Talk of the need to take Macau’s economy in different directions is on the lips of each of Macau’s leaders these days but apart from the growing conference and exhibition sector, is enough being done to build on the giant casino sector?
For Henry Lei, program coordinator for International Finances and Economy studies at the University of Macau (UMAC), the government could be doing much more to “egg on” diversification by giving more financial incentives and economic aid.

Legislation

Lei says adjustments to legislation should be made that allow a deceleration in the growth of the gaming sector but that, stimulate the development of other industries.
His idea is backed by Carlos Siu, program coordinator for Enterprise Management at the Macau Polytechnic Institute (IPM) who says the executive needs to set an example. Siu says diversification has been processing “slowly”, and adds: “The government must take on the role of key investor in infrastructure and resources that lead to the expansion of the territory’s economic base.’’
This year the executive has put in more resources but not enough, they only sought to ameliorate the effects of the global financial crisis and stem the tide of unemployment.
In the third and fourth quarters of 2008 economic development slowed down after years of growth, still, the year closed with a growth rate of 13.2 percent.
Nevertheless, this year the forecasts are more conservative. Secretary for the Economy and Finance, Francis Tam, already said that Macau will “face more difficulties, with predictions for negative growth in general.

Infrastructure

Expanding conventions and exhibitions is a good move but Lei says: “It cannot been seen as the only and exclusive way to diversify the economy.’’
He points to the fact that the city does not have a public convention centre or any other similar facility due to a lack of investment in this sector, and programmes for professional training are also sadly lacking, says Lei.
“The Government could, for instance, convert the Macau Dome into a convention centre. At the same time, negotiate with the academic institutions so that they may offer degrees and training programs of short and long duration,’’ says Lei. This would need to be done in conjunction with the private sector, he adds.

Spotlight

The organisation of international events was and always will be an effective way to put Macau’s name in the spotlight, for example between 2005 and 2007 with the East Asian Games and the Lusofonia Games.
Nevertheless, says Siu, the local authorities must carry the experience gathered in the organisation of these events into other sectors, including the convention and exhibition sector.
Lei prefers to target the construction of more attractions. Theme parks or even an oceanarium ought to be built to encourage tourists to remain longer in the territory, he said.
The creative industries, art and design also need to be looked at says Lei because they seem to get stuck in the government
machine.

WAYS FORWARD FOR THE DELTA

• Promote big infrastructure projects. Reinforce the coordination and the cooperation between Guangdong and Macau in urban planning, railways transportation, computer and energy bases, as well as of the urban water supply facilities. Begin construction of the bridge connecting Hong Kong, Zhuhai and Macau.
• Reinforce CEPA implementation and encourage co-operation in the financial domain supporting the firm development of the renmimbi activities by Macau banking institutions.
• Consolidate Macau’s role as an international centre for tourism and leisure, through the coordination of the tourism, commercial, convention and exhibition activities, among others. Diversify and develop integrated tourism.
• Create a new cooperation mechanism between Zhuhai and Macau. Take advantage of the Zhuhai-Macau Transborder Industrial Park, changing it into a place which favours the stimulation of the cooperation in the areas of services and high technology.
• Develop bilateral cooperation in the area of customs and extend transit reform at the border, study mechanisms which will allow the mutual recognition and the common use of the control areas, as well as boosting law enforcement.
• Construct, jointly, a green area to enhance the quality of life in the Pearl River Delta region. Collaborate on clean energy policies, employing a uniform use of fuel measures for vehicles and vessels. Adopt a uniform use of better regulating standards for smoke discharge and support the development of a recycling system.

Beyond borders

It is time to plot a way forward and place a bet on regional integration

Integration with the Pearl River Delta is increasingly being seen by the government as the way forward to diversification.
The 2008-2020 Plan for the Reform and Development of the Pearl River Delta Region, presented by the State Council for Development and Reform at the beginning of the year spells ou how this might be done.
The general guidelines predict the transformation of the present industrial model of intensive work to more advanced industries of added high value, a modernisation of urban areas and a cleaner environment.

Innovation

Therefore in the next three years, about 100 laboratories for innovation, research and development will be established. In the shorter run, goals for 2012 include the implementation of three to five industrial parks for hi-tech industries.
Macau officials are interested in establishing a series of specific studies on the economic development of the city.
The goal is to identify “in a scientific manner” the characteristics and rules inherent to the development of Macau’s economy, as well as the advantages and disadvantages in the area of economic integration.
Coordinated by the Secretary for the Economy and Finances, Francis Tam, and with collaboration from the Centre of Strategic Studies for Sustainable Development, a work group will be created with the participation of representatives from the different areas of government, similar to the one already created in Hong Kong.
Meetings with local experts will also be organised, gathering and processing opinions and suggestions for use when formulating policies.
Despite advancing with these studies, the executive has yet to define a clear timetable, so there is no date for when a report will be published.

Donald Tsang’s vision

Hong Kong reveals priority areas for economic diversification

It’s not only Macau that needs to change its policies and the base of its economy. The dilemma of economic diversification is also concerning Hong Kong which is looking at the services industry as the most plausible solution.
The HKSAR’s Chief Executive Donald Tsang Yam-kuen has outlined a plan that involves six types of services , based on a study by a group of specialists.
According to Tsang, services in the areas of medicine, innovation, creativity, environment, education and tests should take priority in the coming years, with the objective of expanding the territory’s economic base.

Full potential

Admitting these “are not new areas”, Tsang said it was necessary to consider if their full potential has already been achieved. “If we come to the conclusion there’s still some room left to manoeuvre, we must understand what it is we can do to reach the maximum exponent in these sectors,” he said in the South China Morning Post.
He noted that there are always new doors waiting to be opened and the most self evident is cooperation with the mainland.
“It’s necessary to be concious that the increasing cooperation with China will bring new development opportunities. We will study the role the Government may play to help these sectors fly even higher,’’ he said.
In the opinion of the president of the Institute for the Investigation in Applied Science and Technology, Patrick Wang Shui-chung, the focus on these six services areas may have other outcomes apart from diversification.
It will be advantageous in transforming the economy based on knowledge, underlined Wang also a member of the work group for the economy created by the neighbouring region’s Executive.

Forums

Under this plan, those responsible will create discussion forums with the representatives of these six services sectors, including academics and investigators, to find the best way forward. The results should be presented during the next meeting of the central work group, which for now, hasn’t yet been scheduled.
This goal announced by the Executive led by Tsang is not new. His predecessor, Tung Chee-hwa, talked of making Hong Kong an economy based on four pillars: besides a centre of finances and commerce, to gamble on tourism and professional services as complementary areas.

by Tiago Azevedo