University of Macau experts believe the city can be developed into hub to design financial products and platforms. Fintech is the way forward, stresses Michael Hui, director of the Asia-Pacific Academy of Economics and Management.
The COVID-19 crisis is highlighting the city’s conspicuous dependence on a single industry: gaming and tourism. In many ways, the case for economic diversification has never been stronger. This has been reiterated time and again by top government officials, with Chief Executive Ho Iat Seng leading the way, and by a number of experts. The multi-billion dollar key question is: how? It will surely take time, but Michael Hui, Vice Rector of the University of Macau (UM) and director of UM’s Asia-Pacific Academy of Economics and Management (APAEM), stresses, “there is a need to think seriously about diversification,” and the crux of the question lies in adding value.
The development plan of the Guangdong-Hong Kong-Macau Greater Bay Area sets the stage. It is already a highly developed manufacturing and technological powerhouse and it aims to become the world’s leading tech and innovation hub. To attain that goal one needs “talent and services, especially financial services.”
The government has announced moves to promote financial leasing and wealth management. Those who cast a more skeptical eye on the matter point to the fact that GBA already has highly developed financial districts, such as Hong Kong’s world-class services, Shenzhen’s increasingly attractive financial sector and even Guangzhou. Michael Hui argues, “Since we are already a very advanced economy, we need to engage in industries with high economic value added.”
And financial services are key. “Not necessarily the traditional services, like setting up a stock exchange market, but rather the design of financial services by making use of new technologies.” This means the future direction brings together finance and technology, in a financial innovation drive, which embraces the much-heralded concept of fintech. “This can be a very lucrative economic activity and that is something we believe Macau can do in the future for the sake of economic development and diversification of economic activities,” Professor Hui emphasizes.
Macau: the designer
In a division of labour among the different GBA cities with regard to the financial services business, “Macau can be at the upstream of the value chain,” not so much by delivering the services but by designing products and platforms and selling them to customers in Shenzhen, Hong Kong or other markets. Professor Hui also notes, “There are legal constraints that need to be overcome if Macau is to create a stock exchange market, but if we simply design the financial platforms and products, we can attract smart young talents who can enjoy the lifestyle advantages of living in this area.”
To meet such a goal, Macau has to cope with a shortage of properly skilled and savvy fintech talents. A recurrent problem observed by Michael Hui is a pattern whereby, “people in finance and technology are unable to effectively communicate with each other.” Closing that gap implies crafting programmes to “nurture young talents who can work in the design of new financial transaction products and platforms,” enhancing cooperation between Macau, Hengqin and Zhuhai. This is, to a great extent, the rationale behind APAEM’s mission.
In addition, the SAR, together with Hengqin is at the intersection of both the internal and the external circulation in the “dual circulation” model of the Chinese economy, as highlighted by Jerome Yen, also a member of APAEM and Head of the Centre for Innovation and Entrepreneurship.
Thinking outside the box
New programs are in the pipeline to cope with the expected demand, such as UM’s new Master of Science in fintech, bringing together finance and high technology, alongside advanced mathematical and statistical skills.
Jerome Yen also sees a link between fintech and smart tourism, another key area of APAEM’s activities. “We could use Artificial Intelligence, Fintech and big data to analyze visitors’ profiles.”
In order to seize the opportunities brought by financial innovation and GBA development, “Macau needs to think outside the box,” according to Michael Hui, otherwise the city risks “being completely left out.” In addition to a regulatory upgrade, Professors Hui and Yen underscore the importance of nurturing and attracting talents.
However it can be very difficult to retain those who are trained in local higher education institutions, as “the system is too rigid” when it comes to allowing non-local graduates to stay and work in Macau, Jerome Yen observes.
“Since we are already a very advanced economy, we need to engage in industries with high economic value added,” Michael Hui