The economic model we all know in Macau no longer serves; the Chief Executive is the first to admit it. New ideas are needed. Some experts leave their contribution on these pages.
MB January 2021 Special Report | The COVID-19 year
“At the moment, the pandemic is at least forcing the government to do something in terms of employment, fiscal deficit, and narrow tax base. How should the government respond? The government can use money to solve the problem, but it is not a long-term solution,” states Che Sei Tak, lecturer of Macau Polytechnic Institute, to Macau Business.
“The real long-term solution,” the researcher emphasizes, “is to reconstruct a new economic development model.”
“How can we achieve sustainable economic development? The unquestionable answer is to promote the upgrading and transformation of industrial structure through technological innovation,” asserts Dr. Che, interviewed by Macau Business (see text on these pages).
Che Sei Tak understands that this new model is not against gaming. “Macau needs to rely heavily on the tertiary industry from the current economic development model that also relies heavily on the gaming industry (academic circles have always regarded the gaming industry as the leading industry to drive other related industries as the development model of vertical diversification), focusing on the development model of the gaming industry.”
According to Professor Glenn McCartney, Faculty of Business Administration, University of Macau, the future also lies on gaming. But not as usual. He sees the post-pandemic “as an opportunity to engage with industry, and a more collaborative approach with the private sector can provide greater consensus on a way forward for Macau.”
Mr McCartney recently wrote a paper titled The impact of the coronavirus outbreak on Macau. From tourism lockdown to tourism recovery, in which he states that “rather than a ‘rethink’ on tourism, the immense economic fallout to Macau’s casino industry will mean a focus on Macau’s core casino business and Chinese travel markets. Likewise, the city’s tourism and destination marketing authorities would resume their modus operandi prior to coronavirus.”
Richard Qiu, a colleague of Glenn McCartney at the Department of Integrated Resort and Tourism Management, is another voice who doesn’t believes in ‘changing the paradigm.’ “Quite the contrary, I think Macau will rely on the tourism sector for a very long period of time in the future, even if we are actually trying to change the paradigm.”
“Nevertheless,” states the Assistant Professor, “diversification within the tourism sector is inevitable and necessary. For example, the government is already shifting towards MICE and gastronomy from gaming. It is true that Macau’s heavy dependence on its tourism sector makes it vulnerable to pandemics and other ‘tourism related’ shocks, but no city is immune to all shocks.”
Professor Qiu underscores, “the actual ‘change’ we need is the refinement of the industry. In the case of Macau, legalized gambling and the history/culture of the Chinese-Portuguese fusion are all our precious endowment. The industry should utilize these endowments to attract and retain guests from all over the world.”
“Gaming is our name card and we should embrace it. The type of diversification needed is the development of other types of tourism activities to complement gaming,” says Richard Qiu.
Easy? Of course not.
“The problem is forcing reform,” explains Che Sei Tak.
That’s why he defends that Macau “should pursue a mixed economic development model; that is, the government should not only follow the principle of the free market, but also intervene through effective policy supply, but it should be emphasized [that even] government intervention has boundaries. It cannot replace entrepreneurs to do market things, but can only improve an institutional environment that can inspire entrepreneurship.”
“The overreliance on gaming and tourism industries has long been an issue and this problem is salient during pandemic. Right, we need to develop an economic pillar which is robust against crisis. High-end technology should be something that Macau needs to focus on,” says Lawrence Fong to Macau Business.
According to this Associate Professor from the Department of Integrated Resort and Tourism Management, University of Macau, the development plan for the Guangdong-Hong Kong-Macau Greater Bay Area, puts Macau, together with Guangzhou, Shenzhen, and Hong Kong, “as a city to pursue the development of an innovation and technology corridor.”
Mr Fong also states that, among these four cities, “Macau has the geographical advantage of being close to the cities at the west of Guangdong province and can take the leading role in the region,” and “our connection to Portuguese-speaking countries is an additional merit.”
However, “given its limitation in land and labor resources, Macau has to be selective in the technology that it will develop. Software engineering and medical-related technology development should be feasible.”
Lawrence Fong and Che Sei Tak share this same idea: “Taking the advanced manufacturing industry as an example, Macau can focus on modern Chinese medicine for the treatment of serious illnesses. This is different from traditional Chinese medicine for health care and mild disease treatment. It needs to be combined high technology,” says Dr Che to Macau Business.
“When Macau successfully develops modern Chinese medicine and similar epidemics occur in the future, Macau can gain growth momentum through drug exports. I know that this idea will be difficult to convince people who have always clung to traditional development thinking, but this must be done. The real difficulty is not the resistance of opposition, but the determination to stick to it,” states the Polytechnic Institute lecturer.