Sign of the times

It would appear that the Macau SAR’s first 11 years have been a success. Economically, the territory is more sound than ever before, and substantial improvements have been made on infrastructure, health and education, to name a few.
Nevertheless, there are big delays in the courts for those seeking justice, civil awareness still lags and the streets are often blocked with traffic. The gap between the rich and poor is widening and real estate prices are making home-ownership increasingly inaccessible. Unfortunately, Macau is also perceived as more corrupt now than it was just a few years ago.
The city is increasingly oriented toward the mainland in matters of commerce and politics. Businessmen still dominate the Legislative Assembly and fewer women are now among Macau’s principal officials than ten years ago.
These are just a few of the dichotomies that have arisen in the last 11 years. For the population and government alike, it has not been an easy ride.

Better, not best
In the political sphere, almost nothing has changed 11 years after the Chinese flag was hoisted over government headquarters. The number of legislators has increased from 23 to 29, following what was agreed between China and Portugal in the SAR’s Basic Law.
On December 20, 1999, the Legislative Assembly was composed of eight legislators elected by direct vote, eight by indirect vote within associations, and another seven were appointed by the chief executive. The current ratio is 12:10:7.
No changes have been made to how the chief executive is selected. A small committee of 300 still have that responsibility.
What has grown is the human resources of the public administration. Modern-day Macau has more than 22,700 civil servants. The number has increased by one-quarter in the past five years. There has also been considerable investment in infrastructure to improve the efficiency and productivity of the administrative machine.
The government is now spending more from a bigger public purse, swelled by tax revenues due to the gaming boom. In 2003, the government spent a total of MOP15.7 billion. That had more than doubled by last year to MOP35.4 billion. Spending on health, education and social security has increased significantly.
Although Macau continues to be regarded as a safe city, rising crime is a problem.
In 1998, the city registered 8,487 criminal offences. Last year, the reported figure was 12,406 offences, a number that had decreased from the highs of the previous two years.
Of course, the territory has come a long way from the bad old days prior to the handover, when violence carried out by organised crime syndicates was a troublesome issue for the Portuguese authorities to handle.
The number of homicides dropped from 42 in 1999 to ten last year. But the number of assaults has increased by almost two-thirds and sexual offences have quadrupled.
The city also has a tarnished international reputation, with the US State Department singling out the city as a destination for human trafficking and a potential centre for money laundering.
Reflecting a period of great development, there are more noise complaints dealt with by the police, quadrupling between 1999 and last year, almost 3,900 offenses.

More jobs, more money
Unemployment has dropped drastically, from 6.3 percent in 1999 to less than 3.0 percent today, according to the latest available data. And the monthly median wage has improved, almost doubling to MOP9,000 in September.
In education, there are several positive indicators, from the rising number of teachers to the class promotion rates and the number of students going on to university.
Perhaps more significant is the number of people in adult education. Between 1998-1999 and 2008-2009, the quantity of courses available has more than doubled, as has the number of enrolled students.

We’re growing
The city’s population has grown to almost 550,000 – up more than 120,000 people in 11 years – but Macau now has almost 40 percent more green areas.
There are more cars and motorcycles on the roads, and the density of vehicles on public roads has jumped from 353 vehicles per kilometre of road in 1999 to 460 last year. That has meant added pressure on infrastructure.
Air quality has improved in the past three years, but the territory is now consuming water and electricity at a rate like never before and producing more domestic garbage.
With so much growth taking place, the territory itself has become bigger, with the land reclaimed since than handover adding 5.7 square kilometres to the 23.8 square kilometres Macau had in 1999.
Despite the added pressure on the environment, we are all living longer and the number of doctors per 1,000 heads has increased over the past 11 years. However, the number of hospital beds per 1,000 people in the territory – 2.0 as of last year – is still bellow the international average of 3.0.
The marriage rate has increased every year since the end of 2005. The birth rate has grown alongside it, with a baby boom underway. Divorce rates have also risen, peaking last year. If you believe the statistics, one in four marriages ends in divorce, while 11 years ago the rate was one in five.
But the question remains, are we better off? It is your call.

Revitalizing SMEs in Macau: Challenges and opportunities

Local small and medium-sized enterprises need to step up their game and bet on innovation.
The Macau SAR will soon be celebrating the 11th anniversary of its handover to China on December 20, 1999. Over the past 11 years, we have witnessed a number of major economic, political and social changes occurring in the society, but one cannot deny the fact that the liberalization of the gaming industry in 2002 appeared as one of the major turning points for the recent development of Macau.
Apart from generating robust growth of gaming revenues and stimulating remarkable increases of tourist arrivals in Macau(1), the new gaming operators also brought new technology, capital and management practices into the local business environment, which have helped consolidate the role and status of Macau as a major tourism destination in Asia.
While it is undisputable that the future economic development of Macau will depend very much on the tourism sector and its gaming industry, in particular, there has been a strong call from various sectors in society over the past several years to further diversify its economy, a reminder that was also given by Premier Wen Jiabao during his maiden visit to Macau recently. In order to achieve this objective, we need to devise a balanced approach to develop the local business environment in which the potential contributions of small and medium-sized enterprises (SMEs) should not be ignored.
It is our hope, that while continuing to enjoy the fast economic growth due to the rapid development of the tourism and gaming sectors, the Macau SAR government can provide sufficient aid and support to the local SMEs so as to create enough space for them to survive and flourish.

Challenges
In order to assess the difficulties facing the local SMEs, the first author and other colleagues from the Faculty of Business Administration, at the University of Macau, carried out an exploratory study in 1999(2). In the study, we conducted a survey of the local small and medium sized manufacturers, trying to identify the major business and operational problems they encountered. They all claimed that “a decline in profit”, “strong competition” and “fluctuation in raw material prices” were the three major problems affecting their daily operations, whereas “labour shortages” appeared as the most severe concern in the labour issue.
In a more recent study conducted by the second author and other colleagues sponsored by the Macau Foundation(3) to investigate the impact on SMEs after the liberalization of gaming industry, it was found that they faced similar challenges as before in terms of “labour shortages” and “insufficient policy support”. However, the “risk of unbalanced economic growth and related impact” was somehow perceived as an additional concern by the local SMEs since they had been operating in a highly competitive environment for both market share and resources.
Comparing the results of the above two exploratory studies on SMEs over the past decade, it is obvious that the local SMEs have been less likely to enjoy the benefits brought about by the liberalization of gaming industry, due to lack of resources and the negative impact of the changing landscape of the business environment. However, their long-term survival should not be determined by these factors alone. Instead, a more proactive approach should be undertaken in order to revitalize the sector and exploit the hidden opportunities.

Opportunities
On the positive side, local SMEs can strive to maintain a high degree of flexibility due to their small scale of operations and lower organizational barriers. Competing on low cost will no longer be a viable strategic option in the future, and they need to abandon this traditional mindset by embarking on the path of innovation and moving up the value-added chain.
In a recent seminar hosted by the Science and Technology Development Fund of Macau, Professor Kazuyuki Motohashi from the University of Tokyo argued the need for the local SMEs to engage in service innovation by teaming up with domestic and foreign institutions in order to develop a “system of innovation”.
Of course the implementation of this networked approach of innovation requires a collective and well-coordinated effort among various entities, namely multinational firms, government funding agencies, universities and local SMEs. But coupled with a strong entrepreneurial drive from the business sector and support from the Macau SAR government, we are confident that this vision can be achieved.
As a concluding remark, Macau has transformed itself into a service-based economy with a particular emphasis on the tourism and gaming industries in the past decade. Despite the remarkable economic achievements, it is time for us to re-consider which model of sustainable development is suitable for Macau. Regardless of what final model will be adopted, it is always necessary to have the involvement of local SMEs and other institutions.

(1) – http://www.dsec.gov.mo/default.aspx
(2)  – Antonio, N., Hong, J. & Lam, T. (1999) ‘Reassessing the Realities and Hopes for Small and Medium Enterprises in Macau’, Euro-Asia Journal of Management, 17: 49-72.
(3) – Veronica H.I, Fong & Anthony I.K. Wong. (2009) ‘The Imperative of Human Resource in Macau’s Sustainable Development: Problem and Solution’, a research project supported by Macau Foundation.

Jacky Hong  Associate professor of Management, University of Macau Veronica Fong  PhD candidate, University of Macau

We’ve come a long way

Eleven years after the handover, Macau has done better than survive economically; it has flourished. Now diversification from the casino-led economy is the priority.
“Growth” is the word that springs most readily to mind when considering Macau’s economy since the handover. And any consideration of the last 11 years must take into account the changes in the business environment. Businessmen have witnessed the most dramatic changes since the establishment of the Macau SAR on December 20, 1999.
“Scale difference is one of the main things that you notice,” says Henry Brockman, the chairman of the British Business Association of Macau. “It’s now possible for businesses to get more efficient because it’s all on a much bigger scale than 11 years ago.”
Telecommunications is one example, he says. “Macau now has three mobile phone operators, whereas in 1999 it only had one. That’s because there has been growth in the communications traffic, which means more efficiency and lower costs for everybody.”
The British Business Association is itself a product of the post-handover boom, having been created in 2006 to represent British business interests. “A decade ago we could never have formed this association because we would only have had about 10 or 15 members,” notes Mr Brockman. Nowadays the association has more than 200 members.
“New sectors are also open to British investment, such as construction,” he says. “Before it was pretty much a closed market but now you have such major projects going on in Macau that the owners of those projects want the very best internationally. That has poured in foreign investment.”
The Statistics and Census Service recorded MOP557 million (US$70 million) of inward direct investment in the construction sector in 1999. By 2009, the last year for which data is available, this figure had risen to MOP2.9 billion.

From all sides
The president of the Macau Exporters and Importers Association, Jackson Tsui Wai Kwan, is sure about one thing: “The economy of Macau is now quite free”.
“There is no recession and investment is coming from all sides, which is very good for the business community, as are the very low taxes.”
Macau’s exports – mainly textiles and garments, footwear, toys and electronic goods – were worth MOP17.6 billion in 1999. Imports amounted to MOP16.3 billion.
It is a far different story today. In the first nine months of the year, the value of exports was MOP5.3 billion and imports were worth MOP31.9 billion.
“Since the handover, all the imports and exports are now much simpler. It is easier to have goods from all over the world and to export goods from Macau to everywhere too,” says Mr Tsui, who is also a legislator.
The president of the Association of Building Contractors and Developers, Tommy Lau Veng Seng, thinks Macau has had “a really successful decade”, especially in the property sector.
“Real estate is one of the most popular ways to invest in Macau,” he says. Mr Lau, also a legislator, says growth in the real estate sector has been partly due to foreign investment.
He has a “quite positive” view of the evolution of the local business environment over the past 11 years. “The very substantial economic growth is the obvious change. Once we opened up the gaming industry, the numbers beat all previous records,” he says.
He harbours some concerns. He stresses there is a need for economic diversification and laments the shortage of quality labour.

Casino economy
In 1998, 44.5 percent of government revenue came from direct taxes on gaming. The proportion increased sharply after the handover, with the liberalisation of the casino industry. Nowadays, the percentage is around 83 percent.
New players in the gaming industry mean more tax revenue and more tourists. Almost 22 million tourists visited last year, 15 million more than in 1999. By the end of last year, 51 percent of arrivals were from the mainland. A decade prior, most were from Hong Kong. Visa restrictions made it much harder for mainland Chinese to visit.
By the end of 2006, Macau had overtaken Las Vegas in terms of casino gross gaming revenue. The figure has increased every year and Macau will post another new record this year of somewhere around MOP180 billion.
“Gaming has evolved in volume but also in terms of quality and service diversification,” says economist José Morgado. The industry’s liberalisation has “allowed more money to enter Macau, as well as new operators, namely Americans, which gave more quality to the supply”.
The industry has even greater potential, if it is developed in the right way, he says. There should be more attention paid to meetings, incentives, conventions and exhibitions or MICE. While government data records 323 MICE events in the third quarter, and a year-on-year increase of 44 percent in participant numbers, the sector has seen its share of ups and downs.

Patchy development
Mr Morgado, who is the chief executive of BES Oriente bank, says the banking sector has also profited from the entry of new players in the gaming industry. It has provided investors with loans for their projects and other financial services.
“It has all been very positive,” he says.
But there are shortcomings.
Initially, Mr Morgado recalls, there was a degree of public investment, but after the corruption case involving the disgraced former Secretary for Transport and Public Works, Ao Man Long, the government has poured less money into public infrastructure. “The economic boom cooled down a bit,” he says. Mr Morgado believes it is imperative that public investment keeps up with private investment.
Although Macau is richer overall, there are areas that have seen few benefits from the boom, such as health, education and working conditions, says Mr Morgado.
For Henry Lei, assistant professor of business economics at the University of Macau, the region’s “very positive situation” does not mean everyone is better off.
Mr Lei points out that construction workers face competition from imported labourers. There is also a “serious problem with the appreciation of the renminbi and the depreciation of the US dollar” and “overdependence on the gaming sector and the rising property prices”, he says.

Simply a lot more
Nevertheless, Mr Lei is satisfied with the achievements since the handover.
“The economy is going quite well. We’ve doubled growth, we have more job positions and income levels have increased quite a lot,” he says.
“We simply have a lot more than 11 years ago.”
Mr Lei and Mr Morgado agree that there is still much to be done. For instance, development has created a need for more qualified workers.
In the background, there is a new chapter starting, one of growing economic integration with the mainland.
Mr Lei says support from the central government for projects on Hengqin Island, the new University of Macau campus and the Chinese medicine park, is a very positive sign for the future.
He believes it is possible for Macau to develop innovative industries and new businesses that will ensure prosperity and reduce the economy’s dependence on bets placed at gaming tables.

By Filipa Queiroz

Tales of two societies

Prosperity after the handover has created a community divided by wealth and that uses technology to voice its alienation.
The Macau SAR’s explosion of wealth in these first 11 years has inevitably meant a social transformation. The results of economic growth, increasing urbanisation and the dominance of the gaming industry can be seen everywhere.
How has the community coped with the changes? Opinions are split.
“I would like to use one sentence to describe it. Too much, too narrow and too fast,” says Cecilia Ho, a sociologist at the Macau Polytechnic Institute. Ms Ho believes Macau’s society is increasingly divided into the haves and the have-nots.
“The poverty gap is widening. There is too much emphasis given to the development of Macau as a world entertainment hub, while social and cultural aspects are neglected,” she argues.
She is particularly sensitive to the plight of non-resident workers. Last year she directed a documentary that tells the story of a female migrant worker who left Indonesia to work as a domestic helper in Macau. Since the documentary’s release, a new law on the employment of non-resident workers has taken effect but problems remain. “There is still a lot of exploitation by recruitment agencies, especially for the Indonesian domestic helpers. Their minimum monthly salary is still MOP2,500,” she says.
Government data reveals there were almost 74,000 non-resident workers in the city at the end of August – more than double the number in 1999.
There were 5,694 employed in manufacturing and 15,797 in domestic services, both low-paid occupations. Most were from the mainland, the Philippines, Vietnam and Indonesia. With no minimum wage for either resident or non-resident workers, many struggle to make a decent living.

Reaching out
Victoria Lei is assistant professor of English literature at the University of Macau and former president of the Macao New Chinese Youth Association. She says that when she looks back to 1999, she feels nostalgic.
“A lot has changed. I feel proud of what we have achieved but very anxious too,” she says.
Her view is that Macau is paying too high a price for its development, sacrificing its natural and cultural heritage. Although environmental concerns are high and the landscape has changed, there are positives.
“Now, young people have more opportunities and for the first time they actually feel that their dreams can come true,” she notes.
The chance to interact more deeply with foreign students means “we can learn from each other,” she adds. Ms Lei says she hears mainlanders speaking in the university corridors, helping residents with Mandarin, while improving their own Cantonese.
At the end of 1999, about 10,000 students were in higher education in Macau. Last year there were more than 21,000.
Angus Cheong thinks society is adapting to the new form of government and the renewed bond to the mainland. Mr Cheong is the research director of e-Research Lab and director of the Macau Internet Project, an organisation that researches Internet usage in Macau.
Mr Cheong says the past 11 years were a fascinating period that saw people start to get in touch with the outside world, using the web as their main medium.
“Macau is [now] one of the most mature places for using the Internet in the world,” he says.

Finding a voice
The results of his last survey indicate that more than one-third of Macau’s Internet users use online forums as platforms to express their feelings and opinions. Young people are not shy about using them to discuss and criticise government policies, he says.
“Together with Facebook, forum users advocate a culture of monitoring society and the government, expressing also their emotions and thoughts about their daily life,” he comments.
“Users evaluate and criticise government policies without exposing themselves in the traditional media. Activists use them to promote their points of view, while others use them as a place to organise social activities.”
It comes as no surprise to Larry So, one of Macau’s leading political analysts. “I see the young challenging the government in the next couple of years for being too much in favour of the business sector and the casino people,” Mr So says.
A changing attitude was obvious in the last two elections, with more votes going to trade unionists and pro-democracy candidates as the electorate, and candidates, got younger.
He recalls the vision of former Chief Executive Edmund Ho Hau Wah. “Policy started to change and he knew how to push up the economy, for example, opening up the immigration policy so that other people could come to Macau and stay here,” he says.
“If we look back, there was an addition of 100,000 people from that time until now, which is quite a lot.”
According to Mr So, “2004 – 2005 was the turning point of Macau, the take-off stage in economic terms”.
But politics have failed to follow suit, as most of the leading politicians were more deeply engaged with economic matters than with political beliefs, he says. “Until now nothing has changed.”

Higher purpose
Agnes Lam, assistant professor in the University of Macau’s Department of Communication and chairman of Macau Civic Power, believes that people lack something to believe in besides money and casinos.
“People in Macau are suffering from some kind of identity crisis,” she says. Ms Lam says the SAR has failed to evolve in a healthy way and that its institutions should have been made stronger before the liberalisation of the gaming industry.
She acknowledges that the quality of life has improved. “People have more money to go to study abroad, to travel, and the young can earn substantial salaries when they graduate,” she notes.
The problem is that, once in the workforce, young people do not have enough career options, she says. “If a person wants to earn enough money, the best solution is to go to work in a casino or some other related industry.”
Ms Lam believes wealth has created tensions between established residents and newcomers. “Macau people were always very open to others, namely in the 1960s and 1970s, when a lot of people came to Macau. Now I feel that there are tensions,” she observes.
A higher average standard of living means little to those on low incomes who have been left behind, says Caritas Macau secretary-general Paul Pun Chi Meng.
“Those people spend more time working and, even so, it’s not enough to fulfill their expectations and pay for their basic needs,” he says.
The head of the largest non-profit charitable organisation in the territory, with 60 years of history and more than 1,000 staff and volunteers, believes that the population needs to feel that the energy they’re spending gets “a reasonable return”.
“The problem is that, mainly, we think of those who have, and forget those who do not have,” he says. “In 10 years Macau won’t have enough homes for the elderly or schools for everybody.”