Due to the gloomy economic prospect and a proposed cut in public spending, it’s high time for the government to make good use of its existing properties in lieu of private property rentals.
Over the past few years the public has been increasingly concerned as to why and how the administration spends a whopping amount of over 800 million a year in renting private properties for office use and others, while a number of government-owned properties have remained idle and the progress of building new multi-functional administrative buildings has been far from satisfactory.
As the Chief Executive asks for a blanket 10 per cent cut in current expenditure in the public administration next year in view of a brisk economic outlook caused by the novel coronavirus (COVID-19), the rental expenses by public bodies remain a major public concern.
Chief Executive Ho Iat Seng ordered via a dispatch in late June that all government departments and public entities must make “prudent assessment” of all types of expenditures when drafting the budget for next year, which should represent a 10-percent cut from this year. Based on the government expenditure of MOP110.9 billion (US$13.86 billion) this year, a 10 percent cut will bring the administration spending to the level of about MOP99.81 billion in 2021.
Though the dispatch does not detail in which areas the cut will be made, officials have reiterated in the past few weeks that the payrolls to civil servants and the spending in social welfare uses will not be affected. For instance, Mr Ho has said he hopes the cash handout scheme of MOP10,000 for permanent residents would continue next year.
“The government in the past made expenditure without much restraint, given the robust fiscal reserve and income,” says legislator Leong Sun Iok. “With the drastic fall in visitation and thus the government revenue… it’s high time for officials to mull over a more cautious approach in expenditure.”
Too big, too expensive
Representing over 80 percent of the government revenue, the gross gaming revenue plunged 77.4 percent in the first half of this year when the number of visitors to the territory also dropped by over 80 percent. As a result, the income of the authorities only amounted to MOP25.22 billion in the first five months of 2020, decreasing by more than 52 percent from a year earlier – latest figures from the Financial Service Bureau show.
“For example, the community is always concerned why the government has to spend over MOP800 million a year in renting private properties — some government departments do not have to take up so much space or should not have to pay that much in rents,” Mr. Leong illustrates. “It’s not like the government does not have any idle properties available … so I hope it could make better use of its resources to reduce the spending in this area.”
Figures unveiled recently by the authorities show public bodies spent more than MOP2.6 billion in office, warehouses and parking rents between 2017 and 2019, with the expenses totalling about MOP850 million last year. The Financial Bureau, which oversees the rental leases of public bodies, says in a statement that the budgeted expenditure by public bodies for renting this year “is similar to last year”, and there is only “a small increment” in some of the rental contracts.
Concerning the rental expenses next year, the bureau notes: “After reviewing the multiple-year rental contracts in the past, besides a pragmatic and conservative forecast that the rental hike of real estate will ease next year, [it is expected] the budgeted expenditure [for next year] will be similar to 2019 and 2020.”
In light of the 10 percent cut ordered by the Chief Executive, the bureau remarks, “Concerning the rental leases, which will expire by 2020 and the landlords have demanded a hike, the [Financial] Bureau has been actively in touch with the landlords, negotiating for the rents to remain at the same level or striving for a cut during the renewal.” The statement did not spell out the number of rental leases involved in this scenario, only noting there are a total of some 200 rental leases inked by public bodies that remain effective at the moment.
The bureau also says it will ask government departments to review their space needs during the renewal of their respective rental contracts. “If there are government properties with appropriate conditions, [the bureau] will ask the relevant departments to relocate so as to reduce the rental expenses in private properties,” the statement adds.
To suffice the growing space needs of public bodies and reduce the government’s reliance on private properties, the authorities have planned part of the five newly reclaimed zones — namely, Zone B — will be zoned for office use of administrative and judicial entities. As it might still take years before the blueprint of the new land reclamations to be completed, a new multi-functional government building was completed in Pac On, Taipa in 2018, offering a floor space of 25,000 square metres for office and storage uses. The Government is also constructing another multi-functional building, catering a floor space of 13,400 square metres, at the 6K land plot in ZAPE, which will be completed next year.
In addition to new developments, some critics censured that the government could make better use of its existing properties, some of which have stayed idle for years, such as the Silver Jubilee Building in the old Taipa campus of the University of Macau, the old Government Information Bureau (GCS) building in the city’s downtown, and others.
“With the new-term government [sworn in since December], there is high hope that the government could ensure the prudent use of public money through making better use of the empty government properties,” another legislator Antonio Ng Kuok Cheong says. For instance, he highlights the rents for the offices of the Secretariat for Economy and Finance and the Secretariat for Transport and Public Works, both located at the Bank of China building, one of the prime office towers in the city, top over MOP10 million each ayear.
“As the principal officials in the city, both the Secretary for Economy and Finance and the Secretary for Transport and Public Works should lead by example, and relocate their offices to idle government properties,” the lawmaker adds. “This will truly showcase the determination of the authorities in the prudent use of public money.”
Here are the latest updates of some of the idle public properties and new multi-functional Government towers in the city.
- Pac On Multi-functional Building
The MOP291-million construction for the building at the O1 land plot in Pac On, Taipa, offering the space of 25,000 square metres for office and storage uses, began in late 2016 and was completed two years later. The tower could help the Government save about MOP21 million a year in rents, it has previously forecasted.
“Public bodies like the Cultural Affairs Bureau, Infrastructure Development Office and Financial Bureau have occupied some floors and part of the area [in the building] that have been available for use since 2019,” the Financial Bureau explains in a statement about the latest situation of the building. The Printing Bureau has also relocated its headquarters from the city’s downtown to the Pac On building since May last year.
The Financial Bureau says there are still some ongoing structuring works for the remaining part of the building, which will be “completed by the end of this year or early next year”. “After the relevant Government department takes up the space, [we] will discuss with the department to end part of their existing storage rental leases to reduce the relevant expenditure,” the bureau notes. But it does not specify which public bodies will take up the remaining space of the building.
- ZAPE Multi-functional Building
The planned 13,400-square-metre building is located at the 6K land plot in ZAPE, which is expected to be completed next year after the works began in late 2018. With a price tag of about MOP188 million, the Government has, so far, not confirmed which public bodies will take up the multi-functional building.
- Former Government Information Building (GCS) building
Located next to St Dominic’s Church, one of the World Heritage listed sites in the city, the building once used to house the Government Information Bureau (GCS) before its relocation in 2006. The building has, since then, been transferred multiple times within various Government departments for different planned uses, including a training centrefor civil servants by the Public Administration and Civil Service Bureau, and a proposed display centre for food products from the Portuguese-speaking countries by the Macau Trade and Investment Promotion Institute. However, most of these plans did not last long and the building has largely remained idle over the years.
The building was at last handed over to the Economic Bureau and the Public Security Police Force in mid-2017. With some minor structural problems like water leaks, the building had to undergo renovation before being put to use again, the authorities said at the time.
According to the Economic Bureau, the renovation works for the building, including the ground floor, first to third floors and the attic, began in August last year and was completed in the second quarter of this year. However, the building could only be operational by the end of 2020 at the soonest, because the city’s sole electricity supplier, Companhia de Electricidade de Macau – CEM, S.A, is installing a substation in the building to enhance the electricity supply in the district, the bureau says in a statement.
Some floors of the building will be used as the temporary office of the bureau in the near future, while it has started a study about the future usage of the building, the statement reads. The building will be mainly used as “the promotional platform for products from Macau small-and medium-sized enterprises and young entrepreneurs”, incorporating both online and offline sales mode, it adds.
- Former Silver Jubilee Building
Part of the old campus of the University of Macau in Taipa, the building stretching more than 10 floors was completed in 2006 for teaching and research uses. As the public university was relocated to a new campus in nearby Hengqin in 2014, the old Taipacampus has been divided and granted to various entities. The Silver Jubilee Building has, since then, fallen into the hands of the Public Administration and Civil Service Bureau, which plans to turn it into a training centre for civil servants.
However, the building has remained empty and decayed in the past six years since the relocation of the University of Macau. The bureau justified last year that multiple parts and facilities of the building required renovation, and it had to commission a third-party company to draft a new design plan for the site. At the time, it added that it would open tender for the refurbishment by the end of last year.
But the bureau noted in a reply in July that the tender has been cancelled because the building “has been transferred to the Macao Institute for Tourism Studies for usage”. This move expands the size of the campus of the public institute in Taipa, which has already run three buildings in the old Taipa campus of the University of Macau, including the former library, East Asia Hall and SQ Building.
- Former Printing Bureau building
Situated in Rua da Imprensa Nacional in the city’s downtown, the building had served as the headquarters of the Printing Bureau since the handover of the city in 1999. Following the relocation of the Printing Bureau to the new office building in Pac On in May last year, the building has remained vacant. The Government has noted recently the building would undergo refurbishment, and would be used as the office for the new Government department to be formed by the Government Headquarters SupportServices and the Protocol, Public Relations and External Affairs Office. To date, there is no timetable when this could be done.
- Building in Avenida do Conselheiro Ferreira de Almeida
Located in the vicinity of Lou Lim Ieoc Garden at No 105 A and B, Avenida doConselheiro Ferreira de Almeida, the 840-square-metre building has stayed idle for years before the Government decided in 2018 to renovate it and turn it into part of the Government office facilities. The works began in 2018 and have been completed in recent times. However, the Macau Post and Telecommunications, which owns the building, has not revealed the overall plan for the site yet.