Macau and Guangdong last month signed a framework agreement that will regulate cooperation between both parties for years to come. The newly inked pact is far reaching and intended to take the relationship across the Border Gate to a new level.

In many regards, the Macau-Guangdong agreement is almost a no-brainer.

If increasing integration between neighbours is a worldwide trend, there are even more reasons for these two parties to come closer. For starters, Macau and Guangdong are major partners in several key areas. They are part of the same country and share common interests.

For Macau, the pact creates a platform to discuss matters such as regional transport, food imports and utilities. These are areas in which the territory is highly dependent on its neighbouring province.

Instead of being an end-consumer, the new agreement means the SAR will be called on to have a more active role in planning and constructing the infrastructure that channel energy, water and gas from Guangdong to Macau.

Treasure Island

The singular issue within the Macau-Guangdong agreement that has attracted most attention by the media and analysts has been the development of Hengqin Island. There is a strong argument for their enthusiasm. Macau needs land and the development could help to ease the pressure.

The pact lays down a path for the island’s co-development. It mentions the creation of a traditional Chinese medicine industrial park and another zone to house the development of creative industries, among other things.

Clearly, these are good intentions. But it seems there is a lot of naivety here too. For all that has been said and done, one cannot but wonder how much effort was put into assessing the potential success of the development strategy.

On paper, boosting cooperation between Macau and Guangdong should be a truism. Nevertheless, the reality has proven to be more complex. Think about the Zhuhai-Macau Cross Border Industrial Zone, a failed project.

It is not the only failed enterprise. Highly praised, the Mainland and Macau Closer Economic Partnership Arrangement (CEPA) along with its seven subsequent supplements has failed to translate into substantial economic gains for the SAR.

A chequered past

According to government data, between January 2004 and February 2011, the total exports of CEPA goods to the mainland reached about MOP179 million (US$22.4 million) – as much as the gross gaming revenue from just one Macau casino on a good week.
In face of these two recent failures, one would expect that any new framework for cooperation between Macau and Guangdong would be preceded by more exhaustive studies that would fine tune the proposals. That has not happened.
There seems to be a gap between the direction politicians want business to go and where the latter is really heading.

People are left puzzled to see the Macau and Guangdong governments investing millions in a traditional Chinese medicine industrial park on Hengqin for which there are no known, major parties that have signed up.

It seems the Macau government is following the motto for Cotai laid down by Las Vegas Sands’ Sheldon Adelson: build supply first and demand will come later. With the benefit of hindsight, it seems Mr Adelson was right but past experience shows projects involving cooperation between Macau and Guangdong are less likely to succeed.

That is why, unfortunately, the new framework agreement has more of a flavour of Fernando Chui Sai On and his team jumping onto the bandwagon to please Beijing, rather than using the pact as a development tool for Macau.
Let’s hope this does not result in another golden opportunity spoiled.
by Emanuel Graça