OPINION – The tender process

By Carlos Lobo*

The Macau government seems keen on proceeding with its previously defined calendar for the gaming industry. Change relevant laws and regulations, push forward with the open tender, and then… hope for the best?

We have posited in the past several weeks that the best solution for Macau is to postpone the tender because of the impact of the COVID-19 pandemic and Mainland China’s policies toward Macau’s gaming industry (read criminal cases against junkets, financial controls, border controls based on assumed gambling activities, etc.).  From a gaming industry’s perspective, this is the worst time possible to move forward with the tender, as the chances of achieving some of its stated goals will suffer from these limitations.

We believe five months are not enough to run a ‘full’ open tender. So instead, we see the government choosing to open a limited tender, “restricted by a pre-qualification”; under current regulations, this expedited process would allow for a tender where applicants do not need to present investment projects. The six concessions could then be granted by December of this year. We will need to wait for the amendment to the Administrative Regulation 26/2002 – which establishes the rules governing the tender process – to see if there are significant changes to this process, but it is doable.

The ostensible casualty in this scenario is the ‘international’ part of the tender, notwithstanding recent measures to alleviate Macau’s isolation (which are very much welcome!). But there are other casualties, including potential investment projects. Historically, Macau has used the gaming concessions as tools to fuel long-term changes to Macau’s landscape, demanding investment projects from applicants.  Gaming companies will no longer have a say in that.

And there are other concerns as well. International investors may shun Macau, attracted by Singapore, the Philippines, and even Thailand, theoretically striking a blow to Macau’s international competitiveness. This could also limit the private sector’s interest and participation in economic diversification projects, namely in Hengqin.

Considering all this, we wonder why the government is moving ahead anyway and seems keen to accept such casualties. The timing for the tender is clearly within Macau’s control and autonomy!

We can only speculate, but the timing seems telling.  If you want – or need – to show you are knowledgeable about the main risks and a team player, you need to push ahead.  Toeing the line is crucial at this moment, regardless of special meetings about the economy.  Hopefully, with the new laws extending the government’s control over the gaming industry, and by showing determination, execution, and compliance with the law, the government will have more room to maneuver after March 2023 to support Macau’s gaming industry.

So, ‘the show must go on.’

*Carlos Lobo is a Macau-based lawyer