Special Report – A key investment scrutinized

The Traditional Chinese Medicine Science and Technology Industrial Park of Cooperation between Guangdong and Macau (the GMTCM Park), in Hengqin, is a flagship project both in terms of regional cooperation and push for diversification. However the management of the project became subject to greater scrutiny after a Commission of Audit report exposed sore spots.

Macau Business | January 2022 | Special Report | Traditional Chinese Medicine – Breathing a new life

The biggest ever investment from the Macau Government in the area of traditional Chinese medicine (TCM)  – the Traditional Chinese Medicine Science and Technology Industrial Park of Cooperation between Guangdong and Macau – was off to a good start.

Everything seemed to be going well, with the GMTCM Park presented as a huge success, until a year ago when the Commission of Audit (CA) released a report on the activities undertaken by public investment company Macau Investment and Development Limited (MID) since its founding in 2011. MID, owner of the GMTCM Park project in the name of the MSAR Government, was criticised in the CA audit for pursuing a development model for the Park that unnecessarily cost the public purse “tens of billions”.

The report states that for a certain area of the project MID opted to carry out development of the land on its own – the development model requiring the greatest investment of capital, according to the CA – and that by 2019 estimated investment costs of all construction projects in the park had reached some MOP6.9 billion.

According to the audit, MID adopted a costly development model – self-built construction – based on a lease without sale principle, while at the same time undertaking preparations for eventual sale of the land, showing “contradictions between the decisions taken and their application in practice.”

The company was criticised for not “even analysing other development and exploitation models,” considering the development and exploitation of the enterprise as a “fait accompli”.

The audit also covers the Ruilian Wellness resort located on the GMTCM Park site. The CA reported that MID never did an analysis weighing the advantages and disadvantages of operating a hotel on its own or on behalf of a company. “On the contrary,” the Commission noted, “it chose to operate the project on its own without considering the second possibility,” criticizing the fact that “there were contradictory assessments as to the grounds that led to this decision.”

Caught off guard by the CA document, MID’s board of directors reacted immediately, stating that the company “attaches great importance to and sincerely accepts the opinions and suggestions” of the audit.

“The process of developing a Park takes a long time, during which expectations may change for unforeseen reasons,” MID’s response continues, assuring that “the Industrial Park will seriously reflect on future work and improve even more effectively in accordance with the opinions of the Commission of Audit.”

“The MSAR Government has completely suspended the latest investment plans at the GMTCM Park and at the same time postponed the opening of those projects already built, in order to contribute to a global inspection” – MID

The Government was not completely satisfied with these explanations, and the office of the Secretary for Economy and Finance, Lei Wai Nong, released a statement on the conclusions of the audit in which it indicated that “this company has already been instructed to undertake an in-depth and effective assessment of the management and operating models it adopted and to propose plans for global reform and adjustments, strengthening its inspection mechanism and rationalizing the use of public resources in order to increase its efficiency.”

The Secretary said priority would be given to improving the company’s management mechanisms of those of its subsidiaries, while “also intensifying their inspection activities.” Mr Lei stipulated that MID’s management staff positions be held by “individuals with business sense, knowledge of economic efficiency and business management skills.”

Shortly thereafter, it became known that the Macau SAR had completely suspended MID’s forthcoming investment plans and projects and had “at the same time postponed the opening of those projects already built, in order to contribute to a global inspection,” MID said. According to the managing company, the suspension of further plans is intended to facilitate a global reassessment of the projects, ensuring there will be an improvement in management.

From that point, however, a wall of silence was built.

MID was expected to receive MOP140 million from the MSAR budget in 2021.

However the company does not publish accounts in the Official Bulletin or on its official website, and various requests from Macau Business for updated information went unanswered.

The matter also ran out of steam in the Legislative Assembly: two lawmakers delivered written interpellations in the days following the release of the CA report, but the subject has not been taken up again in over a year.

Finally, in his recent Policy Address Ho Iat Seng makes several references to the Park (see the next story in this report).

8 TCM preparations in production

“The GMTCM Park has committed to the development and production of eight TCM preparations with significant effectiveness for medical institutions, who have already begun their clinical use, and has undertaken research and development projects commissioned for additional medicines sharing the same designation and prescription,” the Chief Executive revealed in his latest Policy Address, which gave great prominence to TCM.

Ho Iat Seng added that “as of September 2021, the Park has completed the registration of 213 companies (including 52 from Macau) and the installation by contract of 102 companies (including 31 from Macau), and has attracted the installation of large, renowned pharmaceutical companies, innovative research and development institutions and Mainland services.”

The CE went on to affirm: “We will take advantage of the GMTCM Park to aggregate industries, in order to accelerate the development, transformation and production of scientific and technological results in the field of TCM in Macau and Hengqin and promote the establishment of renowned pharmaceutical companies in Macau.”

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