three years from now there will be a decrease in the number of local students.
So she suggests “new programs”, able to cope with local demand and attract international students.
Vong says universities should up their game but stops short of calling for government inspections of them. Also, at a time where long distance programs are getting more and more popular, the professor believes there should be some rules to protect both local institutions and local students – in effect, guaranteeing the quality of the services which people often pay highly for.
With a year remaining of Edmund Ho’s tenure, many people are already thinking of the next Chief Executive. So believes that after the corruption case that tainted Edmund Ho’s last year, the next boss “doesn’t have to be a good one, just a clean one”.

For the home stretch

Suggestions for Edmund Ho’s last year in office:

Make gaming concessionaries reinvest a fixed percentage of their revenues in Macau

Improve the draft of the Article 23 national security law

Regulate Basic Law Article 27 to allow trade unions and strikes

Training sessions to explain and motivate people for eventual direct elections

Recruit magistrates from Portugal

Equal benefits for civil servants doing the same job, regardless of their contract

Creation of a compulsory social security scheme

Speed up the building of public housing

Build a public hospital in Taipa

Recruit more doctors from outside Macau

Improve accountability mechanisms in private schools

Improve performance assessment in tertiary education

Introduce new programs to attract international students

Improve the rules for long distance programs

by Sofia Jesus

Future imperfect

The sky used to be the limit, not any more. Everyone agrees that economic growth will slow in the coming months but how bad will it get and how well equipped is Macau to cope?

The term rollercoaster ride is often overused but the fairground metaphor is a perfect fit for the last few months of Macau’s economic cycle. Skyrocketing economic growth, no more, the cacophony of pile drivers and jack hammers, no more. This is the new face of boom-town Macau.

Since September gaming revenues have been decreasing year-on-year and according to all the analysts, 2009 promises at best zero growth and probably falling revenues for the gaming industry. The whole economy will suffer, with the most vulnerable sector being the Small and Medium Enterprises (SMEs), who face obstacles in getting access to loans as confidence within the banking sector continues to plunge as a result of the international financial crisis.
But apparently there’s some good news for Macau, compared to many other countries and regions, the SAR Government has enough reserves to keep the economy ticking over relatively well for at least the next two years. Macau has an MOP80 billion budget surplus saved for a rain day since the handover. As the dark clouds gather over Macau, the government has announced a raft of measures including support for SMEs, new public works projects, handouts and a subsidy for every resident.

Low growth

During a recent meeting of Portuguese-speaking countries, the director of the Monetary Authority of Macau (AMCM) Felix Pontes said: “The Macau economy is already feeling the pinch of the international financial crisis, but 2009 and 2010 will be worse”.
However, Pontes does not believe that the MSAR’s GDP will plunge next year. “Growth will be quite low but we will not face a recession,’’ he said.
Secretary for the Economy and Finance, Francis Tam, says the economy will almost certainly not grow, but Fung Kwan, head of the Department of Economics of the University of Macau, is not so pessimistic.
He said: “We will be able to keep our economy moving and probably have single digit growth.’’
Nevertheless, the long time Macau-based economist Albano Martins admits, in line with Tam’s forecast, that the economy may not grow at all or manage only a very low increase.
The recession, zero growth or slowdown of the GDP will be the result of two two major factors. Decreasing gaming revenue—a Deutshe Bank analysis predicts they will plunge 14 percent—and falling investment which has been a key driver behind the double digit growth since the gaming industry was liberalised.

Higher unemployment

During the recent policy address to the legislative Assembly, Francis Tam warned that we should be prepared for a time of adjustment.
“Macau will face important challenges following the decrease in external demand in the export market. Slower growth in the mainland and neighboring regions will have an impact on Macau’s tourism,’’ said Tam.
In other words, manufacturers and the gaming and entertainment industries will feel the pinch of the recession in Europe and the US and the resultant slowdown of East Asian economies.
In this scenario, unemployment will increase not only in the big casinos, hotels and construction companies but also in the SME sector. Fung Kwan considers the problem may not be serious as most of the fired workers will be non-residents. “Workforce cuts must be done firstly in the non-resident sector. This will prevent a significant increase in the unemployment rate,’’ he says.

Help for SMEs

At this time of adjustment, the government will be more proactive in offering retraining courses for the unemployed. During the policy address debate in the Legislative Assembly, lawmaker Chui Sai Peng said: “Not only do the workers need training but also the entrepreneurs need training in order to cope with the challenges.’’
The SMEs are especially fragile in this context. Tong Noi Tong, coordinator of the Macau SMEs Association (MSMEA), sees dark times ahead: “Next year will be very very difficult,’’ he says.
Mr Tong expects that nearly 1,000 small businesses will close due to problems in getting bank loans from the banks and the limits imposed on the importation of foreign workers.
“SMEs need more imported labour because locals won’t accept the salaries we can offer,’’ says Mr. Tong.
The government relief package for SMEs has pleased the small businesses but the head of the Macau Small and Medium Sized Enterprises Association (MSMEA) fears it will not be enough.
In his 2009 policy address Chief Executive Edmund Ho Hau-wah announced a big increase in the budget for the fund to support business from about MOP600 million in 2008 to more than MOP2.1 billion in next year.
However Tong Noi Tong is sceptical: “It is not only a matter of more money. The government must analyse case by case the needs of the SMEs,’’ he says.
Lawmaker Tsui Wai Kwan suggests for each job created, SMEs get a government subsidy.

Intervention

Besides boosting support for the SMEs, the government has also pledged to increase public expenditure by 25 percent. In 2009, the public expenditure budget is more than MOP10 billion.
Fung Kwan believes the authorities need to “spend more, build more public infrastructure in the shape of roads and bridges”.
In addition, he says, to help the grassroots – always the most affected in a time of economic downturn – it is important to spend more money on social welfare. In a bid to absorb the unemployed, officials are planning to set up “social enterprises”, a concept not yet fully explained by the government.
Mr Fung also thinks that now more than ever it is necessary to push for diversification in the economy and he gets support from lawmaker Lau Pun Lap, who is calling on the government to set up a special fund to help such diversification.

Bounce back?

Macau will always be heavily dependent on the gaming industry. In this respect the MSAR could be able to escape the worst ravages of the worlwide recession if the casinos bounce back.
But as the old certainties disolve and disappear, for analyst David Green of Price Waterhouse Coopers, the question is what kind of recovery we will have.
As the current situation stems from a combination of three factors – the credit crisis, a shortage of labour and visa restrictions from the mainland – Green believes once one of these factors is eased, the situation will improve.
It is very likely that the Chinese government will soon roll back some of the restrictions on individual visas which will be good news for casino operators, but other problems may hinder the recovery of the gaming sector.
As VIP revenues represent the lion’s share of the gaming gains, the problems facing junket operators in getting access to loans – because of the lack of confidence in the baking sector – may turn out to be a much worst headache than the issue of the mainland individual visa
restrictions.

by José Carlos Matias