Macau Business Editorial | August 2022 | By José Carlos Matias – Director
Looking out on Macau, in this summer of ’22, you’d be forgiven for thinking the city’s emblematic, neon-realist, “sky’s the limit” fairy tale belonged to some galaxy far, far away. In fact, it was real, and it was right here, just a few years ago. Macau was poised to overtake Qatar as the wealthiest economy on earth (in terms of GDP per capita). And back then, the notion that all that abundance could be built on sand was already well entrenched. There were those more down-to-earth, realist voices at the time who were not so convinced – but as the hustle and hype of our “Las Vegas of Asia” enjoyed the spotlight, was anyone going to take these canaries in the coalmine and their two cents of scepticism seriously?
It’s human nature to ride the high. At the peak of an economic cycle “experts” hold onto assumed perpetual prosperity, advancing rosy forecasts grounded mostly on wishful thinking. Though no one on earth could have specifically anticipated the devastating impact a pandemic like COVID-19 and ensuing restrictions would have, our recent two-year trek has nevertheless led us crashing and careening all the way from boom to doom. And the last few weeks have dragged the whole economy and society along with it into terra incognita. Quo vadis Macau? Where do we go from here? Does it all add up to the perfect storm we’ve all been fearing?
At this juncture it’s crucial to come to terms with reality, though without indulging in cynicism or nihilism.
Reality bites hard, and the city is now well into a multi-layered socio-economic crisis for which the extent of contraction in demand and value creation is yet to be properly assessed. Added predicaments such as those affecting mental health and wellbeing, while less quantifiable, must not be swept under the rug. Swift action is needed.
As the city wakes from 45 days of partial lockdown and pandemic-related restrictions, many are wondering how they’ll manage should they be asked to stomach yet another dose of the same bitter medicine. At time of printing, the SAR has maintained a hard-won tally of zero cases, and the quarantine requirement for crossing the border with Zhuhai has been lifted. The gradual relaxation that is now planned should wind us back to the situation pre-June 18 and allow for partial resumption of a certain level of business activity along with activation of the first of two MOP10 billion financial aid packages, the second slated for just weeks later. These are important, necessary steps, but they’re not sufficient considering the longer-term view.
The fact of the matter is that the local economy risks living on borrowed time indefinitely, should the city keep having to dig into its rainy-day fund with no end in sight.
A roadmap, therefore, is essential. It’s ill-advised to keep kicking the can down the road when it comes to answering key questions on the business environment one can expect in the coming few years. Even if uncertainty has become the new normal, with support from mainland China and articulation with its entities, the SAR should be able to find a path through this, one that allows it to straddle inner circulation within China’s economy and outer circulation between it and the rest of the world – with both feet on the ground. The approach can be incremental but should be swift and decisive.
The blueprints and masterplans that have been devised, wisely, for the city’s involvement in grand regional and national development projects only make sense against a backdrop of openness and modernization.
It’s true that COVID-19 is not going away any time soon and we are not yet quite ready to perform a post mortemon this pandemic, but much has been learned about the virus and from the way various other countries have safely managed their transitions away from severe restrictions. Rekindling the economy versus protecting public health should not be seen as a zero-sum game.
There’s a need for reconnection between the stated policy aims and actual measures on the ground.
For instance, the Government’s having made it a priority to attract international visitors in its newly launched public tender for gaming concessionaires is laudable, indeed, but such a target only makes sense in tandem with a clear roadmap to reopening the city to foreign tourists and a bold promotional strategy signalling Macau’s readiness to welcome them. Concrete measures to tout the city’s international visitor-friendliness and a smart and effective way to broadcast that message overseas should be put in the pipeline as soon as possible. In doing so the city can mobilize both ideas and resources and reopen its talent pool to fresh blood. Macau does in fact have the financial tools not only to alleviate current economic and social pains but also to invest in value creation and reap the benefits in future.
Can it be done? Where there’s a will, there’s a way, and it seems the stakes have never been so high. One expects both local and central Governments will find a way forward and be able to shed light on the future.
Some might say it sounds like what’s needed here is a leap of faith, but history has shown it’s a mistake to write Macau off.
As Mark Twain would have said: reports of Macau’s demise are greatly exaggerated.