(Xinhua/Cheong Kam Ka)

EDITORIAL – Spillover

Macau Business Editorial | October 2022 | By José Carlos Matias – Director

In the past two years, amid the pandemic, the MBtv/FRC Debates Series has become something of a household name for those seeking a free flow of views on the city’s economy and current affairs. It is something we’re particularly proud of, and it’s especially meaningful given its success during a period of relative contraction of the city’s public sphere. We therefore express our deepest gratitude to the guest speakers and to our partner in the project, the Rui Cunha Foundation.

The latest installment in the MBtv Debates Series was not only an interesting exchange on the way forward for the SAR’s economy; it also served as a constructive contribution to a much-needed path towards recovery. In a nutshell, three words sum it up: reopening, reopening, reopening. Reopening borders – quarantine-free – with the world, safely but as soon as possible; reopening attractors to fresh foreign direct investment; and reopening the city to top-notch international talent who can then transfer their expertise to local society and economy and revive the city’s cosmopolitan fabric. One mustn’t downplay how far Macau is lagging behind other developed jurisdictions in the post-pandemic race to attract investment and lure professionals. Of course, none of this should be done at the expense of local labour, sorely in need of a recovered economy for job and wage security. With the right policies in place, the fallacious notion of a zero-sum game between local and imported skilled labour must be put to rest. The only attractive zero sum here is the hoped-for “0+0” quarantine-free arrangement as early as possible in 2023.

Speaking of the coming year, preparing the budget for 2023 will be no easy endeavour – for the SAR Government or any private company, for that matter. The crux of the matter is, unsurprisingly, the gaming revenue estimate. For the past two years the Government has fallen well short of its MOP130 billion forecast. So far this year – counting the first nine months of 2022 – gaming revenue stands at just MOP31.8 billion.

The only attractive zero sum here is the hoped-for “0+0” quarantine-free arrangement

A clearer picture of a path towards “new normal” for the city’s core industry may surface in November, with the announced return of mainland package tours and electronic visas. It’s a measure that has injected some (mild) optimism into the market – a much needed sign as we enter the crucial phase of the tender to award the six new gaming concessions, with newcomer Genting-backed GMM throwing its hat in the ring and joining the six incumbent firms. It’s high time for authorities to vigorously revert the industry’s downward spiral, considering the many challenges the industry is facing, as addressed in another important panel discussion, also featured in these pages, jointly held by the France Macau Chamber of Commerce and Macau Business in September.

In terms of a revenue stream, land auctions will return after a 14-year hiatus. The Government’s dozens of idle land plots do constitute a reserve that could be used to secure fresh income, given the structural deficit (covered only by the fiscal reserve) that the SAR must continue to endure in the near-term and possibly beyond. One hopes these auctions will not only bring in the earnings the city needs but will also lay foundations for added-value investments. Resorting to land auctions, however, has its limitations.

So at this stage, the only realistic way to effectively ensure employment and socio-economic stability, as well as sustainable public finances, is to prop up the gaming (and tourism) industry and allow other economic activities to benefit from the spillover effect.