Macau can learn from many countries that have diversified their economies and seen a significant expansion of the role of services in their economies, with globalisation and technological change being prime drivers of what has come to be called the “servicification” of the world economy.
By Niall Murray, Founder and Chairman of Murray International Group
Abu Dhabi is one country that has implemented a highly successful and structured approach to diversification. Abu Dhabi has been working on its “Economic Vision 2030” since 2008. This comprehensive plan to diversify the economy and reduce its dependence on Oil as a the predominant source of revenue is one example of how Macau can approach diversification beyond gaming. They created a task force of public and private sector stakeholders, with extensive support from renowned international institutions. The task force was mandated with two key tasks: 1. conduct an exhaustive assessment of the key enablers of economic growth. 2. Create a comprehensive long term economic vision, with explicit targets to guide the evolution of the diversification of Abu Dhabi’s economy through to the year 2030. The result was the creation of a long-term roadmap for economic progress for the Emirate through the establishment of a common framework aligning all policies and plans and fully engaging the private sector in their implementation.
Abu Dhabi decided to benchmark Norway, due to it’s comparable oil outputs, it’s success in channelling of oil revenues for local economic development, nurturing a well-diversified economy and maintaining disciplined fiscal policies.
They benchmarked Ireland’s process of developing a diversified knowledge-based economy and experience in attracting investment from large companies such as Google, Facebook, Microsoft and the tremendous growth of Ryanair. New Zealand was of great interest due to its exceptional performance in developing a relatively large export base.
Abu Dhabi has fostered non-oil GDP growth at a higher rate than that of the oil sector. Abu Dhabi heavily invests resources from Energy – Oil & Gas, Petrochemicals, and Metal into Aviation, Aerospace, & Defence, Pharmaceuticals, Biotechnology, & Life Sciences, Tourism, Healthcare Equipment & Services, Transportation, Trade, & Logistics, Education, Media, Financial & Telecommunication Services.
At a CAGR of around 7% Abu Dhabi is making substantial process in its efforts to lower its dependence on Oil, and to achieve an Oil / Non-Oil GDP split of 36 % to 64% by 2030 (from a Oil / Non-Oil GDP split of 59% to 41% GDP in 2008).
China has clearly indicated that Macau must focus on implementing the new financial support guidelines jointly issued by the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange, to boost the development of the Greater Bay Area.
The new guidelines put forward 26 specific measures in the following five areas: promoting the Greater Bay Area’s cross-border trade and facilitating investment and financing, expanding the opening-up of the financial sector, promoting the connectivity of financial markets and financial infrastructure, boosting innovation of the Greater Bay Area’s financial services, and preventing cross-border financial risks.
The Financial Support Guidelines are a gift, just as Gaming liberalisation was a gift to Macau. To take full advantage of this gift, the Macau government must put together a comprehensive development plan, led by a team of local and international financial and IT infrastructure professionals who can create a world class financial, commercial and business hub in Macau, using best practices and professional project management.
These financial support measures will provide a legal framework, solid foundation and catalyst to Macau in diversifying its economy by improving trade, infrastructure and connectivity and to build a solid value added services foundation upon which to diversify the economy beyond Gaming, in an economic area that includes Hong Kong, Macau, and Guangdong Province and a population of 71 million.
In addition to the above, Macau should focus on technological innovations in services such as mobile communications, ‘virtual presence’ technology, instant machine translation and associated value-added services (e-commerce, e-payments), access to cloud computing and data storage that are rapidly changing the very economics of services delivery and the geography of trade and investment. Talented Macanese could provide value added services world-wide.
These developments can greatly enhance the ability of Macau’s e-commerce, micro-, small- and medium-sized enterprises (MSMEs) to contest markets and supply new products by improving access to information and the potential to deliver goods and services to consumers/buyers on a much greater scale.
New technologies will allow Macau SME’s to sell into global markets, supply services to larger companies that participate in regional and global value chains and to domestic consumers.