Already the main source of support for local start-ups, the government needs to do more and, above all, do it differently, experts suggest
Macau Business | June 2022 | Special Report | Start-ups in Macau
Calvin Chui, among the lawyers in Macau with the most experience serving young entrepreneurs, believes “the Government of Macau has been supportive of young innovators and entrepreneurs and has urged Macau youths to explore new career choices and opportunities outside the traditional career path, as well as to think outside the box and thereby diversify and revitalize Macau’s economic development.”
Mr Chui, a partner in the Letkou legal firm, elaborates: “the Government has already launched several financial support measures for local entrepreneurs, including both young and experienced, to alleviate the pressure of funding at the early stage of a business start-up.”
Emanuel Soares, another (young) lawyer who is very active in the local start-up ecosystem, believes more needs to be done. When Macau Business asked him about the primary structural problems that local start-ups face, the MdME trainee lawyer put “the lack of hard government incentives (e.g. funding) and a sophisticated venture capital investor community looking to put serious capital behind start-up ventures” in first place.
Mr Soares expands on this: “The one basic need that all start-ups require to grow and ultimately succeed is access to sufficient funding and strategic partners. This could happen through the private sector or by way of government support and incentives.
“While there are several of these types of incentives in place already, it has not been sufficient to attract and retain large-scale projects with potential for expansion. At this stage of development of the ecosystem, we would benefit from going one step further, for example by establishing government-managed investment funds which place significant investment in young entrepreneurs’ ventures.”
The MdME lawyer points to “success cases of how these types of funds drive the innovation sector” that “can be found in many cities in mainland China, the Hong Kong SAR, Singapore and abroad. A good example of this is the 200M Matching Fund established by the Portuguese government, which is a national public fund set up to strategically co-invest together with private investors in Portuguese start-ups.”
Local entrepreneur Marco Duarte Rizzolio agrees “the government plays a crucial role in the development of a start-up ecosystem”, citing as his example the fact that the development of entrepreneurship is part of Macau’s Five-Year Development Plan as defined by China’s central government and is under the stewardship of Macau’s Economy and Finance Bureau.
However he stresses that the “various departments within the Macau Government – such as the MGTO [Tourist Office], IPIM [Trade and Investment Promotion Institute], Forum Macau, Marine & Water Bureau, DICJ [Gaming Inspection and Coordination Bureau] and others – will have to strengthen their collaboration in order to guarantee the development of an entrepreneurial ecosystem.”
Mr Rizzolio believes this “is the main challenge: how to develop entrepreneurship when there is a lack of cross-collaboration between governmental departments; how to break down the existing silos and obstacles and enable innovation and new, sustainable businesses with adequate policies. Many economic sectors have legal constraints limiting exploitation of new businesses, (i.e.) shared-economy business models lacking legal framework consensus, which can only be addressed with the co-operation of each governmental department.”
The majority of funding in Macau is public. The Fund for Science and Technology (FDCT), the most important for science and tech projects involving innovation, supports start-ups and academic PhD researchers whose projects make use of the Internet of Things (with amounts ranging from MOP500,000 to MOP2,000,000).
For more than a month, Macau Business made repeated attempts to contact the FDCT to try and ascertain how many projects had been supported in the last decade and with what amounts, but without results.
The Cultural Industries Fund also supports projects of companies and associations.
Another important source of support is the Macao Economy and Finance Bureau, which fosters the development of SMEs, easing their difficulties through several aid schemes that provide interest-free financial assistance (read more on the Young Entrepreneurs Aid Scheme at the end of this article).
“Funding in Macau is very much geared towards associations rather than companies. Funding schemes thus need to embrace companies, too, rather than be restricted to associations,” Marco D. Rizzolio insists.
At the end of the previous government, the then-Chief Executive announced plans to set up an investment and development fund, but nothing further has been heard on that since.
Young Entrepreneurs Aid Scheme
“The Macau SAR Government has always attached great importance to supporting development and opportunities for local young people. As the dedicated bureau in the area of promotion of youth entrepreneurship, the Macau Economic and Technological Development Bureau (DSEDT) provides support for local youth to explore new options other than traditional career tendencies and to realize their entrepreneurial aspirations,” the DSEDT tells Macau Business.
To that end the Youth Entrepreneurs Aid Scheme was introduced in 2013, “to provide interest-free assistance to Macau young people with entrepreneurial aspirations but lacking resources, to help alleviate financial pressure on them during the early stage of their entrepreneurship. Meanwhile, implementation of the Scheme is injecting new impetus into Macao’s economic development.”
As of 31 March 2022 a total of 2,507 applications had been received and 1,879 cases had been approved with a total approved funding amount of approximately MOP408 million. The average age of young entrepreneurs who apply for the Scheme is 30. The beneficiary companies’ activities are concentrated mainly in retail (45.3 per cent), food and beverage (12.5 per cent) and B2B services (10.2 per cent).
The DSEDT further explains that the Scheme also covers emerging industries supported by the MSAR government including the cultural and creative industries, e-commerce and Chinese medicine. “In addition, implementation of the Scheme has also had a positive effect on the local job market, creating more than 5,000 job opportunities.”
Under the Scheme, local young entrepreneurs (aged 21–44) and limited companies with over 50 per cent of their capital contributed by local young entrepreneurs can apply for interest-free loans of up to MOP300,000, with a maximum repayment period of up to eight years.
The assistance is earmarked for the following purpose(s): purchase of equipment needed for the commercial enterprise’s operation; decoration works carried out on the commercial enterprise’s business premises; entering into commercial concession contracts or franchising contracts; acquisition of rights to exclusive use of technology or of intellectual property rights; conducting publicity and promotion campaigns; and the commercial enterprise’s working capital.