Sino-Luso offshore allowed

The MSAR will now allow the opening of offshores related to trade and services between Portuguese-speaking countries and mainland China starting from today, according to a release in the Official Gazette yesterday.
According to the release, the addition to the list was requested by the Macau Trade and Investment Promotion Institute (IPIM), bringing the number of authorised commercial activities eligible for the Macau offshore regime to nine.
However, the President of the International Lusophone Markets Business Association (ACIML), Eduardo Ambrósio, told Business Daily the measure wouldn’t offer any “advantages or benefits” to local or outside companies engaged in Sino-Luso business.
“Maybe before it was advantageous to open an offshore in Macau, but nowadays I don’t see a lot of advantages to it,” Mr. Ambrósio said.
According to the businessman, the cost of performing yearly audits of offshore operations in Macau is higher than for a class A company (a company with more than MOP1 million in capital).
“A class A company can have an accountant make the audit and then present it to the [Monetary Authority of Macau], while an offshore needs to hire a professional auditor, which is more expensive,” he added.
These disadvantages, together with the low number of activities allowed for offshore operations to engage in, have reduced the number of offshores in the MSAR.
According to Macau Business magazine, as of the end of 2016, only two new offshores were registered in Macau, while 28 chose to close operations.
IPIM told Business Daily that the measure was set up to encourage investment from businesses related to Sino-Luso trade and services in Macau.
‘Fiscal incentive can further strengthen the development of positioning and objectives.  With this preferential treatment, more investors would expect to choose Macau as a stepping stone for the products and services between Lusophone countries and the Mainland market, which could accelerate the moderate diversification of Macau’s economy,’ IPIM told Business Daily.

Good intentions
For former deputy secretary-general of the permanent secretariat of Forum Macau, Rita Santos, the change was a “welcome measure” that could “improve” and “boost” the level of trade and business between Lusophone countries and mainland China through Macau.
However, Ms. Santos – who worked at Forum Macao for 12 years – stated that there has been a “lack of specific measures” by the MSAR Government to help local SME’s to take a larger role in Sino-Luso trade.
One of the issues that “has been discussed since Forum Macao was created 14 years ago” was the creation of an export credit insurance scheme that could reduce the risk for local companies making deals abroad.
“It is very hard for local companies to compete in Sino-Luso trade with the large state-owned Chinese companies, so there is a need for more measures to reduce their risk,” she told Business Daily.
In November of last year, the Secretary for Economy and Finance, Lionel Leong Vai Tac, announced that there were plans to create an export credit insurance system and that insurance firms would be contacted, however to date, no specific timeline for establishing the scheme has been provided.
Ms. Santos also believes the MSAR Government could provide more subsidies to support business trips and operations of local companies to Lusophone countries.
“So far only one local company [Charlestrong Engineering Technology] has managed to secure a construction development in Mozambique, which shows how much can still be done in helping local companies,” Ms. Santos added.
In 2014, local construction company Charlestrong signed a contract with the country’s government housing bureau for the second phase of construction of the Olympic Village, a 240-apartment complex in Maputo for middle and lower-income Mozambique residents.
In the first seven months of this year, Sino-Luso trade increased around 31.3 per cent yearly to reach US$67.61 billion (MOP544.35 billion), according to data provided by Forum Macao.


Restricted club
In 2005, the Macau offshore legislation was amended, reducing the number of active eligible operations for the offshore regime from 20 to eight.
Before today, those activities were: information equipment consultancy; information and programming consultancy; data processing; data bank services; administration and filing support services; R&D activities; technical research and analytical activities; and sailing vessels and aviation equipment administration activities.