Aerial photo taken on July 29, 2020 shows the morning view of Macao Peninsula in south China. (Xinhua/Cheong Kam Ka)

OPINION-Macau’s potential as a financial services platform

By Jorge Costa Oliveira

Macau Business, November 2020

In October 2016, at the 5th Forum Macau Ministerial Conference, China’s Premier Li Keqiang announced that “China will support Macau to become a financial services platform”. This statement linked this goal to Macau’s purpose as a platform between China and the Portuguese-speaking countries (PSC). The “Outline Development Plan for the Guangdong-Hong Kong-Macau Greater Bay Area (GBA)” sets the general framework to “develop an international financial hub in the GBA”, stating Macau’s role. Since its promulgation – in February 2019 – the Macau Government has what it needs to:

– Define a Policy to set up a platform for financial services; and
– Delineate Strategies aiming at implementing the said Policy.
Regarding Policy, there are two levels of implementation:

1st level (immediate mandate, linked essentially to China-PSC connecting role): 
–       to develop a China-PSC platform for financial services;
–       to establish an export-credit insurance system;
–       to develop as an RMB clearing center for PSC;
–       to leverage Macau’s strengths as the headquarters of the China-PSC Cooperation and Development Fund; and
–       to enhance financial cooperation services between China and PSC.

2nd level (pending studies and not linked to China-PSC connecting role):  
–       [to study the feasibility of] establishing in Macau a securities market denominated and cleared in RMB;
–       [to study the feasibility of] establishing in Macau a green finance platform;
–        [to study and explore the development of and] create a Macau-Zhuhai cross-boundary financial cooperation demonstration zone;
–       to develop special financial products and services such as leasing; as well as
–       [to] “promote cooperation between Macau and Shenzhen concerning special financial products”.

Jorge Costa Oliveira
Partner and CEO
JCO Consultancy

Clearly, the “Outline Development Plan” is cautious on requiring more “studies” to be undertaken on Macau’s role beyond the China-PSC bridge. The level of financial services currently offered is not sophisticated: there is no tradition and there is not enough critical mass in Macau concerning financial firms, financial professionals, investment analysts as well as other qualified personnel for this sector.

Therefore, it is but natural that Macau resorts to outside expertise, starting with the above-mentioned studies. It is not the first time that the Macau Government has to resort to outside expertise to compensate for lack of domestic critical mass. This was done in the Legal Transition in the late-80s to early 90s of the last century when hundreds of jurists, mostly from Portugal, were hired by Macau Government departments in order to guarantee that the works regarding the transition in the legal system – to ensure the “continuity of Macau’s legal system” but in fact requiring the making of modern, local, adapted key laws and regulations and the application of relevant international treaties – would be done in time and with quality.


Another moment when it was deemed necessary to hire outside preparatory studies services concerned the liberalization of the casino gaming sector. This last case sets a good example of what not to do. The said services were asked from only one Hong Kong large auditing firm. Unfortunately, since the services rendered were not of great quality, the Macau Government was not able to use them to enhance the local expertise and was forced to develop a policy and strategies resorting to other sources of outside know-how on an issue-by-issue approach.
Thus, the lesson to learn is that the Macau Government should seek contributions from a wide array of qualified entities; when Macau is at the early stages of creating critical mass to set a comprehensive policy and define strategies, why not get as many qualified contributions as possible?
The expertise required at this stage needs not be on all matters; for instance, at this early stage, it is not important to dive into the kind of financial products that a Macau securities market should offer. But rather focus on the pillars of the regulatory framework – the legal and regulatory framework, the supervision model, the training of qualified personnel.


Artificial transplant of outside models usually does not work; but given that Macau enjoys a wide degree of autonomy as a Special Administrative Region of the People’s Republic of China, it is inevitable to look at the neighbor S.A.R. and reflect on the foundations that made Hong Kong one of the world’s largest financial markets:

(i) geographical location, language and knowledge of the Chinese society that facilitates its role of gateway to China; (ii) traditional large business hub for China; (iii) a stable business environment; (iv) a reliable and stable legal system; (v) an independent Judiciary; (vi) the free flow of capital; (vii) low tax rates (in particular, regarding capital gains); (viii) extensive networks with the rest of the world; (ix) a large pool of financial talents; (x) a wide range of financial products; and (xi) an independent, reputable and highly qualified securities regulatory and supervision body (SFC).


Macau has some of these features. But it hasn’t been a large business hub for China for quite some time; it does not have extensive networks with the rest of the world; it does not have a pool of financial talents; with the exception – to a certain degree – of the Commission Against Corruption, there is no tradition of independent, reputable and qualified regulatory or supervisory entities; sadly, the most relevant regulatory and supervisory body in Macau – the Gaming Inspection and Coordination Bureau – has not lived up to the community’s expectations and is not praised by entities other than the supervised corporations themselves.

 Looking at the statistics of the Macau Courts on Administrative Law cases, the high percentage of Government wins does not bode well for an independent Judiciary; and, although Macau has a reliable and stable legal system, it is difficult to uphold that when the chairman of the Court of Final Appeal proposes to move away from the principle of continuity of the legal system, thus appealing to the subversion of a constitutional principle enshrined in the Basic Law and in an international treaty (the Sino-Portuguese Joint Declaration on the Question of Macau).


This last case is but one example of how many within Macau’s elites still fail to understand that Macau is only useful to China if it is different. Macau has been given the possibility to play a singular and distinct role on the creation of one of the world’s main international financial hubs. If some in Macau’s elites do not realize that, it is only understandable if China ends up promoting changes also at that level.