OPINION – Traditional medicine

Almost ten years ago, the government created a company to deal with cooperation projects in Guangdong province – Macau Investimento e Desenvolvimento, SA (Macau Investment and Development Limited, the English registered name). As a public limited company (PLC or SA, in the Portuguese acronym), it came to life with three shareholders, the minimum required by law – the Macau SAR, IPIM (Macau Institute for the Promotion of Investment and FDIC (Commerce and Industry Development Fund). For all practical purposes, it is a single-shareholder government-owned company.  

By José I. Duarte | Economist, Macau Business Senior Analyst


In its existence, the company has increased the capital stock six times, raising it 23-fold to more than nine billion patacas. As of now, it has no operational revenue. Those increases are apparently related to continually growing commitments. Through the years, the company created many subsidiaries. According to the company’s information, they presently amount to 21, of which 13 are not active. In those that are active, it employs a combined total of 425 persons.  

One way or the other, we are talking about public funds used for public aims and policies. Naturally, these are funds that elude the standard public finance procedures and scrutiny, moved and assigned under the cloak of a private company.  

The only financial document in the public domain is an exceedingly short one (literally, five lines), only in Chinese. It informs us about losses in 2018 and 2019, amounting together to some 20 million patacas.        

Its managerial options were the object of a recent report by the Audit Commission. It includes many observations and not a few criticisms about the company’s performance. 

The primary and almost exclusive activity, so far, is the development of a Traditional Chinese Medicine Industrial Park in Hengqin Island (Ilha da Montanha in Portuguese.) That is also, understandably, the main subject of the audit report.  

Here, we leave aside the most technical details and considerations, as they would take several pages to describe or comment on. The curious reader can access and digest the report at leisure, downloading it from the Audit Commission website.            

But the report contains some general and somewhat startling statements that are worth further comments here. At a certain point, the auditors declare, concerning management decisions: “there was no analysis of the pros and cons of the development models,” or “estimates of the costs involved”. Then, when talking about the investment plans, it adds the “concrete benefits, the “goals to achieve,” and the “foundations of the analysis” are missing. 

Stop for a moment: decisions involving billions of public funds were reached without considering alternatives and their costs? Without budgeting, setting aims or criteria? 

To this, the company just has to say that it “accepts the opinions and suggestions graciously and will take the necessary measures to improve the level of management” (possibly a misnomer here). On executed investment, it promises to hire a consulting firm to carry on “studies, namely on costs and project returns”.  

Do I understand correctly? After the investment decision and execution, one hires a consultant to tell the company about its costs and returns? Not that the company shows much confidence in the results of such studies. As a sort of anticipated “I told you so,” it alerts the Audit Commission that the “investment project will take time and may be subject to unforeseen changes”. (Who knew?) 

And, of course, we have the guarantee that all was done according to the “guidelines of the two governments,” the respect of the “rules of the market economy,” and “ensuring the rational use of public funds, to create a favorable economic environment for the development of traditional Chinese medicine in Macau”. We stand reassured.