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Economy & Finance 24 Window dressing David Chow wants to use his new development on Hengqin to promote Macau

Politics 34 The kingmaker Li Gang, the new deputy director of Beijing’s liaison offi ce, is expected to soon move up

Greater China 38 Historic U-turn Hong Kong government drops plan to redevelop former Central Government Offi ces 40 Burning issue Rising emissions from cargo ships are one of Hong Kong’s main sources of pollution 42 Back on the stands End of heavy-handed censorship in the mainland is some way off 43 Growing old The mainland’s working-age population declines for the fi rst time in decades

Special 44 Welcome the Year of the Snake The Lunar New Year holiday is forecast to bring more tourists and business to Macau

Property 66 Money-making factories Special stamp duty exemption makes industrial property attractive to investors

Gaming 72 Payment in kind Government says Sands China and Galaxy Entertainment will be entitled to more tables 74 Hail to the masses Mass market to continue growing faster than VIP play 75 Smoking blowback Trade unions slam restrictions on smoking in casinos

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Gaming 78 Gambling apartheid Several Asian countries embrace casinos, but only for foreigners 82 Leader to be The Sands Bethlehem is posting handsome results but the property is on sale

Hospitality 86 Tough decisions Exclusive interview with the new director of the tourist offi ce, Maria Helena de Senna Fernandes 92 Worlds apart While Macau’s visitor arrivals are dropping, in Hong Kong they are surging 96 Tasteful tourism Macau is carving itself a niche as a gourmet destination

Lifestyle 101 Let’s get physical Demand for yoga classes is on the rise

Technology 105 Cable TV offl ine Government says ‘no’ to Cable TV’s plan to offer Internet services

Arts & Culture 108 Box offi ce clout Foreign fi lms are becoming increasingly popular in the mainland

Opinion 12 From the publisher’s desk Paulo A. Azevedo 15 Editorial Emanuel Graça 23 Storm in a baby bottle José I. Duarte 33 Pockets: silver lined André Ribeiro 36 Don’t bet on payouts Keith Morrison 41 The limits of China’s consumer revolution Zhang Monan 64 Systems at risk Lee Howell 98 Unhappily ever after Gustavo Cavaliere 104 Technology and the employment challenge Michael Spence

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MACAU BUSINESS OFFICIAL BLACKBERRY CARRIER

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from the publisher’sdesk

PAULO A. AZEVEDOFOUNDER

AND PUBLISHER

Students from the privately owned Macau University of Science and Technology demonstrated against a proposal to increase tuition fees last month. The increases are up to 20 percent, high enough to upset most students.

A private university is entitled to raise tuition fees to cope with increasing operational costs. But the University of Science and Technology is no ordinary private university.

It receives millions in government grants each year. No one has ever explained why.

It was also granted land, among other favours, which can only be understood in the context of the way Macau operates – a peculiar, yet twisted, perverse, often immoral way of working.

While not illegal, no one in Macau cares to investigate or explain the grants. Why would they? The city’s leaders within its upper echelons seem to think the public is no more than a uniform mass of dummies, undeserving of accountability or their respect.

Until the common practice of favouring the ventures of friends and acquaintances vanishes, the city is doomed to develop at a much slower pace than its potential would imply.

We need to let the market work, with the government ensuring that fair competition is the standard. Offi cials should focus their attention on improving public education and healthcare, and not on spoiling private institutions with public money.

It is not hard to understand what makes a city special: history, cultural diversity, openness to new ideas, rules, transparency and ethics of its socio-

political and economic machinery.Add freedoms and quality of life to the list.Do not forget about investment

in infrastructure, and public spending on education and health. These are fundamental to ensuring social harmony, and fostering creativity and invention.

For years, investment in education and health in Macau has made headlines for the wrong reasons. That is mostly because of the difference in spending directed to public education and health, and the piles of money given to private concerns.

The difference refl ects the free hand of offi cialdom and other highly ranked people who should not have any say in funding because of confl icts of interest. Many of the city’s leaders are members of the organisations that benefi t from offi cial largess.

Professionals in the public healthcare system are the fi rst to highlight the inequity of government investment into privately owned healthcare instead of the public hospital and healthcare centres.

The private hospitals charge handsomely for their services and they make a profi t.

There have been several grants that should be probed, no matter how surprising – or not – the outcomes would be.

If Macau had a proper graft-buster, that would be the outcome. The city lacks this sort of service too.

KILL FAVOURS FOR FAIRNESS

FEBRUARY 2013

Offi cials should focus their

attention on improving public

education and healthcare,

and not on spoiling private

institutions with public money

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Arithmetic and budgeting are no longer exact sciences for the government, but more like fortune telling. It is as likely that they will get it wrong as it is that they might get it right

FEBRUARY 2013

The big news last month was the announcement of cost overruns in the construction of the new

campus of the University of Macau on Hengqin Island.

In April 2010, the government said the project would cost MOP5.8 billion (US$725,000). By last March, the price tag had reached MOP10.2 billion, according to a report from the Commission of Audit.

One year later, who might be able to estimate the true cost? Be afraid.

The audit commission said the overrun was the result of an initial budget that was “unrealistic” and the product of “ineffi cient expense control and management”.

For years, we have called the government’s attention to this, without anyone in power listening.

The biggest insult is not the cost overrun itself but the lame excuses presented by offi cials. Accountability is not a word familiar to Macau’s offi cials.

The head of the Infrastructure Development Offi ce said the blowout was the product of the bureau deliberately low-balling on the budget to “save public money”.

I hope he comes back to explain himself. How can you save money by creating a budget that was unrealistic in the fi rst place?

ROT AT THE TOPAfter the commission’s report

was made public, the Secretary for Transport and Public Works reaffi rmed that the maximum cost of the campus stood at MOP9.8 billion, as was set in 2011. The government and the Commission of Audit just had “different views” on which works to include in the budget.

This is a colourful new variation of the “glass half empty, half full” dichotomy.

Arithmetic and budgeting are no longer exact sciences for the government, but more like fortune telling. It is as likely that they will get it wrong as it is that they might get it right.

In the end, Macau loses.The city needs a formula to

eradicate these miscalculations and cost overruns in public works that have collectively cost us billions.

It is unacceptable that the government learned nothing from similar situations in the past.

If these cost overruns took place in a private company, which must be accountable to its shareholders, what would happen to those responsible for the mistakes?

Governments are no different. Someone must be made accountable because they are responsible for an entire city, a responsibility that is immensely greater than the management of a single company.

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Editorial CouncilPaulo A. Azevedo, Emanuel Graça, Tiago Azevedo, Duncan Davidson, José I. Duarte

VOL.1 Nº106

Founder and PublisherPaulo A. [email protected]

Editor-in-ChiefEmanuel Graç[email protected]

Assistant Editor-in-ChiefAlexandra [email protected]

Executive Senior AnalystJosé I. [email protected]

Art DirectorsConnie Chong, Luis [email protected]

Hong Kong BureauMichael Hoare (Chief), Anil [email protected]

Events DirectorMargarida [email protected]

Special CorrespondentMuhammad [email protected]

Beijing CorrespondentMaria João [email protected]

Manila CorrespondentMax V. de [email protected]

Assistant to the PublisherLaurentina da [email protected]

Offi ce ManagerElsa [email protected]

PhotographyAntónio Mil-Homens, António Leong, Carmo Correia, Greg Mansfi eld, Gonçalo Lobo Pinheiro,John Si, Manuel Cardoso, MSP Agency, Naty Torres, Agencies

IllustrationG. Fox, Rui Rasquinho

Contributing EditorsChristina Yang Ting Yan, Dennis Ferreira, Derek Proctor (Bangkok), Filipa Queiroz, Helder Beja, Joana Freitas, João Ferreira da Silva, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lois Iwase, Luciana Leitão, Mandy Kuok, Michael Grimes, Sara Farr, Sara Silva Moreira, Sofi a Jesus, Xi Chen, Yuci Tai

Regular Contributors André Ribeiro, Branko Milanovic, David Cheung, David Green, Dominique Moisi, Eswar Prasad, Frank J. Fahrenkopf Jr., Gustavo Cavaliere, Hideaki Kaneda, José António Ocampo, José Sales Marques, Joseph Stiglitz, Leanda Lee, Keith Morrison, Kenneth Rogoff, Kenneth Tsang, Marvin Goodfriend, Pan Yue, Paulo J. Zak, Peter Singer, Richard Whitfi eld, Rodrigo de Rato, Robert J. Shiller, Sin-ming Shaw, Sudhir Kalé, Sun Shuyun, Vishakha N. Desai, Wenran Jiang

AdvertisingBina [email protected]é [email protected] Yu, [email protected]

Media Relations

GRIFFIN Consultoria de Media Limitada

TranslationsPROMPT Editorial Services, Poema Language Services Ltd,TLS Translation and Language Services

AgenciesAFP, Lusa

ExclusivesGambling Compliance, Project Syndicate

Printed in Macau by Welfare LtdPublished every month in Macau. All Rights Reserved. Macau Business magazine is a media product of De Ficção - Multimedia Projects

Disclaimer: In Macau Business magazine, the translation of MOP amounts into US$ amounts (and vice-versa) is made at the rate of MOP 8to US$1 for the purposes of illustration only.

Letters to the [email protected]

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Address: Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No. 679 Av. do Dr. Francisco Vieira Machado, Macau Tel: (853) 2833 1258 / 2870 5909 Fax: (853) 2833 1487 Email: [email protected]

FEBRUARY 2013

FEBRUARY 2013

BEST INTENTIONS

[email protected]

offi cials feared that, if the ratio was based on the number of operating tables, units in non-smoking areas could end up idle, while their counterparts in non-smoking areas would overfl ow.

The authorities gave casinos the power of discretion. Publicly their line was the government acting tough on tobacco.

It is a pragmatic strategy. But there was more to it. And that is where it has gone wrong.

Casinos were given a one-year grace period ahead of the ban so that they could set up the infrastructure to purify and contain smoking zones. The idea was to give gaming operators time to equip themselves with world-class ventilation systems and ensure that, even for the heaviest of smoking gamblers, air quality would be pristine.

The Health Bureau failed to deliver on time. The bureau ensnared itself in technicalities and was weighed down by indecision. It was only able to lay out the technical specifi cations for smoking areas in late October.

Casino operators had just a handful of weeks to have everything in place. Bear in mind that Christmas is considered a peak season.

The bureau continued to drag its feet whenever it was asked to clarify the rules.

From an initial period of 12 months, casinos had to push to ensure everything was in place in just one-sixth of that time. It was not enough time to implement or source high-tech ventilation systems, as most of the operators must have wanted.

Everything was rushed.Poor management by the Health Bureau

has meant that one month after the ban, neither casino workers nor gaming operators are satisfi ed with the arrangements. Even some gamblers are complaining.

Meanwhile, Health Bureau director Lei Chin Ion received a medal of merit in December for his work from Chief Executive Fernando Chui Sai On.

One wonders why.

The partial ban on smoking inside casinos came into force one month ago, but it is already the source of a great deal of controversy. It is an

obvious case of how the road to hell is paved with good intentions.

Casino workers are not satisfi ed, saying that it does not go far enough to protect them. The smoking areas are jammed with smokers. At most properties, the amount of smoke in the air inside smoking areas is defi nitely more noticeable – and potentially harmful – than it was before the ban.

Trade unions say the rules were poorly drafted. The regulations allow gaming operators to set up smoking areas covering up to 50 percent of the gaming fl oor but do not set any ratio for the number of slot machines and gaming tables in smoking and non-smoking areas.

In the most extreme situations, a casino could decide to have a non-smoking gaming area with just one table versus a smoking area with 100 tables.

As casinos tiptoe through the ban, they have assumed a conservative position. Operators prefer to allocate more tables to smoking areas. If the clientele so demands, they may make more resources available in non-smoking areas.

It is a no-brainer to conclude that this was the government’s intention in the fi rst place. The government deliberately provided gaming operators with leeway because offi cials were afraid of the ban’s potential impact on gaming revenue and their taxation revenues.

Make no mistake – this was no distraction.Note that the government is not restricting

the growth of the gaming sector by capping the area of casinos; it is doing so by controlling the number of live gaming tables. It obviously knows that, for the industry, what matters is not how big a casino is but how many tables it has.

Unhealthy managementThere is a similar calculus for smoking and non-smoking areas within the casinos. But

EMANUEL GRAÇAEDITOR-IN-CHIEF

Poor management by the Health

Bureau has meant that one month after the ban on smoking inside casinos,

neither workers nor gaming

operators are satisfi ed with the

arrangements

The Monetary Authority of Macau forecasts that the city’s real gross domestic product will expand by a “low single digit” rate in 2013.In its latest Monetary and Financial Stability Review, released last month, the monetary authority added that Macau’s GDP is likely to have grown by a high-single digit rate, at about 9.0 percent, for 2012 as a whole.Infl ation is expected to subside “modestly” during 2013, primarily due to a slowing domestic economy and contained world infl ation. But signifi cant deviation from the average 6.1 percent level recorded in 2012 is “unlikely in the near future”.Macau’s de facto central bank forecasts that the unemployment rate will continue hovering at around 2.0 percent this year, while the number of non-resident workers “is expected to trend upwards at a gradual pace”.

FEBRUARY 2013

GOVT AND COMMISSION OF AUDITCLASH ON HENGQIN CAMPUSThe cost for the construction of the University of Macau’s new campus on Hengqin Island still stands at MOP9.8 billion (US$1.2 billion) as set in 2011, Secretary for Transport and Public Works Lau Si Io said last month. In response to a report from the Commission of Audit, Mr Lau said that the commission and the government had different views on which works to include in the budget. He said the audit report included ground foundation building costs and other minor works in the budget. According to the Commission of Audit’s estimation, the price tag for the new campus had already topped MOP10.2 billion as of March last year.

EXPORTS OF CEPA GOODSUP BY 20 PERCENT

Macau exports to the mainland under the Closer Economic Partnership Arrangement (CEPA) reached MOP104.1 million (US$13 million) in 2012, up by 20.2 percent over the previous year. Data released by the Economic Services shows that since the agreement was inked in 2004 and until December last year, the total

amount of exports of CEPA goods reached MOP360.6 million. Exports of CEPA goods to the mainland enjoy zero tariffs.

LOW-SINGLE DIGIT GDP GROWTH FOR 2013The monetary authority also says infl ation will slow down this year, but not much

MINIMUM WAGE PROPOSALOUT BEFORE MARCH-END

The Labour Affairs Bureau will deliver a proposal on a statutory minimum wage for cleaning and building security staff to the Standing Committee for the Coordination of Social Affairs before the end of March, the bureau’s head Wong Chi Hong said last month. The committee comprises representatives of unions,

employers and the government. Mr Wong reassured that the government is on schedule with the implementation of the fi rst ever minimum wage in Macau, which would only cover these two sectors.

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MAINLAND CRACKS DOWNON ‘SHUIKE’ SMUGGLERSCustoms offi cers in Guangdong province cracked 9,741 ‘shuike’ smuggling cases last year, involving RMB1.34 billion (MOP1.72 billion), the offi cial government mouthpiece China Daily reported. The term ‘shuike’ refers to people who visit Hong Kong and Macau at least once a day to smuggle electronic products, food, milk powder or other products from the two cities into the mainland. “They can easily earn RMB5,000 to RMB10,000 a month by selling the smuggled goods online to mainland consumers,” China Daily wrote.

YELLOW TAXIS GETCONTRACT EXTENSIONThe Transport Bureau said last month that it would grant a short-term contract extension to Vang Iek Radio Taxi Co – the operator of Macau’s 100 yellow radio-taxis – when its current contract ends this month. The bureau didn’t say how long the short-term extension would be for. In August 2011, the government already extended Vang Iek’s radio-taxi service contract for 18 months, without a public tender. The bureau added that Vang Iek must introduce a number of improvements in order to have its concession renewed for a longer period.

MACAU TO GET REAL-TIMESETTLEMENT SYSTEMMacau will soon have a real-time settlement system, our sister publication Business Daily reports. The Monetary Authority of Macau is preparing for the launch of a pataca instant funds transfer system, “which will be in operation in the fi rst quarter of 2013,” a spokesperson told the English-language newspaper. Currently, transfers of money or securities between banks are made in batches and settled manually at the end of the day. The new system will allow those transfers to be settled on a real-time basis.

The company achieved a net annual profi t of MOP14.4 million last yearCAM POSTS FIRST PROFIT EVERThe Macau International Airport Company Ltd – CAM generated a net annual profi t of MOP14.4 million (US$1.8 million) last year, chairman Ma Iao Hang announced. This is the fi rst profi t in the company’s history, since airport operations started in 1995.CAM’s revenue for 2012 exceeded MOP750 million, according to Mr Ma.Last year, the airport handled 4.49 million passengers, up by

11 percent year-on-year.CAM was able to achieve a net profi t after a capital increase backed by the government and Sociedade de Turismo e Diversões de Macau SA, which took place last year. That allowed the company to fully repay the bank loans deriving from the fi nancing needs for airport infrastructure development back in its early stage of construction.

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OVER 5,000 FAMILIESGETTING GOVT SUPPORTA total of 5,010 families received government fi nancial support from January to November last year, offi cial data shows. Because those families’ incomes were below the offi cial minimum subsistence index, they were entitled to fi nancial help from the government. Meanwhile, the index was raised by around 2.5 percent last month. For a one-member household, the value was increased to MOP3,450 (US$431).

Fitch Ratings warned in a special report issued last month that the rising proportion of elderly in advanced economies over the next 40 years will put severe pressure on public spending for many jurisdictions, including Macau.The ratings agency says the city will appear on the list of the 15 jurisdictions worldwide with the highest elderly dependency ratios by 2050. The ratio measures the number of people over 64 to the number of people of working age.Fitch said the situation was even more serious in debt-ridden countries, with little leeway to build up a fi scal war chest to counter the expected increase in age-related expenditure. Macau is better positioned than many advanced economies to address this issue, since it has huge surpluses and, is the only jurisdiction worldwide that has no debt.

GRAND PRIX TO COVER TWO WEEKENDSTo mark the 60th anniversary of the Macau Grand Prix, the organising committee has announced a two-weekend event for this year. The fi rst race weekend is set for November 9 to November 10. The second is to be hosted from November 14 to November 17. The three headline races – the Formula 3 Macau Grand Prix, the Motorcycle Grand Prix and the double-header season fi nale of the FIA World Touring Car Championship – will be held on November 14 to November 17. The full provisional programme will be announced at a later date.

MACAU AND HK INK ARBITRATION AGREEMENTHong Kong’s Secretary for Justice, Rimsky Yuen, visited Macau last month to sign an arrangement concerning the reciprocal recognition and enforcement of arbitral awards between the two cities. Under the arrangement, the courts of Macau and Hong Kong will mutually recognise and enforce arbitral awards in both places. Mr Yuen also took the opportunity to visit Macau’s Public Prosecutions Offi ce, Court of Final Appeal and Legal Affairs Bureau.

FITCH WARNS OF AGEING COSTSThe ratings agency says the elderly will put severe pressure on public spending over the next 40 years

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FOREX RESERVES HITMOP132.5 BILLIONMacau’s foreign exchange reserves amounted to MOP132.5 billion (US$16.6 billion) at the end of December, the monetary authority announced. The reserves increased by 0.5 percent month-on-month. The foreign exchange reserves were separated from the fi scal reserve in February last year and started to be managed separately. As of February 2012, the city’s foreign exchange reserves stood at MOP126.7 billion.

MORE INVESTMENTIN THE MAINLANDIn the fi rst 11 months of last year, the Ministry of Commerce approved 277 new investment projects in the mainland by Macau companies, up by 5.3 percent year-on-year. The combined value of the projects was US$480 million (MOP3.8 billion), 27.9 percent less than a year before. The ministry approved 47 new Macau investment projects in November last year, up by 38.2 percent year-on-year.

CITY DROPS ON THE LISTOF FREEST ECONOMIESMacau dropped on the Heritage Foundation’s annual Index of Economic Freedom, released last month. The U.S. think tank gave Macau a score of 71.7 points, down by 0.1 points year-on-year. This means the city is now ranked as the world’s 26th freest economy; last year, it was at position number 19. In Asia-Pacifi c, the city is ranked seventh out of 41 jurisdictions, one spot down from last year.

Consumers complain lessThe number of consumer complaints handled by the Consumer Council

dropped for the second consecutive year in 2012. Telecommunications services continue to top the list

1,609The number of consumer complaints handled by the

Consumer Council in 2012, down by 4.7 percent year-on-year

22.4%The percentage of consumer complaints in 2012 that were fi led by tourists,

amounting to a total of 361. The percentage is similar to 2011

231The number of complaints made against telecommunication services in 2012,

mainly 3G mobile phone charges and data fees, down by 11.5 percent year-on-year

27.8%The yearly increase in complaints about telecommunication equipment,

to 202, mainly involving the quality and prices of 3G mobile phones, and business practices

124The number of complaints related to food and beverage in 2012,

down by 16.8 percent year-on-year. They mainly targeted pastries, milk powder and frozen food

7,222The number of cases received by the Consumer Council in 2012,

including complaints (1,609), enquiries (5,520) and suggestions (93), up by 5.4 percent year-on-year

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Some issues in Macau just never seem to go away, manifesting themselves in the greatest possible variety of ways.

Take market distortions – or as an economist might put it, imperfections – which plague the economy. The latest episode in this saga was last month’s baby milk powder shortage drama.

In this regard, the recent interview given by Jessica Ng, the executive director of the Macau Pharmacies Association, to the Portuguese-language daily Ponto Final is remarkable for what was said and left unsaid.

Infant formula, particularly several popular brands, was in scarce supply last month. This was obviously a major concern for parents reliant on it for feeding their newborns.

The shortage seems to have had two causes. One was an increase in births prompted by the Year of the Dragon, regarded in Chinese tradition as being a good year for giving birth. The other was an increase in demand by mainland tourists, who distrust the infant formula sold in the mainland, particularly since the melamine-tainted milk scandal in 2008.

While these causes explain a lot, they also explain very little.In the fi rst place, the increase in the number of births was

expected. Newspapers were talking about it a year ago.An increase of one-quarter in the number of births in one

year – as hinted by the available data – is certainly signifi cant in relative terms. In absolute terms that is not the case in Macau. The “boom” translates into about 1,400 additional babies, less than 120 babies a month over the average.

This increase in births is not something that should cause a major disruption in the market, especially since it was expected and the births were distributed throughout the year. The second cause, the increase in demand by mainland tourists, has been happening for years.

Retailer’s interestsThe main causes of the infant formula shortage have been known or expected for a long time. They would have been dealt with without too much trouble in a properly functioning market.

So we need to fi nd out what is happening on the supply side. That is where Ms Ng’s interview becomes illuminating, in a twisted way.

She made a proper diagnosis of the immediate causes of the problem. She correctly defended, reasonably and fi rmly, the interests of her constituency: the pharmacies. Ms Ng clearly knows her trade and what matters to her associates.

She was aware that some analysts had suggested the pharmacies limit sales to mainland tourists. She made it clear during the interview that it is neither in the power of, nor the interest of, pharmacies to discriminate between one kind of customer and another, or to act as customs offi cers.

Ms Ng also recognised that there is a problem in the supply chain. But pharmacies were reliant on wholesalers.

We may infer from the interview that solving the problem of a shortage of formula is beyond the ability of the retailers, even though they would benefi t from a solution. In the end, their business is selling, and more supply would mean more sales. But when asked about other market details, Ms Ng could say nothing with any certainty.

Many new pharmacies have opened recently. Some apparently sell hardly anything other than infant formula and cosmetics. Ms Ng said she was aware of the growth in the number of outlets and their different target markets, but that she had no data.

Unusually cautiousMs Ng was asked by how much imports of baby formula had increased. Only the Census and Statistics Service would know, she replied. She was asked how many suppliers were active. She said she did not know.

In sum, when it came to identifying other possible causes of the shortage, she did not wish to talk about it.

It is hard not to see this as a deliberate attempt to avoid ruffl ing any feathers among those on whom the members of her association depend for their supply. Such reticence is understandable, maybe even commendable, given her position.

But it reveals the opacity of the supply chains, which limits the ability of consumers – or even retailers – to defend their interests in the event of market distortions or disruptions.

That is the main conclusion drawn from this affair but it is nothing new.

Does it mean nothing can be done?On the demand side, there is little action that can be

taken. High demand from mainland tourists for infant formula and other specifi c items will persist until their distrust of the products sold in the mainland dissipates. That is beyond Macau’s ambit. But when the distrust does dissipate, pharmacies here that depend on it for business will regret it.

The passage of time will remove the other immediate cause of the shortage, the increase in births. The Year of the Snake is apparently less auspicious for births.

In the end, we will see this latest shortage as no more than a storm in a teacup.

Still, there is one area where the government could make a difference. It could reassess the organisation of the market, and change or remove any rules and privileges that limit competition or delay market adjustments. That would reduce the likelihood of similar shortages occurring, and contribute towards improving the range of products available to consumers and their access to it.

I just do not see anyone betting on that happening.

Storm in a baby bottleJOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - [email protected]

WORRIES ABOUT A SHORTAGE OF INFANT FORMULA HIGHLIGHT THE IMPERFECTIONS OF THE MARKET

FEBRUARY 2013

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FEBRUARY 2013

BY ALEXANDRA LAGES

usinessman David Chow Kam Fai says he wants to use his newly acquired piece of land on Hengqin Island as a shop window for Macau. He is plan-ning to build a plaza and com-mercial centre with a Portu-

guese theme on the land to lure more mainland tourists to the city.

Mr Chow told Macau Business in an exclu-sive interview that the development would not just be a place to shop, eat and drink, but a new vehicle to promote the city to potential visitors. “Hengqin has a lot of land and it is very close by. If we can use it to build resorts, good enter-tainment areas and shopping centres, it will be supporting Macau,” he says.

Mr Chow argues that Hengqin can play an important role in increasing the number of visi-tors here – not only ordinary tourists but slight-ly wealthier ones, too. He says the city needs to appeal to what he calls the premium mass mar-ket. “The VIP market is not enough to support the continuation of economic development. We need a supporting market,” he says.

WINDOW DAVID CHOW SAYS HIS AS-YET-UNNAMED, PORTUGUESE-THEMED DEVELOPMENT ON HENGQIN WILL LURE MORE TOURISTS TO MACAU

DRESSING

The tourism and gaming industries have long relied on VIPs but there have been signs that this is changing. Casino gross gaming rev-enue from the mass market increased four times faster than gross gaming revenue from the VIP market last year.

Analysts expect the trend to continue this year. Even so, revenue from the VIP market still makes up almost 70 percent of all casino rev-enue.

Mr Chow says more attractions here and on Hengqin mean ordinary visitors will stay longer and shuttle between the city and the island. He says this will benefi t the tourism and retailing industries as well as the gaming industry. “It’s not a matter of supporting casinos. It will sup-port other markets in other areas,” he says.

Portuguese fl avoursHengqin is an island of 106 square km, just to the west of Macau. It is the mainland’s third special economic area, after the Binhai New Area in Tianjin and the Pudong New Area in Shanghai. It is meant for industrial, offi ce, hous-ing and tourism projects. The governments of

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FEBRUARY 2013

Guangdong, Zhuhai and Macau are its main supporters.

Mr Chow made the only valid bid in an auction in December for land on Hengqin that was reserved for Macau enterprises. He paid RMB250 million for a plot of 30,000 square metres next to the border crossing with access to the Guangzhou-Zhuhai high-speed railway.

Mr Chow expects about 80 million people a year to pass by the doorstep of his development. He means to draw a fraction of the passers-by into the com-mercial centre and, from there, lure them into Macau.

The project will cost RMB1.6 bil-lion (MOP2.1 billion), including the cost of the land.

“That piece of land, even though it is not too big, is enough to start with,” Mr Chow says.

The development will have a fl oor area of more than 90,000 square me-tres. The plaza will be able to hold up to 10,000 people. It will have parking for 1,200 cars.

The development will be designed by veteran Macau architect Carlos Marrei-ros. Its design will be based on Portugal’s lavish, gothic-inspired Manueline style of architecture, from the 16th century.

Mr Chow says he is attempting to promote Portuguese culture, the infl u-ence of which makes Macau unique. “Macau has 450 years of history. Before you cross to Cotai, we will try to remind

Economy & Finance

tourists that there is not only the Las Vegas-style strip and modern buildings in Macau,” he says.

Nicely pricedMost of the manifestations of Macau’s Portuguese heritage are on the peninsu-la, along with most of the city’s small and medium enterprises. Mr Chow’s strategy is to lure tourists not just to Cotai but also into the city centre, where business-es will benefi t from their spending.

Mr Chow has an ulterior interest in making this strategy work: he is the chief executive of Macau Legend De-velopment Ltd, which owns the Macau Fisherman’s Wharf theme park and the Landmark Macau hotel on the peninsula.

27

FEBRUARY 2013

GOLDENAGE IN THE MAKING In three years’ time, it will be the

golden age of Macau,” businessman David Chow Kam Fai forecasts. It will be fuelled by more visitors than ever.

But Mr Chow says that to prevent congestion, the government must invest at least MOP300 billion (US$37.5 billion) in improving the city’s infrastructure and its healthcare, education, transport and cultural offerings.

“Macau is small. Now we are talking about a new land reclamation programme but it will take at least fi ve years. In three years, when the Hong Kong-Macau-Zhuhai Bridge is ready, plus the Zhuhai-Guangzhou railway linking Macau with more mainland cit-ies, the visitor fl ow will increase a lot,” he says.

Mr Chow says mainlanders are trav-elling more and more as their incomes increase, and that this will mean more visitors to Macau. “As people get richer in the mainland, they need facilities for holidays,” he says. “Where can they go?”

As a directly elected member of the Legislative Assembly, from 1996 to 2009, Mr Chow was often outspo-ken, especially about tourism. He was among the fi rst to propose night mar-kets for Macau, a project the govern-ment is now considering for the shores of Sai Van Lake.

After Mr Chow retired from the Legislative Assembly, his wife, Melinda Chan Mei Yi, ran and won a directly elected seat in 2009. She will run for re-election this year.

Mr Chow says Chief Executive Fern-ando Chui Sai On should have no prob-lem in getting re-elected next year for a second term, in view of Mr Chui’s per-formance so far. “Macau is still growing. There is no bad news for Macau for the time being,” Mr Chow says.

However, he is severely critical of the government secretaries. He says Mr Chui gave the secretaries the power and opportunity they needed to shine, but that their performance has lacked lustre.

The company runs two casinos on those premises, by arrangement with gaming concessionaire SJM Holdings Ltd.

Even so, Mr Chow says he does not intend to bundle his venture on Hengqin with his businesses on the peninsula. He says the company undertaking the Hengqin project, Sino Perfect Invest-ment Ltd, will work to promote Macau generally and not just his own interests.

Mr Chow says he is open to nego-tiation with the Portuguese government about using his Hengqin development for marketing Portugal to mainland tourists. “It’s also a project to promote Portugal. Not too many people go to Portugal when they visit Europe. They’d rather go to France or Spain,” he says.

Mr Chow says this is the right time to invest in Hengqin, as it is “a lot cheaper” than Macau. He says the RMB250 million he paid for his land there was a “very good” price, making it much cheaper than land in Gongbei. And, unlike Macau, Hengqin has no shortage of suitable workers, he says.

Work in progressMr Chow is not alone in the endeav-our. Around 20 Macau SMEs back Sino Perfect. Mr Chow is the head of the Federal General Commercial As-sociation of Macau SMEs, established last year.

He says the venture has enough funding. In December, Sino Perfect signed a deal with 15 fi nancial institu-tions to borrow money for the project.

Mr Chow says big retailers in Macau, Hong Kong and Japan have al-ready approached him with a view to forming partnerships. But he says it is too early to choose which companies will have outlets in the commercial centre. And although some gaming companies in Macau, including Galaxy Entertainment Group Ltd, have shown interest in investing in non-gaming projects on Hengqin, Mr Chow says he is not looking for other partners.

Work on the foundations of the development is expected to begin by June and construction should take around four years.

Mr Chow says he is in no hurry. To be successful, he says the develop-ment needs enough people living on Hengqin by the time it opens to consti-tute a customer base. Hengqin’s popu-lation is expected to climb to 120,000 by 2015 and to 280,000 by 2020, ac-cording to its development plan.

“We need some population there,” says Mr Chow. “What I know about the schedule for Hengqin is that they are going to build a lot of buildings within the next three years. Four years is a good time. By then the Hong Kong-Macau-Zhuhai Bridge will be open and there will be more projects in Cotai.”

Some Macau SMEs have been calling for more information about business opportunities on Hengqin and offi cial incentives to invest there. Mr Chow advises them to be patient. “Small enterprises will have to wait until the buildings are completed,” he says. “The whole area and the planning are still works in progress.”

“

David Chow made the only valid bid in an auction in December for land on Hengqin that was reserved for Macau enterprises

28

FEBRUARY 2013

David Chow Kam Fai is one of Macau’s most fl am-boyant businessmen and one of its most prolifi c en-trepreneurs. Mr Chow has businesses here and in

Beijing, and he wants to expand into Europe and Africa. This is the year for doing it. “I’ll be very busy in 2013,” he says.

The South China Morning Post described Mr Chow in 2005 as a “little big man”, who is “small in stature” but “who thinks bigger than most Macau entrepreneurs”. In the conference room of his offi ces in the Landmark building, the walls are covered with blueprints of his forthcoming projects here, on Hengqin Island and in Benin in West Af-rica.

His Macau Legend Development Ltd announced last year a plan to spend HK$5 billion (US$645 million) on redeveloping the seven-year-old Macau Fisherman’s Wharf theme park. The fi rst phase of the work will refurbish the theme park and add two hotels, a yacht club and a dinosaur museum containing fossils lent by the mainland. Mr Chow declines to give a schedule for the redevelopment or details of it.

The theme park, opened on December 31, 2005, failed to attract the number of visitors analysts had expected. Sev-eral shops and restaurants there have closed.

Mr Chow said last year that Macau Legend could fl oat its stock in Hong Kong or Singapore if it needed more money to redevelop Macau Fisherman’s Wharf. News me-dia reported last month that the company would try to raise US$800 million (MOP6.4 billion) from an initial public of-fering in Hong Kong in the second quarter of this year. Mr Chow refused to comment on this.

Family affairMacau Legend was created by the merger last year of the Landmark Macau hotel, Pharaoh’s Palace Casino, also known as Club VIP Legend, and Macau Fisherman’s Wharf, all controlled by Mr Chow.

He is Macau Legend’s biggest shareholder, owning

THINKING BIGDAVID CHOW’S TO-DO LIST IS FULL OF NEW PROJECTS, SOME AS FAR AFIELD AS AFRICA

33.6 percent. His mother, Lam Fong Ngo, who according to media reports built an empire of VIP gaming clubs found-ed in the 1970s, is the next biggest, owning 24.7 percent. SJM Holdings Ltd bought a stake of 4 percent in Macau Legend for HK$480 million last year.

Mr Chow also owns the fi ve-star Legendale Hotel in Beijing. The hotel was on the offi cial list of properties for dignitaries to stay in or dine at during the 2008 Olympic Games.

Mr Chow was born in Hong Kong, worked in Las Ve-gas in the 1970s and came to Macau in 1981. He made a name for himself as an operator of gambling junkets be-fore entering the casino business in the late 1990s, when he opened Club VIP Legend in partnership with casino mogul Stanley Ho Hung Sun.

He is also no stranger to misfortune. Several years ago a court in Hong Kong issued an arrest warrant after casino tycoon Steve Wynn tried to have him declared bankrupt because of a US$5 million (MOP40 million) gambling debt at the now-demolished Desert Inn casino in Las Vegas. Mr Wynn and Mr Chow settled their dispute out of court in 2004.

Mr Chow has been keen on investing in Africa for some time. A casino resort project in Cape Verde is still on hold, he says, while he waits for the necessary legislation.

He has been Cape Verde’s honorary consul in Macau since 2001.

Globe trotterMr Chow has good relationships with governments in Af-rica, South America and the Asia-Pacifi c region. Displayed in his offi ce are dozens of photographs of him with foreign dignitaries, and a rock crystal presented to him by Lula da Silva, formerly president of Brazil.

Mr Chow is now venturing into urban development in Benin. He is assessing business opportunities in Djibouti, Angola and Tunisia. In Europe, he is considering invest-ing in Ukraine. His areas of interest range from tourism to mining.

Mr Chow’s interests extend beyond business. He is an avid collector of items related to the sea, and owns sev eral replicas of sailing ships. One of the latest additions to his collection is an antique diving helmet, acquired in South Africa.

Mr Chow is nothing if not resilient. In 2010 he sur-prised the guests at his 60th birthday party by singing “What a Wonderful World” with world-famous jazz sax-ophonist Kenny G as accompanist. The place where they performed was the Wynn Macau casino resort, owned by the man who tried to have Mr Chow declared bankrupt 10 years earlier.

David Chow has businesses here and in Beijing, and he wants to expand into Europe and Africa. This is the year for doing it. “I’ll be very busy in 2013,” he says

Economy & Finance

MOP

mill

ion

MOP

mill

ion

MOP

mill

ion

30

Gross national income

In last month’s issue we looked at gross national income (GNI) and its relevance. This month, some detailed analysis.Although gross domestic product is normally used as the main indicator of the wealth generated by an economy, GNI is a better indicator. That is because some of the income generated belongs to people elsewhere, and some residents have income generated abroad.When we add to GDP the net balance of these outfl ows and infl ows of income – called net external factor income – we obtain the gross income made by residents.Unfortunately, GNI fi gures are made available much later than GDP estimates – in Macau’s case, usually almost a year later. So GDP is usually used as a proxy for GNI.

In most economies, net external factor income counts for relatively little. But in economies that are either the source or destination of large fl ows of foreign investment, it makes a difference.In Macau, one would expect GNI to be lower than GDP, given the importance to the economy of companies registered elsewhere, in particular the casino operators. So the net external factor income fl ows are usually outward, meaning that outsiders get more income from their investment here than Macau investors get from their investments elsewhere.These net outfl ows have become more pronounced since 2007. Before then, there were years of intense foreign direct investment, most due to the development of new casinos. As time passed those investments bore fruit, and outfl ows increased.Immediately after the liberalisation of the gaming market in 2002, net external factor income fl ows amounted to low percentages of GDP. But after that the percentages grew steadily, with only a brief major contraction in 2007.Most recently, net outfl ows have been the equivalent of over 10 percent of GDP. In 2011 the net outfl ow was the equivalent of 13.7 percent of GDP.

The increase in the size of net external factor income outfl ows meant that annual growth in GNI was slower than annual growth in GDP, except in 2007 and 2009. In other words, GDP tends to overestimate the wealth generated by residents.

The difference between infl ows and outfl ows of external factor income will probably increase in the near future. The current trend is for outfl ows to grow faster than infl ows.In 2010 and 2011, the outfl ows were about four times the size of the infl ows, the biggest difference since the liberalisation of the gaming market.

GRAPH 1

GRAPH 2

GRAPH 3

Economic Trends by José I. Duarte

GRAPH 1 - GNI, GDP and net external factor income at current prices

GRAPH 2 - GNI and GDP at current prices, annual changes

GRAPH 3 - External factor income at current prices

0

250,000

30,000

20,000

10,000

-50,000

0

150,000

100,000

50,000

200,000

300,000

70,000

60,000

50,000

30,000

40,000

20,000

10,000

0

60,000

50,000

40,000

2003

2002

2004

2003

2002

2005 2006

2003 2004 2005

2004 2005

2006

2007

2007

2008

2006 2007 2008

20092008

2009

2009 2010

2010 2011

20112010

2011

GDP

GDP change

Outfl ows

Net external factor incomeGNI

GNI change

Infl ows

FEBRUARY 2013

12,000

10,000

8,000

6,000

4,000

-2,000

2,000

MOP

mill

ion

MOP

mill

ion

MOP

mill

ion

31

10,000

0

-20,000

-10,000

-30,000

-40,000

-50,000

External factor income fl ows

Below is an analysis of the composition of external factor income fl ows.

Infl ows of external factor income from foreign direct investment show a rising trend in the period under consideration. But of the infl ows of income from the three kinds of investment represented, infl ows of income from FDI were the most volatile. Infl ows of income from FDI were even negative in three of the 10 years.The biggest infl ows of income were from investments other than portfolio investments or FDI. These infl ows include income from deposits and loans.

The picture painted by outfl ows of external factor income is quite different. Outfl ows of income from FDI rose rapidly from below MOP4 billion (US$500 million) in 2002 and 2003 to almost MOP47 billion in 2011. Outfl ows of income from other sources all rose, too, but not by as much.

All things considered, it is fl ows of income from FDI that set the trend for net external factor income fl ows. The net fl ow of income from FDI in 2011 was roughly six times the size of the combined net fl ows of income from all other kinds of investment.

GRAPH 5 - External factor income outfl ows

GRAPH 6 - External factor income net fl ows

GRAPH 4 - External factor income infl ows

GRAPH 4

GRAPH 5

GRAPH 6

14,000

50,000

45,000

40,000

20,000

25,000

0

0

30,000

35,000

5,000

10,000

15,000

Portfolio investment income

FDI income

FDI income



Other investment income



Compensation of employees

Compensation of employees

FDI income

200420032002

2002

2002

2003

2003

2004

2004

2005

2005

2005

2006

2006

2006

2007

2007

2007

2008

2008

2008

2009

2009

2009

2010

2010

2010

2011

2011

2011

FEBRUARY 2013

32

GDP at current prices

GDP in chained prices

GDP per capita at current prices

GDP per capita in chained prices

Domestic loans to private sector

Resident deposits

Foreign exchange reserves*

Infl ation rate (full year 2012)

Exports

Imports

Trade balance

Total revenue

- Direct tax revenue from gaming

Total expenditure

Balance

Water

Electricity

Gasoline

Liquefi ed Petroleum Gas

Natural Gas

Licensed vehicles

- Automobiles

- Motorcycles

Mobile telephone users

Internet services subscribers

Unemployment rate

Median monthly employment earnings

Employed population

Labour force participation

Non-resident workers (end-balance)

MOP 86.1MOP 75.0

-- --

MOP 188.4MOP 362.7MOP 131.8

5.8%

29.1 20.726.2 18.0

27.722.743.2

0.3

41.5 44.9 29.7

--

5.15.59.35.3

-52.4

4.95.54.5

20.622.7

6.58.86.71.5

-100

5.26.74.0

18.210.7

15.314.316.714.5

0.2 41.2

--

19.915.4

--

11.85.1

-- --

17.822.6

-- -1.0

Economic output

Money and prices

External merchandise trade

Public accounts

Utility consumption

Transport and communications

Employment

2011

2011-end

2011

2011

2011

2011-end

Oct - Dec 2011

Year-on-year change (%)














Latest

Latest

Latest

Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Notes

Notes

Notes

Q3 2012Q3 2012

-- --

Nov 2012Nov 2012Nov 2012Dec 2012

Jan-Nov 2012Jan-Nov 2012Jan-Nov 2012

Jan-Nov 2012Jan-Nov 2012Jan-Nov 2012Jan-Nov 2012

Jan-Nov 2012Jan-Nov 2012Jan-Nov 2012Jan-Nov 2012Jan-Nov 2012

Nov 2012Nov 2012Nov 2012Nov 2012Nov 2012

MOP 292.1MOP 273.1

MOP 531,723MOP 497,219

MOP 161.9MOP 291.6MOP 272.4

6.1%

MOP 112.7MOP 99.7MOP 49.0MOP 63.7

70.53,857

81.742,908

73.6

206,34995,151

111,1981,353,194

209,223

68.73,897

79.839,359

--

216,339101,006115,333

1,565,987229,864

MOP 118.5 MOP 104.0

MOP 42.5MOP 76.0

MOP 7.0MOP 62.3

- MOP 55.3

MOP 7.5MOP 64.5

- MOP 57.0

2.1%

MOP 10,000

339,80072.9%

94,028

1.9%

MOP 12,000

350,00072.4%

110,552

-0.6

11.1

5.51.5

24.0

-0.3

16.5

4.0

-0.8

17.6

billionbillion

billionbillionbillion


billionbillionbillionbillion

million m3

million kWhmillion Ltonsmillion m3

million m3

million kWhmillion Ltons

billionbillionbillionbillion



billionbillion

So

urce

: Sta

tistic

s an

d C

ensu

s S

ervi

ce a

nd F

inan

cial

Ser

vice

s B

urea

u

percentage points

percentage points

percentage points

percentage points

percentage points

percentage point

Oct-Dec 2012

Oct-Dec 2012

Oct-Dec 2012

Oct-Dec 2012

Dec 2012

* A new fi scal reserve system was introduced in January 2012, impacting the way foreign exchange reserves are accounted for

Statistical Digest

FEBRUARY 2013

33

Pockets: silver linedThe silver market is relatively obscure and unknown to most

mainstream individual investors. So, when considering investing in precious metals, most go for gold, largely

because of the recent hype about its prospective returns. Few seem to know that the upswing forecast in silver prices is much higher.

Silver has been used for money throughout history by various civilisations. In several languages, the word silver is a synonym for money.

For centuries, China’s monetary system was based on a silver standard, abandoned only in 1935. From 1949 to 1982, private individuals in the mainland were forbidden to own gold and silver. The 2000 liberalisation of the silver market was one of a number of reforms.

Basic economic theory states that the market price of any good is set by the relationship between supply and demand. For silver, growing demand and only slow growth in supply are the fundamental reasons that much higher prices are in prospect.

On the supply side, not many mines that primarily extract silver are in operation today. Most newly mined silver is a by-product of mining for other metals, including lead, zinc, copper and gold.

This means most mining companies that produce silver do not regard it as their core business or main source of revenue. They cannot easily respond to higher prices for silver by increasing their output rapidly or to any great extent.

Central banks do not keep huge reserves of silver like the hoards of gold in their vaults. So they have no large stockpiles to release in order to control prices when demand rises.

Waste of metalDemand for silver is rising, for industrial use and for investment. The imbalance of demand and supply has resulted in a bull market – silver prices rose by over 450 percent between 2000 and 2012.

Of all the metals, silver is the best electrical and thermal conductor. Much of the industrial demand is from the electronics industry, which uses silver in devices such as smartphones, tablet and notebook computers, and television sets. Silver is also used to make photovoltaic cells – and production of photovoltaic cells is increasing rapidly.

Since many of these products contain only tiny quantities of silver, there is little profi t to be made in recovering the metal from them when they are thrown away. So the silver often remains in the rubbish dump.

There are now several silver-linked exchange-traded funds, making it easier for retail investors to put their savings into the metal. Together, these funds held a total of around 600 million ounces of silver in the middle of November, according to estimates by ETF Securities. These exchange-traded funds mirror the price of silver, minus a management fee.

The mainland has been playing a greater and greater role in the global silver market in the past decade. A few years ago, it was a marginal player, but no longer.

Demand from mainland investors has jumped in recent years. This has made the mainland the world’s leading market for investment in silver, whether in the form of the metal itself or in the form of paper such as silver futures and similar contracts, according to a recent Thomson Reuters GFMS report. The report says the mainland now supplies 14 percent of the world’s newly-mined silver, making it likely to become the second-largest producer in the world.

Cheap at the priceAnalysts expect demand for silver in the mainland to grow in the coming years, driving up the global price. Silver is now relatively cheap. During the course of history, one ounce of gold has been worth, on average, about 16 ounces of silver. On January 15, one ounce of gold could buy about 54 ounces of silver.

If gold were to remain at US$1,680 (MOP13,440) an ounce, its price on January 15, and the ratio of the price of gold to the price of silver were to return to its historical average, silver would fetch about US$105 an ounce, or 230 percent more than it does now. If one ounce of gold was worth 10 ounces of silver, silver would fetch US$168 an ounce.

Given the fundamental supply and demand, silver looks set to leap in price. It is likely to outperform gold in the next 10 years, since the market for silver is smaller, making it more volatile.

For centuries our ancestors used silver as currency. Today the metal presents a rare opportunity to make a handsome profi t on a medium-term investment.

ANDRÉ RIBEIRO CONSULTANT AND EXECUTIVE COACH - [email protected]

HIGH DEMAND AND LIMITED SUPPLY OF SILVER ARE MAKING THE METAL AN ATTRACTIVE ALTERNATIVE INVESTMENT

The views expressed here are those of the author and are not investment calls by Macau Business

2001 20022000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

60

50

40

30

20

10

0

SILVER SPOT PRICEU.

S. d

olla

rs p

er o

unce

FEBRUARY 2013

34

FEBRUARY 2013

BY ALEXANDRA LAGES

The kingmakerLi Gang, the new deputy director of Beijing’s liaison offi ce, may have a dominant role in mapping the future of the gaming industry

Why was Li Gang, the former deputy director of the central government liaison offi ce in

Hong Kong, shunted across the estuary to fi ll the equivalent position in Macau? Analysts say it was because Mr Li will soon become head of the liaison offi ce here.

His appointment in December as deputy director of the central govern-ment liaison offi ce was greeted with surprise in the press, because many pun-dits had expected Mr Li to move up to become the director. Those expectations were strengthened by the present direc-tor, Bai Zhijian. Mr Bai had hinted that he might retire after the new Chinese Communist Party leadership took over in November.

It is still on the cards that Mr Li could become director later this year. Analysts say that otherwise his move from Hong Kong could be considered a demotion. As deputy director of the li-aison offi ce, Mr Li has the rank of vice-minister. Promotion to director would give him the rank of minister.

Reports in the Chinese-language press suggest that Mr Li will become the director after the National People’s Con-gress meets in Beijing next month, or after the Legislative Assembly elections here later this year. “Well, we still have a year to go. Let’s see then,” was his answer to reporters in December when they asked when he might take over.

Mr Li was deputy director of the liaison offi ce in Hong Kong and its spokesman for nine years. He won praise for his handling of the media and thorny issues, including tensions generated by the one country, two systems principle.

Analysts say he is expected to have an important say in Macau’s internal af-fairs.

“Mr Li is expected to play a crucial role laying the groundwork for the re-newal of the casino concessions,” says Sonny Lo Shiu Hing, co-director of the Centre for Greater China Studies at the Hong Kong Institute of Education.

Mr Lo says although there are seven

years until the fi rst concessions expire, the government will need plenty of time to prepare. Offi cials of the central gov-ernment liaison offi ces in the special administrative regions usually keep their posts for a long time. Mr Bai has been director here for more than a dec-ade. Peng Qinghua was deputy director in Hong Kong from 2003 to 2009, then being promoted to director, a position he kept until last year.

Anti-corruption role?Mr Li is also member of the Communist Party Central Commission for Disci-pline Inspection.

Bill Chou Kwok Ping, an associate professor of political science at the Uni-versity of Macau, says: “Mr Li may be charged with supporting anti-corruption efforts that involve party members, in-cluding offi cials in the mainland and party members working in various sec-tors of Macau.”

However, Mr Li has said Macau and its gaming industry are not within the primary scope of the commission’s

latest anti-corruption effort in the main-land. “The task of the commission is to get to grips with anti-corruption moves in the mainland,” he told reporters in December.

“This task is not related to Macau’s affairs.”

He was speaking after reports that mainland authorities would intensify their scrutiny of gambling junket op-erators in an effort to deter corruption and money laundering. There were also media reports that mainland investiga-tors had visited in November to look into suspected money laundering during now-disgraced Bo Xilai’s time as Com-munist Party chief of Chongqing.

Reform roleMr Li may have a say in the political evolution of Macau. Mr Chou says Mr Li may have to deal with further politi-cal reform here. Mr Chou describes last year’s political reforms as a “half-baked cake”. The reforms added two directly elected seats and two indirectly seats to the Legislative Assembly, and increased

Li Gang

Politics

35

FEBRUARY 2013

tions. This indicated that the electoral blueprint, which Mr Li played an im-portant role in making, was not satisfac-tory,” he says.

Excessive infl uenceMr Chou says tension between Beijing and Hong Kong intensifi ed while Mr Li was deputy director of the central gov-ernment liaison offi ce in Hong Kong. Advocates of democracy accused the li-aison offi ce of meddling in Hong Kong’s internal affairs by backing pro-Beijing candidates in the Legislative Council elections and by playing a big part in giving Leung Chun-ying victory over Henry Tang Ying-yen in last year’s elec-tion for the post of chief executive.

“Had Mr Li’s performance been appreciated by Beijing, he would have been promoted to director of the Hong Kong liaison offi ce,” says Mr Chou. He says the transfer of Mr Li to a “less im-portant” post here indicates that Beijing is not that satisfi ed with his work.

One of Mr Li’s tasks here will be to hold consultations about the election of the next chief executive. That should be easy enough next year, as most analysts think Fernando Chui Sai On will run for a second term. It may not be so easy in 2019, when a new chief executive must be elected because Mr Chui cannot run for a third consecutive term.

Mr Chou says Mr Li may have to use a fi rmer hand in dealing with the estab-lishment camp. The establishment camp has put up some resistance to some of Beijing’s directives to Macau, including directives on countering corruption and money laundering, and on diversifying the economy, he says.

At the same time, groups that usu-ally support the government are fi nd-ing it increasingly diffi cult to remain politically relevant. Mr Chou says these groups will “become eager to look for the support of Mr Li for a bigger share of power and wealth”.

The Hong Kong Institute of Educa-tion’s Mr Lo says Mr Li will also have “to reach out to the grassroots level, including young people and pro-demo-crats”. Mr Lo says Mr Li was one of a new set of offi cials posted to the liaison offi ce in Hong Kong when Tung Chee-hwa was the chief executive. They were told to get a better feel for Hong Kong public opinion, Mr Lo says.

Mr Li’s experience from that task ma y prove useful in a rapidly changing Macau.

the number of members of the commit-tee that elects the chief executive from 300 to 400.

“The reforms have done little to re-distribute political power. The pro-es-tablishment camp is as entrenched as be-fore,” Mr Chou says. He says the reforms hold no promise of further progress to-ward democracy.

Mr Li is familiar with debate about political reform. In Hong Kong, he was involved in the liaison offi ce’s nego-tiations with the Democratic Party over electoral reforms in 2010, helping ensure that the Legislative Council supported the changes.

The reforms increased the number of seats in the Legislative Council to 70, of which 40 are directly elected. This means that the majority of members are now elected by universal suffrage, the rest being elected by functional constitu-encies, which are under the sway of the establishment and Beijing. The reforms also increased the number of members of the committee that elects the chief ex-ecutive to 1,200 from 800.

Advocates of democracy had de-manded a reform schedule so that elec-tions would be decided entirely by uni-versal suffrage in 2017, as promised by Beijing. Mr Chou doubts that Hong Kong’s reforms achieved much.

“The outcome of the negotiations was not welcomed in Hong Kong, as evidenced by the dismal performance of the Democratic Party in the 2012 elec-

Bai Zhijian, the present director of the liaison offi ce,

is likely to retire soon

Li Gang (third from right), at the reception in celebration of the 13th anniversary of the Macau SAR

36

FEBRUARY 2013

Don’t bet on payoutsTHERE ARE RICH PICKINGS FOR A FEW IN MACAU AND LITTLE ELSE FOR THE REMAINDER

KEITH MORRISON AUTHOR AND EDUCATIONIST - [email protected]

Life is not fair. Despite low unemployment and the apparently unstoppable gaming business in Macau, not everyone gets dealt a decent hand of cards.The table shows the median monthly pay of various kinds

of workers and the percentage increases in their pay over three periods in the past decade. The data for the third quarter of last year are the latest available.

At fi rst glance you might be tempted to think that workers have weathered the storm of the international economic downturn and come up smiling. After all, blue-collar workers, craftsmen, bosses and clerks have had monstrous increases in their median monthly pay in the past decade. The pay of other white-collar workers and unskilled workers has also risen, but to a lesser extent.

But simple data like these are deceptive. At the end of September last year the number of people in the group that comprises legislators, government offi cials, leaders of associations, directors and managers of companies was 19,200, making up only 5.6 percent of the working population. But this group had the third-highest percentage increase in median pay since the third quarter of 2002.

Similarly, the group that had the highest percentage increase in median pay, blue-collar workers – comprising plant and machine operators, drivers and assemblers – numbered 16,600, making up just 4.8 percent of the working population.

The group that had the second-highest percentage increase in median pay, craftsmen and similar workers, numbered 28,800, about 8.4 percent of the working population.

In other words, the biggest pay increases in the past decade went to about 18.8 percent of the working population.

Pyramid’s baseClerks constitute the largest group of workers, making up 28.4 percent of the working population in September. Their ranks have swelled in the past decade from 33,900 workers to 97,600. But the percentage increase in their median pay between the third quarter of 2002 and the third quarter of last year was the fi fth-lowest.

Service and sales workers constitute the second-largest group of workers, making up 21.3 percent of the working population. They numbered 73,200 in September, 67.5 percent more than a decade before. But the percentage increase in their median pay in the past decade was the third-lowest.

Together, clerks, service and sales workers, and unskilled workers comprised 66.4 percent of the working population

in September, having comprised only 55.5 percent a decade before. This suggests the workforce is becoming less skilled.

Percentages alone give an incomplete picture of pay increases. Real people have real pay, and we need to look at actual incomes for the percentages to be meaningful. For example, an increase of 10 percent in monthly pay of MOP30,000 (US$3,750) is greater than an increase of 25 percent in monthly pay of MOP10,000.

The increase of 156.1 percent in the median pay of the group comprising legislators, government offi cials, leaders of associations, directors and managers of companies in the past decade meant their median pay in September was nearly three times that of plant and machine operators, drivers and assemblers, whose increase of 287.5 percent in median pay was the highest.

The median monthly pay of clerks was half the median monthly pay of legislators, government offi cials, leaders of associations, directors and managers of companies in September, and 54 percent of that of professionals.

More for lessThe median monthly pay of service or sales workers was 28 percent of the median monthly pay of legislators, government offi cials, leaders of associations, directors and managers of companies, and 30 percent of that of professionals.

Put plainly, half the workforce – white-collar workers – had median pay that was between 28 percent and 54 percent of that of their bosses.

Unskilled workers, who make up 16.8 percent of the working population, had the smallest percentage increase in their median pay in the past decade, and in September their median pay of MOP5,000 per month was the lowest.

Factor in the effects of infl ation, which was about 6.1 percent last year, and it is clear that the earnings of lower-paid workers tarnish the gleaming image conveyed by the fi gures for percentage increases in median pay. Furthermore, offi cial data show that the median numbers of hours per week worked by the three highest-paid groups of workers in the third quarter of last year ranged between 42.4 and 45.9, but the median numbers of hours per week worked by all the other groups ranged between 46.2 hours and 47.8 hours.

The rich receive high pay on the backs of poorly paid, lower-grade workers who put in long hours. The data paint a picture of the bosses doing very nicely, thank you, while the masses have a daily struggle to make ends meet. Not much equality there.

PAY AND PAY INCREASES IN THE PAST DECADE

Legislators, government offi cials, association leaders, company directors and managers

Professionals

Technicians, associate professionals

Clerks

Service, sales

Craftsmen

Machine operators, drivers, assemblers

Unskilled workers

Median monthly pay 2007Q3

(MOP)


(MOP)

Increase in pay 2002Q3 - 2007Q3

(%)


(%)


(%)


(MOP)

11,716

15,7749,2246,0464,5703,9342,6843,047

19,310

19,53112,61811,5645,9218,6276,0334,279

30,000

28,00018,00015,0008,500

11,70010,4005,000

64.8

23.836.891.329.6

119.3124.840.4

55.4

43.442.729.743.635.672.416.8

156.1

77.595.1

148.186.0

197.4287.564.1

SOURCE: STATISTICS AND CENSUS SERVICE

JANUARY 2013

38

FEBRUARY 2013

BY MARY ANN BENITEZ*

Historic U-turnPublic pressure leads the Hong Kong government to drop plans to redevelop former Central Government Offi ces in Central

With its ancient trees lining a winding lane, Battery Path, in Central, has been one of the

best-loved walkways in Hong Kong. It also leads to the site of the old Central Government Offi ces.

On weekends, hawkers ply cheap clothing and bags as foreign domestic helpers chat, have lunch, buy wares or walk to St John’s Cathedral for church service in this serene green oasis at the heart of Hong Kong’s fi nancial centre.

The city’s government wanted how-ever to introduce changes to the area, by redeveloping the West Wing of the old Central Government Offi ces. The project provoked a heated debate, show-ing a growing interest in Hong Kong in preserving and maintaining the city’s heritage.

Two months ago, the idea was dropped.

In June last year, the Hong Kong gov-ernment had announced the “fi nal plan” for redeveloping the West Wing of the former Central Government Offi ces after a two-year consultation exercise. By that time, the Central Government Offi ces had already been moved to a swanky new harbour-front complex in Tamar.

Under the redevelopment plan, the West Wing would be redeveloped into a 32-story offi ce tower for fi nancial insti-tutions.

“This fi nal plan, which provides for the preservation of the Main and East Wings for use by the Department of Jus-tice and redevelopment of West Wing, has fully taken into account views ex-pressed in the community on the future

of the former Central Government Of-fi ces,” said then Secretary for Develop-ment Carrie Lam Cheng Yuet-ngor.

“It has seized a unique opportunity to create a public open space in the up-per part of Central, enhance the green neighbourhood and provide a new building to meet offi ce and community needs.”

Fight for preservationImmediately there was a howl of opposi-tion from conservationists to the think-ing that Government Hill – which the whole complex is known for – the seat of Hong Kong government for 150 years, would be changed forever.

In December, Leung Chun-ying’s government was forced to reverse the decision, made by the government of former Chief Executive Donald Tsang Yam-kuen.

The West Wing will now be pre-served. The entire offi ce space compris-ing the Main, East and West wings will house the Secretary for Justice and law-related non-government organisations.

The department of justice is cur-rently renting offi ces in Admiralty and moving the department to the old Cen-tral Government Offi ces would save the government some HK$15 million (US$1.9 million) in rent every year.

Interestingly also in December, the government did a U-turn on another controversial decision – the private Ho Tung Gardens on the Peak will be re-developed, per the wishes of its owners. The government had wanted to declare the Ho Tung Gardens a historical monu-ment, but the U-turn meant the way was cleared for its redevelopment by owner Ho Min-kwan.

Behind the movement to preserve the West Wing and Government Hill is the Government Hill Concern Group, an umbrella organisation of 21 non-govern-mental and green groups formed in De-cember 2010.

The group on its website said selling half the site to a developer would destroy “all the historical elements of the West Wing and half of Government Hill.”

Confl ict of interestsWith the government U-turn on the West Wing, the Antiquities Advisory Board in December overturned its earlier rating of a grade two and instead put a grade one rating on the West Wing, which means it is a building of outstanding merit and should be preserved if possible.

Greater China

The redevelopment plan

39

FEBRUARY 2013

* ASSISTANT NEWS EDITOR OF THE STANDARD NEWSPAPER IN HONG KONG

threatened to resign, then changed his mind, instead opting to leave at the end of his term in December last year.

Replacing him was also a veteran Antiquities Advisory Board member,

The snafu cost Bernard Charnwut Chan his chairmanship at the Antiqui-ties Advisory Board. Amid allegations Mr Chan colluded with offi cials so that the West Wing could be demolished, he

Andrew Lam Siu-lo, an urban design planner.

Mr Lam has told the media he hoped to reform the board’s policies and formulate legislation that would restrict the development of buildings that have been graded.

The board is a statutory body set up to advise the Antiquities Authority, which is headed by the Secretary for Development Paul Chan Mo-po.

The Government Hill Concern Group criticises this arrangement. “When proposing the West Wing be re-developed, they [government] somehow overlooked the heritage signifi cance of this site, which should be of special pri-ority in determining how to protect it,” says group convener Katty Law Ngar-ning.

“We do not have a cultural bureau that looks at heritage conservation, par-ticularly in relation to cultural policy.”

The Government Hill Concern Group has suggested an independent and separate entity, which will not be af-fected by development policies.

The old Central Government Offi ces

40

FEBRUARY 2013

Greater China

Hong Kong’s name may mean “fragrant harbour” in Cantonese, but cargo ships burning dirty

fuel in what is one of the world’s busiest ports add to a foul layer of pollution that kills more than 3,000 people a year.

Now the government is pledging to introduce legislation next year to require all oceangoing vessels to use fuel with lower sulphur content when berthed in the city, a measure aimed at making the city more environmentally friendly.

A total of 410,560 vessels arrived and left the port in 2011, with cargo ships vying for space in the crowded waters alongside public ferries, tourist junks and luxury yachts. This level of activity means shipping is a key polluter in a city where, according to the Uni-versity of Hong Kong, air pollution kills about 3,200 people every year.

Simon Ng of the Civic Exchange think tank blames the pollution, which often shrouds the city’s dramatic skyline in thick smog, for driving away talent. “Just imagine a small power plant right next to your doorstep, producing a lot of pollution every day, almost 24 hours a day, what would you do?” he says.

“Ships are now producing a lot more

pollutants than we had anticipated, and it is becoming a major problem that we need to address.”

Rising emissions from ships, which burn heavily polluting bunker fuel, will have seen shipping overtake the power industry as the city’s biggest source of the colourless toxic gas sulphur dioxide last year, Mr Ng predicts.

Nearly 400 Hong Kong people died last year from breathing in pollution from bunker fuel alone, he adds, citing a study on marine pollution by his think tank.

Level playing fi eldActivists say Hong Kong lags behind the rest of the world on environmental issues ranging from recycling to cycle lanes. And when it comes to shipping, while vessels calling in northern Europe and North America are mostly restricted to fuels with 1.0 percent or less sulphur content, Hong Kong allows 3.5 percent.

Last year however, it did introduce a voluntary scheme in which ships using 0.5 percent or less are given a 50 percent discount in port dues. Christine Loh, an en-vironmental crusader who has become the government’s environment undersecretary, says the scheme was just a “small start”.

“We want to regulate. We want it to become mandatory and we want to take the scheme across the border to our neighbours in Guangdong,” she told an air quality conference last month. “We would like, within the next few years, to collaborate and work very closely with the Guangdong province so the whole of the water of the [Pearl River Delta] could be turned into a low emission zone.”

The Hong Kong Shipowners Asso-ciation says the industry is operating in a terrible environment amid an unpredict-able trade volume due to the global fi -nancial crisis. “Asking carriers to spend money that they don’t have on switch-ing fuel is quite a diffi cult thing,” the association’s managing director Arthur Bowring says.

However, he adds liners are pre-pared to work with the government and notes that about 18 companies have taken part in a two-year unsubsidised, industry-led initiative to use cleaner fuel that expired at the end of last year.

Orient Overseas, Hong Kong’s big-gest container ship operator, which took part in the initiative, says mandatory regulation would at least create a level playing fi eld.

BY BEH LIH YI*

Burning issuePollution turns Hong Kong harbour from ‘fragrant’ to foul

* AFP NEWS AGENCY

41

FEBRUARY 2013

The limits of China’s consumer revolution

China’s economy is at a crossroads. As 2013 begins, foreign and domestic observers alike are asking which path the country’s economic development should take in

the next decade. How can China ensure stable and sustainable growth in the face of signifi cant internal and external challenges, including slowing medium- and long-term growth, rising labour costs and growing infl ationary pressure?

After the global economic crisis weakened external demand, which sustained China’s unprecedented economic growth for three decades, the authorities agreed that internal demand, especially domestic consumption, must become the country’s new growth engine. At the Chinese Communist Party’s congress in November, China’s leaders declared their intention to double per capita income by 2020, unleashing RMB64 trillion (MOP82 trillion) of purchasing power.

Indeed, with roughly 130 million middle-class consumers, China’s domestic market holds signifi cant potential. The Boston Consulting Group estimates that, with an average annual gross domestic product growth rate of 7 percent in China and 2 percent in the United States, Chinese domestic consumption will rise to half of America’s by 2015, and 80 percent in 2020 (assuming that the renminbi appreciates at an average rate of 3 percent against the U.S. dollar over the next few years).

Moreover, the current-account surplus plummeted from more than 10 percent of GDP in 2007 to 2.8 percent in 2011, refl ecting China’s decreasing reliance on exports to drive economic growth. In 2010, China’s imports ranked second in the world and are expected to grow at an average annual rate of 27 percent in 2011-2015, outpacing export growth by fi ve percentage points. As a result, the total value of imports is expected to exceed US$10 trillion (MOP80 trillion) in only two years, providing lucrative investment opportunities and broader markets to foreign investors.

Low productivityThis potential is not lost on multinational companies. A survey conducted in May 2012 by China’s State Council Development Research Centre asked 394 Chinese and foreign companies about their future strategic orientation in China. The respondents most often viewed China not only as a market opportunity, a research-and-development base and an export base, but also as a high-end manufacturing base, a regional-headquarters site and a service base. The results also refl ected China’s declining attractiveness as a base for product assembly, low-cost manufacturing and parts production.

In fact, while the U.S. and other developed countries have sought to bring manufacturing home (“reshoring”), they have been establishing innovation facilities in China. Multinational companies have created nearly 1,000 R&D centres in China, including 194 in 2010 alone, enabling them to develop products for the local market. More than 1,400 foreign-funded R&D institutions are currently operating in China and data from China’s Ministry of Commerce indicate that 480 of the world’s top 500 companies have established local subsidiaries.

But China cannot rely on consumption as its only growth engine. History has shown that a one-dimensional development model cannot ensure sustainable competitiveness, just as no single market can sustain global demand. Given this, China

must continue to develop its manufacturing sector.China is the world’s top manufacturing country by

output. But, while it accounts for 19.8 percent of total global manufacturing, it receives less than 3 percent of the world’s manufacturing R&D investment. As a result, China’s innovative capacity remains relatively low, with its high-tech and knowledge-intensive industries unable to compete globally.

On average, China’s industrial enterprises are relatively small, and, although its industrial labour productivity (real manufacturing value added per employee) has improved over the last decade, it remains much lower than that of developed countries – just 4.4 percent of America and Japan’s productivity, and 5.6 percent of Germany’s. And the “pauperisation” phenomenon – in which companies must adjust their commercial strategies to cope with an impoverished consumer base – is increasingly affecting traditional industries, further undermining China’s capacity for sustainable development.

Narrowing gapMoreover, the quality of Chinese-manufactured products continues to lag behind that of developed countries’ manufactured goods. Whereas one unit of intermediate input in developed countries typically generates one unit or more of added value, in China the ratio is only 0.56.

As China’s “demographic dividend” disappears, its low-end labour market is shrinking, driving up its once rock-bottom labour costs and diminishing its rate of return on capital. Over the next decade, as Chinese workers demand higher salaries, basic benefi ts and improved working conditions, the country may well lose the comparative advantage that has driven its manufacturing boom.

While manufacturing wages remain signifi cantly lower in China than in the U.S., the rapidly narrowing gap is already fuelling American reshoring. Given that Chinese wages are rising at an annual rate of 15 percent to 20 percent, productivity-adjusted wage rates in low-cost U.S. states are expected to exceed those in some coastal regions of China by only 40 percent in 2015. Add to that reduced energy costs in the U.S., owing to the country’s shale-gas revolution, as well as the global supply chain’s complexity, and China’s cost advantages will soon be negligible.

Meanwhile, other emerging economies – including Vietnam, India, Mexico and Eastern European countries – are vying for China’s position as the world’s factory. These lower-cost alternatives are fast becoming developed-country investors’ preferred destinations.

Although the enormous potential of China’s consumer market can provide a new impetus for economic growth, the country’s economic transformation cannot succeed unless it upgrades its manufacturing sector. China’s leaders must begin by increasing investment in science and technology, focusing their efforts on parlaying key technological breakthroughs into higher-value-added production. Only by combining growing Chinese consumption with enhanced Chinese manufacturing will the country be able to develop a new comparative advantage, which is the key to sustainable growth over the next decade.

ZHANG MONAN FELLOW OF THE CHINA INFORMATION CENTRE

CHINA CANNOT RELY ON CONSUMPTION AS ITS ONLY GROWTH ENGINE. IT MUST CONTINUE TO DEVELOP ITS MANUFACTURING SECTOR

42

FEBRUARY 2013

Greater China

BY CAROL HUANG*

Back on the standsEnd to mainland media row dims reform hopes

* AFP NEWS AGENCY

The way Beijing contained a rights row that saw rare pro-tests against censorship shows there is no consensus for rapid change, analysts say, despite rising calls for press

freedom and other reforms.Since China’s president-in-waiting, Xi Jinping, was in-

stalled as the new Communist chief in November, authorities have proclaimed themes of better serving the people, respecting rights and clamping down on corruption. But the government’s handling of the rare public dispute – a tangible early test for Mr Xi – suggested radical change is some way off.

The row fl ared after the liberal Southern Weekly news-paper had an editorial urging greater protection for liberties replaced with one praising the ruling party. Angered by what they saw as heavy-handed censorship, demonstrators took to the streets with others speaking out in the mainland’s increas-ingly vocal online community.

A deal between staff and offi cials, reportedly on the basis that there would be no direct interference in content before publication, saw the paper come out again as scheduled, as police removed demonstrators from the scene. Reports said Hu Chunhua, a rising star in the Communist Party and its top offi cial in Guangdong province, where the paper is based, had stepped in to mediate.

Show of forceDavid Goodman, a professor of Chinese politics at the Uni-versity of Sydney, saw the accommodation of protests and the quiet defusing of the situation as signs that leaders themselves were divided over how much leeway to allow. “People don’t normally go around protesting in China like that without some level of high-level support,” he says.

“Both camps will have instructed their people who were at the front line in the situation to back off,” Mr Goodman says. “There are people who don’t want change and people who do want change.”

Such challenges to the government were likely to contin-ue, says Willy Lam, a politics expert at Chinese University of Hong Kong.

“I think people are not so naive to believe that Mr Xi is re-ally serious about abiding by the constitution and so forth be-cause that would mean freedom of expression,” he says. “But I think they want this to be a challenge to Mr Xi because he has in a high-profi le manner committed himself to respecting and abiding by the constitution.”

During the row, the mainland’s major web portals reprint-ed a hard-line offi cial editorial critical of the Southern Weekly but distanced themselves from the content, while the publisher of the Beijing News reportedly resigned.

Mr Lam says the display of press solidarity, buttressed by a show of force on the mainland’s Twitter-like weibos, indi-cated such challenges would arise again.

“First of all there is a nationwide community of journal-ists who are willing and brave enough to offer support to each other. And secondly there is this potent weapon of Weibo which enables public intellectuals [and] legal scholars to beat the censorship,” Mr Lam says.

But some prominent Weibo users who supported of the paper were reportedly later “invited to tea”, a euphemism for being cautioned by authorities.

Social media are subject to strict controls in the mainland, with critical posts rapidly deleted and controversial search terms often blocked, although recently offi cial media have also praised them for exposing wrongdoing, particularly regarding corruption.

Promising approachVague promises of reforms have also been repeatedly sound-ed in the past few months, and a few weeks ago reports said Beijing would stop using its widely criticised “re-education” labour camps.

Doug Young, a journalism professor at Fudan University in Shanghai, saw the offi cial response to the Southern Weekly dispute, with its promise of less interference, as promising. The authorities defused the crisis in a savvy manner, avoiding a backlash and signalling a more pragmatic approach, he says.

This “goes hand in hand with the fact that Mr Xi and this new generation generally want to see more openness in the media,” Mr Young says. “They want to see the media become more of a social-type watchdog and not just a propaganda tool for the Communist Party.”

However, Mr Lam says the way the dispute ended “shows that [Mr Xi] is only interested in economic reform, but regard-ing political reform including policy towards the media, he is no different from [predecessors] Hu Jintao or Jiang Zemin”.

43

FEBRUARY 2013

BY NEIL CONNOR*

Growing oldThe mainland’s working-age population falls

The mainland’s working-age popu-lation declined for the fi rst time in recent decades in 2012, the

government said last month, detailing the extent of a demographic time bomb experts say is one of Beijing’s biggest challenges.

China introduced its controversial one-child policy in the late 1970s to control population growth, but its people are now ageing, moving to the cities and increasingly male, government statistics showed.

The mainland’s population rose by 6.7 million in 2012 to 1.35 billion peo-ple, the National Bureau of Statistics said. Almost 118 boys were born for every 100 girls.

The working-age population – de-fi ned as those from 15 to 59 – fell by 3.45 million to 937 million, adding to concerns about how the country will provide for the elderly, with 194 million people now 60 or over. It was the fi rst absolute drop in the working-age seg-ment in “a considerable period of time”, said National Bureau of Statistics direc-tor Ma Jiantang, adding that he expected it to “fall steadily at least through 2030”.

The mainland’s wealth gap and population imbalances are major con-

cerns for the ruling Communist Party, which places huge importance on pre-serving social stability to avoid any po-tential challenge to its grip on power. An estimated 180,000 protests break out across the mainland every year, many of them sparked by a wide range of social issues, including wage dis-putes and rural workers being denied residents’ rights in cities.

But the government faces a “ma-jor dilemma” over how it confronts the problem of a rapidly ageing population, analysts says.

Population imbalance“For older generations, life is going to be very painful,” Sun Wenguang, a retired academic from Shandong University in Jinan, told AFP.

“The cost of 24-hour care in Beijing is probably RMB7,000 (MOP9,000) a month, and how will this be funded? The average manual worker in the main-land earns about RMB2,000 a month, of course they don’t want to share their money out.”

Liang Zhongtang, a researcher at the Shanghai Academy of Social Sci-ences, says the government is reluctant to confront the population imbalance

because of the sensitivity of the family planning policy. “Actually, the structural decline of the country’s labour resources started long ago,” he told AFP.

Most of the labour force is now aged between 20 and 45, Mr Liang says, with the proportion of older workers within that range increasing rapidly. “This means it is very hard for them to change their jobs or fi nd a new employer”, de-creasing labour fl exibility.

The problems of ageing and labour shortages are “severe” in the country-side, Mr Liang adds.

“Even though rural areas’ social and economic problems are serious, they do not make onto the radar of mainstream [policy makers]. They just ignore the problems plaguing this social stratum.”

As late as 1982, the proportion of the population aged 60 or over in the mainland was just 5 percent, but it now stands at 14.3 percent.

The mainland’s urban population rose to 712 million in 2012, up 21 mil-lion and adding to the strains on public services, while the rural population fell 14 million to 642 million. Average per capita income was RMB26,959 in the cities, compared to RMB7,917 in the country-side, the statistics said. * AFP NEWS AGENCY

WELCOME THE YEAR OF THESNAKE

TOURISM’S PEAK SEASON MEANS HIGHER PRICES

LAI SEE MARKETING AN ENVIRONMENTAL RED FLAG

A STELLAR GUIDE TO THE NEW LUNAR YEAR

BY ALEXANDRA LAGES

Ph

oto

: Lu

ís A

lmo

ste

r

46

FEBRUARY 2013

The Lunar New Year holidays are peak season for Macau’s tourism and gaming industries, but the

beginning of the Year of the Snake may bring more visitors than usual.

That will be due to the opening of Gongbei Station, the last stop on the Guangzhou-Zhuhai Intercity Railway. The bottleneck may come at the Gongbei border crossing that may be unable to cope with a surge in visitors from the mainland.

Amy So Siu Ian, the programme coordinator for hospitality and gaming management at the University of Macau, says the new railway will lead to an increase in tourist numbers during the Lunar New Year holidays. Mainland tourists “may want to experience the new railway and check out how convenient it is,” Ms So says.

Mainlanders have seven consecutive

days off work during the break. In Macau, only the fi rst three days are statutory holidays.

The city welcomed 861,000 tourists during the seven-day holiday last year, an increase of 6.9 percent over 2011, the Macau Government Tourist Offi ce says. Around 546,000 were from the mainland, up by 14.5 percent.

Ms So does not have an estimate for mainland tourist arrivals this year. Final numbers will depend on the weather, the availability of train tickets and the availability of hotel rooms, she says. Some mainland visitors may come to Macau only for the day, spending the night in Zhuhai, where accommodation is cheaper.

The last stretch of the Guangzhou-Zhuhai railway, the extension to Gongbei, was completed in December. Gongbei Station is next to the Gongbei

By the trainloadThe Guangzhou-Zhuhai high-speed railway will bring more tourists during the Lunar New Year holidays,

in potentially record numbers

border crossing, making it convenient for mainlanders coming to Macau – or so it seems.

The high-speed trains halve the time it takes to cover the 117km between Guangzhou and Gongbei to one hour and 12 minutes. The journey takes at least two hours by coach.

A nice bumpIn holiday periods, up to 35 trains a day will arrive in Gongbei from Guangzhou. Each train carries up to 654 passengers in eight carriages. A fi rst-class ticket costs RMB90 (MOP116) and a second-class ticket RMB70.

Union Gaming Group analyst Grant Govertsen, like Ms So, is not prepared to offer a forecast for the number of arrivals during this Lunar New Year. Mr Govertsen says the

LUNAR NEW YEAR

47

FEBRUARY 2013

timing of the opening of Gongbei Station is good for Macau. “It will result in a very nice increase to visitation during the upcoming Lunar New Year holiday,” he says.

He forecasts the new railway will prod some mainlanders that would not otherwise visit, to come for a look. It will probably induce regular visitors from the mainland to come more frequently also.

Casino operator Sands China Ltd is advertising heavily on Guangzhou-Zhuhai trains. At Gongbei, there are advertisements for other casino operators in Macau but advertisements for Sands China stand out because of their sheer number.

Deutsche Bank forecasts that Gongbei Station will re-accelerate growth in the number of visitors to Macau, after a minor year-on-year

increase of only 0.3 percent last year. The bank says the railway should make mainland Chinese more aware of Macau as a place to visit.

It will be good for hotels and casinos here, as visitors from mainland source markets other than Guangdong stay longer on average, and spend twice as much, the investment bank notes.

Overnight increase“With this new link, a visitor from Wuhan (central China) can travel directly to Macau by high-speed train within about four hours, versus 14 hours previously,” Deutsche Bank says in a research report written by analyst Karen Tang and published last month.

The bank has raised its 2013 forecast for growth in gross gaming revenue from the mass market from 22

In holiday periods, up to 35 trains a day will arrive in Gongbei from Guangzhou. Each train carries up to 654 passengers in eight carriages.A fi rst-class ticket costs RMB90 (MOP116) and a second-class ticket RMB70

48

FEBRUARY 2013

LUNAR NEW YEAR

HOLIDAY AVOIDANCE BEHAVIOUR

percent to 25 percent, partly because of the positive effect it expects the railway will have.

Deutsche Bank forecasts a rise of 10 percent in overnight tourists in view of the increase in hotel rooms after last year’s opening of the Sands Cotai Central casino resort.

Connie Loi Kim Ieng, an assistant professor at the Institute for Tourism Studies, is not so sanguine about the effect of the new railway on tourism and gaming. Ms Loi acknowledges high-speed trains will shorten the journey between Guangzhou and Gongbei and that the prices of tickets are “reasonable”, so increasing the inducement to visit.

The railway is still a novelty, however, and some mainland Chinese may wait to hear the experiences of others before taking the train themselves, she says.

“The station in Guangzhou is some 20km away from the city centre. This may be one disadvantage vis-à-vis the point-to-point service provided by the traditional coach companies.”

Therefore, Ms Loi says that the effect of the railway may not be immediately apparent during this year’s Lunar New Year holidays.

Tight squeezeThe impending surge of visitors may prove too much for the facilities at the Gongbei border crossing, which connects southern Zhuhai to northern Macau. About half of all tourists enter Macau here.

Mr Govertsen says the Gongbei crossing facilities are already bursting at the seams. He wants the mainland authorities to speed up work on expanding them.

Amy So Siu Ian, from the University of Macau, says the new railway will lead to an increase in tourist numbers during the Lunar New Year holidays

Union Gaming Group analyst Grant Govertsen says the timing of the opening of Gongbei Station is good for Macau

Connie Loi Kim Ieng, an assistant professor at the Institute for Tourism Studies, says that the effect of the railway may not be immediately apparent

“The expansion is quite necessary. As a stop-gap measure, visitors could be shuttled down to the Cotai immigration checkpoint or to the Inner Harbour Ferry Terminal but, in our opinion, it is important to open the expansion soon,” he says.

The expansion will almost double the Gongbei checkpoint’s capacity. It currently handles 260,000 to 300,000 travellers a day, but in the future it will be able to accommodate up to 500,000 crossings.

The Barrier Gate, its counterpart in Macau, through which travellers must pass before or after Gongbei, can handle up to 500,000 people per day.

The Institute for Tourism Studies’ Ms Loi says the Macau government

should deploy more manpower at the crossing to cope with the fl ow of tourists during the Lunar New Year holidays. She adds that the crossing should be kept open for more hours of the day during the festive season.

Ms So says a new border crossing that has been proposed would ease congestion at the Gongbei crossing. The new crossing is planned for the current site of the Nam Yuen wholesale market and would be for pedestrians only. It would be open around the clock and have capacity for 250,000 travellers a day.

Beijing has yet to approve the proposal for the new crossing. The Macau government has yet to say how much it thinks the new crossing will cost.

Ever-greater waves of mainland visitors cascading into Macau across the Lunar

New Year holidays may soon be a phenom-enon of the past. Connie Loi Kim Ieng, an assistant professor at the Institute for Tour-ism Studies, says the behaviour of tourists from the mainland is changing and, eventu-ally, their numbers will stop growing.

“Lunar New Year will bring in more tour-ists from the mainland for sure, but only modestly,” Ms Loi says.

“Its impact is gradually fading as people now are trying to visit Macau during other peri-ods to avoid congestion as well as high prices.”

She says the fl ow of mainland tourists usually follows a weekly pattern, with peaks at weekends. On weekdays, the peaks are outside working hours.

Ms Loi explains this is mainly be-cause mainland Chinese regard Macau as a place for quick visits. “They do not really need to wait for big festive seasons, when they have a long break, to visit Macau.”

She says tourists from Hong Kong have the same attitude. Together, tourists from Hong Kong and the mainland ac-count for 85 percent of visitors to Macau.

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On the fi rst morning of Lunar New Year, a 238-meter-long golden dragon will lead a parade across major tourist spots

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The Lunar New Year holiday is full of meaningful rituals. One that all families dislike is the

seasonal increase in prices for the most sought-after goods and services.

Are these short-term increases unavoidable or a case of businesses taking advantage of the festival to earn an extra buck?

Macau-based economists say it all comes down to basic economics: demand outstrips supply and prices are pushed up.

“Usually, prices in the Chinese New Year period increase for a short period. But this year prices are already too high, so the percentage of the increase will not be as high as before,” says Macau Association of Economic Sciences chairman Joey Lao Chi Ngai.

Mr Lao says it is diffi cult to estimate this year’s price increases.

Food and beverage outlets mark up prices during the Spring Festival to cover additional operating expenses. Their increased costs include paying higher wages.

Under Macau law, employees are entitled to seek up to three times their normal salary for the fi rst three days of the festival as these are statutory holidays. The holiday this year starts on February 10.

“It’s the usual practice of restaurants to amend their price strategy for Chinese New Year,” Mr Lao says.

Several food and beverage outlets do so by adding a surcharge to the bill that can be as high as 20 percent of the cost of the meal during the fi rst three days of the Lunar New Year.

Economist Albano Martins agrees that demand during the festive season rises as residents consume more and there is a surge in visitors.

“Some retailers take advantage and adjust their prices up,” says Mr Martins.

But the increase also often starts with wholesalers. Nam Yue Food Stuff and Aquatics Co Ltd, one of the city’s two main suppliers of fresh meat, has already warned that wholesale prices

Unwelcome traditionHigher retail prices are the least enjoyable feature of the Spring Festival

for imported fresh beef and pork will rise this month. The company says this is because mainland producers will be unable to cope with rising demand during the holiday period.

Nam Yue says interruptions to supply chains during winter further push up prices.

Costly orangesLast year, the Spring Festival fell on January 23. Data from the Statistics and Census Service shows prices were 0.93 percent higher in January than the month before. It was the highest monthly jump in infl ation last year. In contrast, prices fell in February, which was the only month-on-month drop recorded in 2012.

Last year’s January increase in infl ation was fuelled by double-digit increases in the price of fresh seafood, outbound package tours, and hairdressing and grooming services. The price of oranges, traditional gifts displayed as part of the festival’s traditions, rose by 5 percent.

The head of the Economic Services

Bureau, Sou Tim Peng, who is also part of a government taskforce to help stabilise food prices, says there is no indication of price manipulation in Macau, despite sharp seasonal increases.

As the prices for fresh meat rise, residents are turning to frozen pork and beef, a trend expected to continue during the Spring Festival. Offi cial data shows that imports of frozen meat rose by more than 20 percent last year over 2011’s import volumes.

Fresh meat is mostly sourced from the mainland but frozen meat reaches Macau from all around the world, with a broader range of suppliers helping to keep prices steady.

The good news is that after the Lunar New Year holiday, price increases are expected to slow.

Mr Martins has forecast that full-year infl ation will be between four and fi ve percent. Mr Lao is more bullish and expects a lower infl ation rate of between three and four percent.

Last year, infl ation stood at 6.1 percent.

LUNAR NEW YEAR

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Chinese tradition says a new lunar year requires new money.

Mrs Sit, 50, is a traditionalist. She intends to give away MOP4,000 (US$500) in lai see packets to celebrate the arrival of the Year of the Snake. She says only newly printed banknotes, most of them MOP20 notes, will fi ll the packets.

Lai see packets are red envelopes containing cash, which are traditionally given to unmarried people and employees as a gift and token of blessing at the beginning of each Lunar New Year.

Another follower of the lai see tradition, Mrs Lau, 40, also intends to put mostly MOP20 notes in the lai see packets she will hand out. “My husband and I expect to give out a total of MOP8,000 this year,” she says. However, she explains she prefers using “almost new” notes because of a shortage of brand new notes “and to go for the concept of recycling and re-use”.

She is in the minority. Most people here still want newly printed money for their lai see packets, despite the cost to the environment of printing thousands upon thousands of new notes – on top of the cost to the environment of manufacturing thousands upon thousands of lai see packets.

In the weeks before Lunar New Year, bank customers begin queuing

up to exchange old notes for new ones to put in lai see packets. The vice-president of the Macau Ecological Society, Chan Zeng Meng, urges banks to discourage this.

“Our principle is they should not print money just because of Lunar New Year traditions,” Mr Chan says.

Small fortunesThe Monetary Authority of Macau says it has similar concerns. A spokesperson for the authority says it “has always encouraged the two note-issuing banks to offer good-as-new banknotes to meet the massive public demand during the Chinese New Year period”.

Neither the note-issuing banks, Bank of China and BNU, nor the monetary authority disclose how many new notes are issued in the run-up to Lunar New Year. In Hong Kong, offi cial fi gures show that on average about 200 million new banknotes are printed each year for the festival. It is estimated that about HK$10 billion (US$1.3 billion) is given away in lai see packets there each year.

In Macau, the amount given away may be close to MOP1 billion. Monetary authority statistics show that the amount of pataca notes and coins in circulation during Lunar New Year last year was MOP7.04 billion. A month before, the amount in circulation was MOP6.08 billion, and a month after – when recipients

POSTING A PROFITMacao Post’s special issue last

month of 250,000 stamps marking the arrival of the Year of the Snake sold out in three days.

Stamp dealers quoted by our sister publication, Business Daily, said special issues of this kind attracted mainland Chinese buyers, who mainly gave them away as gifts or kept them as speculative investments.

A sales representative of Piu Kei Stamp Service said a complete set of Year of the Snake stamps, for which Macao Post had charged MOP55 (US$6.88), might now fetch double that sum.

Macao Post has been marking the Lunar New Year with special issues of stamps for 31 years. Last year it made MOP6.5 million from its Year of the Dragon special issue.

Customary costs

SECOND COMINGA new edition of special banknotes

to celebrate the Spring Festival has been produced by the city’s note-issuing banks, Bank of China and BNU.

Last year there was such a rush for the special Year of the Dragon notes that the banks have made people ap-ply online for this year’s limited edition Year of the Snake notes.

Many Chinese think the special notes bring good fortune.

On the fi rst day of reservations, the sheer volume of applications crashed BNU’s computer system. In the fi rst nine hours, more than 210,000 people reserved Bank of China notes. Each applicant was allowed to reserve a maximum of 60 notes.

The deadline for applications was the end of last month. The banks will only begin distributing the notes to successful applicants on March 1, so the notes will come too late to be put in Lunar New Year lai see packets.

The government has authorised each of the note-issuing banks to is-sue a maximum of 20 million special MOP10 (US$1.25) banknotes to mark each new lunar year until 2023.

LUNAR NEW YEAR

Offering unused banknotes in lai see packets carries a heavy

environmental cost

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had opened their lai see packets and banked the money – it was MOP6.6 billion.

It takes nearly 266 tonnes of cotton to make 200 million banknotes, according to the Hong Kong Monetary Authority. The authority has been promoting the distribution of good-as-new notes for Lunar New Year to protect the environment. It says good-as-new notes make up about 45 percent of banknotes distributed in Hong Kong in the run-up to Lunar New Year, having made up only 20 percent in 2006.

In the weeks before Lunar New Year, bank customers begin queuing up to exchange old notes for new ones to put in lai see packets

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Paid messagesDone right, lai see packets can become

prime promotional weapons

LUNAR NEW YEAR

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From public utilities to casinos to property developers, several fi rms are offering lai see packets to clients, printed with their company logo and name

Few people remember the days when Macau parents would wrap one pataca in red paper before

handing it to their children as a gift during Lunar New Year. Lai see packets have evolved in shapes and colours since then, with branded envelopes increasingly used by businesses as marketing tools.

From public utilities to casinos to property developers, several fi rms are offering lai see packets to clients, printed with their company logo and name.

CEM – Macau Electricity Company Ltd is one of the fi rms that distributes thousands of lai see packets, money not included, to its customers ahead of the Spring Festival. A company spokesperson would not disclose how many envelopes were distributed, but said the budget for the promotional exercise had not increased this year.

University of Macau assistant professor of marketing Candy Fong Pun San says the red-coloured packets can raise brand awareness. Despite the promotional benefi ts of branded lai see envelopes, only large corporations tend to use them as a marketing tool.

“Given that there are not many effective promotional channels in Macau, distributing lai see envelopes is probably a good way to promote a brand,” she says.

Newcomers to the market are most likely to reap the greatest benefi ts from branded envelopes. “The effect is presumably stronger when the brand is relatively unknown,” says Ms Fong.

“The receivers, who are mainly kids and young adults, may have never heard of the unknown brands and thus awareness can be increased.”

Established businesses tend to fi nd the “increase in awareness may be minimal, since both the givers and receivers of lai see are already familiar” with the companies, Ms Fong says.

Unique appealOffering lai see packets to existing customers can meet other marketing functions. Ms Fong says giving away envelopes to current clients can build relationships, as is often the case with the banks.

In order to enhance marketing effectiveness, Ms Fong recommends a design that is customised and appealing.

“As kids and young adults receive so many lai see envelopes every year, they are unlikely to notice each envelope when they receive or take out the money from it. Special shapes, designs or colours help to attract the receiver’s attention,” she says.

For printers, the growing demand for branded envelopes is good news.

Business has been increasing by about 15 percent annually, says Jose Ng, manager of Vui Fong Printing. He says the trend is likely to continue this year.

For the Year of the Dragon, Vui Fong printed 120,000 envelopes worth about MOP140,000 (US$17,500). Their major clients are casinos but the company also takes orders from associations, universities and government departments, Mr Ng says.

Margins are falling, however, hit by shortages of suitable staff, higher production costs and competition from mainland printers.

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Many of the city’s fi ve-star hotels are fully booked, long in advance of the holidays

If you are a looking for a room to stay in during the Lunar New Year holi-days, there is a chance you may not

fi nd one. By the middle of last month several of the city’s top hotels and re-sorts were already fully booked.

In Cotai, all of the Venetian Macao’s 2,800 rooms are taken for the holidays. There are no vacancies at Conrad Macao and Sheraton Macao, both in the Sands Cotai Central casino resort, according to Sands China Ltd, the owner and opera-tor of all three hotels.

At the neighbouring City of Dreams resort run by Melco Crown Entertain-ment Ltd, rooms are scarce. By the mid-dle of last month Crown Towers was almost fully booked, according Melco Crown.

Grand Hyatt Macau, also at City of Dreams but managed by Hyatt Hotels Corp, is preparing for a full house. “Res-ervations are expected to increase two weeks before the Chinese New Year,” a spokesperson says.

No vacancy

Altira, a Melco Crown casino hotel in Taipa, is fully booked. There will be no vacancies at Galaxy Entertainment Group Ltd’s Galaxy Macau in Cotai or StarWorld Hotel on the peninsula.

A spokesperson for SJM Holdings Ltd says the company forecasts high oc-cupancy rates at Hotel Lisboa and Grand Lisboa, and expects all the tables at the restaurants there to be reserved.

A representative from Wynn Macau says Lunar New Year is a “positive” pe-riod for business at the casino hotel, and more visitors than usual are expected. They did not offer further details.

The average number of hotel and

“Chinese New Year is one of the iconic components of our event calendar,” says Brendon Elliott, from Sands China

guesthouse rooms occupied each day of the Lunar New Year holidays last year was more than 20,000, 19.2 per-cent above the year before, offi cial data shows. The average room occupancy rate of fi ve-star hotels was 95 percent, 3.7 percentage points more than the year before.

Surging demandThe holidays are an important peak sea-son for the tourism industry. Some busi-nesses begin preparing for them almost a year in advance.

“Chinese New Year is one of the iconic components of our event cal-

LUNAR NEW YEAR

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TICKLING YOUR FANCYEvery major hotel and resort in Macau will offer special attractions and put up deco-

rations to usher in the Year of the Snake.The Venetian Macao, run by Sands China Ltd, has adapted the light show played

out on its façade at Christmas and given it a Lunar New Year theme. Street performers will entertain guests at the company’s other resorts in Cotai.

Galaxy Entertainment Group Ltd will have several promotions to mark Lunar New Year and Valentine’s Day, including raffl es, food and drink offers, performances and other entertainment.

Grand Hyatt Macau will have special programmes for Lunar New Year and Valen-tine’s Day. Both Altira and Wynn Macau will also have festive season treats and special menus at their restaurants.

WORKING HOLIDAYSRetailers are rubbing their hands with glee as they wait for the Lunar New Year

holidays to start. The head of the Macau Association of Retailers and Tourism Services, Frederick Yip Wing Fat, expects the sales volume during the holidays to be 10 to 15 percent higher this year than last year.

“Traditionally, Lunar New Year is one of the major shopping seasons of the year. During this season, not only are local residents willing to spend more, but also Macau receives visitors from around the world, especially from the mainland,” Mr Yip says.

He expects shops to offer special discounts and put up festive decorations to at-tract customers. He declined to estimate the average investment made by retailers in preparation for the holidays.

endar,” says Brendon Elliott, the vice-president of sales and resort marketing of Venetian Macau Ltd, a subsidiary of Sands China. Mr Elliott says it is a “key period” for the company.

Sands China begins preparing 11 months beforehand. “As we start pack-ing down all the activities for the previ-ous year, we look to the key earnings, the graphics and the demographics. We take some of the research that we’ve done and we start the planning process,” he says.

The mainland and Hong Kong are the main sources of tourists to tap into during the holidays. A spokesperson for Galaxy Entertainment says the festivi-ties in Macau “bring more tourists and families from the nearby regions to en-joy a weekend excursion”.

Some businesses say local custom-ers in Macau are also an important mar-ket. Many residents dine out and enter-tain their relatives during the holidays.

“We are expecting a large infl ux of guests to come and enjoy our enter-tainment offerings. For restaurants, it is indeed a very good time of the year, as families are looking for venues that ca-ter to large groups,” a representative of Melco Crown says.

Room rates will surge along with demand. Last year during the holidays, a fi ve-star hotel room cost, on average, MOP2,400 (US$300) per night, 6.3 per-cent more than the year before.

The SJM Holdings spokesperson says that this year, rooms in Hotel Lis-boa and Grand Lisboa will cost up to 30 percent more than usual. Galaxy Enter-tainment says its room rates will be sim-ilar to rates during other big holidays.

“We do not expect a big increase in room rates as the hotel rooms added to the market last year may help to alleviate the shortage,” the Galaxy Entertainment spokesperson says.

Mr Elliott says Sands China has more hotel rooms this year than last year. The fi rst phase of Sands Cotai Central opened last April and it now has 5,700 rooms.

Sheraton Macao was the latest hotel to open at Sands Cotai Central, in Sep-tember.

“Customers are always looking for something new. As Sheraton Macao Ho-tel is the newest and the largest hotel in Macau, with the Sheraton’s signature services, this will attract many guests,” says the managing director of the prop-erty, Josef Dolp.

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Snake1929, 1941, 1953, 1965, 1977, 1989, 2001, 2013

This will be a great year. You will achieve a lot in all aspects of life. Even though there may be adverse situations, good luck will protect you. However, do not invest in any risky ventures because this may end up creating a dilemma in your life. Your relationships will go smoothly this year. Your whole potential will be shown to the world.

Be very careful this year. It will be a time of ups and downs. You should take immense care in starting a new project or dealing with fi nance, as problems may arise. If you remain sharp and ignore negative vibes, you can achieve success. There may be good support from friends and family. You should also be hardworking and clever in dealing with diffi cult situations.

This will be one of the best years for you. Your overall situation will be good and your desires fulfi lled. You will see progress in your income, wealth and career. Obstacles are not completely absent, though. Face each one as it comes, in a decisive way, as they can easily be overcome. Take good care of your health, as you have a propensity to overwork.

Horse1918, 1930, 1942, 1954, 1966, 1978, 1990, 2002

Goat 1919, 1931, 1943, 1955, 1967,

1979, 1991, 2003

Monkey1920, 1932, 1944, 1956, 1968, 1980, 1992, 2004

You should be careful this year, as you may face hardships, misfortune and inauspicious outcomes. But good luck will come if you make the right choices. You just need to be prepared to take things slow, make plans for everything and evaluate the benefi ts and risks of any action. You may need to work harder than normal to achieve some success in your career.

Make way for the

Fortune tellers say the forthcoming Year of the Water Snake will bring love and wisdom. This year also calls for calmness, refl ection and planning. However, there may be some challenges: quick manoeuvres may be needed to avoid unexpected obstacles

LUNAR NEW YEAR

snake

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FEBRUARY 2013

Dragon1928, 1940, 1952, 1964, 1976, 1988, 2000, 2012

Rooster 1921, 1933, 1945, 1957, 1969, 1981, 1993, 2005

This is going to be a successful and rewarding year in your career. There are good opportunities this year but do not push yourself too hard. If you keep your mind sharp and strive a little, you can achieve a lot. You can count on the support of your family and friends. Even though the stars are in your favour, you may face some health problems.

Dog1922, 1934, 1946, 1958, 1970, 1982, 1994, 2006

Think of this year as a test of your perseverance. You may face several challenges. However, you should strive to achieve your goals. On the upside, you will get a lot of love from your family. Never have second thoughts about your decision-making and judgment skills, even in the hardest of times. There are good career opportunities, and prospects of romance or even a wedding.

Pig1923, 1935, 1947, 1959, 1971, 1983, 1995, 2007

Expect misfortune and losses this year. But do not panic, because your health and fi nances will be stable. However, you may need to put some extra effort into overcoming these negative happenings. In love, be prepared to face setbacks if you are looking for a long-term relationship. Arguments will take place between spouses, so try to keep the peace at home.

Rat 1924, 1936, 1948, 1960, 1972, 1984, 1996, 2008

It will be a year of good luck and money for you but expect a few bumps in the road. In your career and business, the year will be interesting and new opportunities can come your way. You should try to stay healthy and fi t. In love, you are a bit secluded this year. Get out and love will fi nd you.

Ox1925, 1937, 1949, 1961, 1973, 1985, 1997, 2009

This will be a period of progress for you in your workplace. Expect fresh starts in relationships and be open to making new friends. The year will also be good for making use of your fi nances for your hobbies, but avoid impulsive purchases. Only spend what you can afford. Because you will be very busy this year, mind your diet. Eat plenty of fruit and vegetables.

Tiger1926, 1938, 1950, 1962, 1974, 1986, 1998, 2010

You need to calm down. You should not jump into any large venture or commit yourself to large expenses. But this year can still be very rewarding if you know what to expect and plan ahead. In the workplace, it is a good time to learn new skills and take on new projects, laying the foundations for future progress. Your love life will run smoothly.

Rabbit1927, 1939, 1951, 1963, 1975, 1987, 1999, 2011

This can be a fantastic year for progress in all areas of your life, whether in fi nance, health or relationships. In the workplace, your employer may put a lot more trust in you. Luck will also be on your side if you decide to change careers. There are new opportunities, but make sure you keep your eyes open to spot them.

This will be a time of mixed fortunes for you. In relationships, you may have several opportunities but also disappointments. Your good will may be tested. You should keep calm while dealing with hardships, instead of complaining. If you do so, it may help bring back peace to your life. There is a fair chance of satisfactory achievements in your career or business.

LUNAR NEW YEAR

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Systems at riskFailure to adapt to climate change, persistent extreme

weather and major systemic fi nancial failure are just three of 50 major risks monitored every year in the World

Economic Forum’s Global Risks Report. It seems natural to draw connections among them, especially after a “superstorm” shut down Wall Street this past October. Indeed, the report reminds us of the many ways in which systems inevitably affect one another in our interdependent world.

More important, the report warns of the dangers of multiple systems failing. Two of the world’s most fundamental systems, for example, are the economy and the environment; their interplay underpins the fi rst of three case studies of risk in this year’s report.

The 1,000 experts who responded to the World Economic Forum’s annual Global Risks Perception Survey, on which the report is based, ranked climate-change adaptation as their top environmental concern in the coming decade. This refl ects a wider shift in thinking about the climate, with growing acceptance that we are now locked in to some degree of global temperature change and need to adapt locally – for example, by strengthening our critical infrastructure systems in order to boost their resilience to extreme weather events.

But we face these environmental challenges at a time of persistent economic weakness. Global growth remains slow; and, with monetary and fi scal policies having a limited impact on economic recovery, governments have neither the resources nor the courage to push for major projects. Not surprisingly, our survey group ranked chronic fi scal imbalances second among 50 global risks that are most likely to manifest themselves over the next 10 years.

Losing both enginesStrong economies provide the leeway to invest in climate adaptation, while environmental stability ensures the breathing space needed to attend to economic problems. Facing stresses on both systems simultaneously is like losing both engines on an airplane in mid-fl ight.

The second case study takes another perspective on systems thinking. What happens if an apparently “minor”

system – such as social media – sparks a “major” geopolitical crisis? With the growing reach of social networks, information can spread worldwide almost instantaneously.

The benefi ts of this are well documented but the risks of misinformation are not. Consider the real-world case of someone shouting “Fire!” in a crowded theatre. Could something similar happen digitally, with a spark of misinformation igniting a confl agration and wreaking havoc before the truth is revealed?

The report’s third case study looks at what happens when we become complacent about a vital system. For example, constant innovation in medical science over the last 100 years has left us with the impression that our healthcare systems can never regress. But experts are increasingly concerned about the potential for pandemics caused by bacteria resistant to all current antibiotics, while our intellectual-property system is failing to create adequate incentives for the development of new varieties. The director-general of the World Health Organisation has warned that if the world falls back into a pre-antibiotic age, a scratch or throat infection could become lethal once again.

Evaluating subsystemsEach case highlights the need to consider how to make systems more resilient, which means that systems cannot be considered in isolation. They are both plugged into larger systems and comprised of smaller subsystems. While, ideally, global risks would be met with global responses, the reality is that these risks manifest themselves mainly at the national level and countries must address them largely on their own. So we need to assess national resilience by regularly evaluating critical subsystems within countries.

The World Economic Forum currently is developing metrics that could evaluate national subsystems across fi ve factors of resilience – redundancy, robustness, resourcefulness, response and recovery – by combining perception-based data with publicly available statistical data. Initial perception-based data gathered by the Forum is pointing toward the importance of leadership ability, transparency, effi ciency and good relationships between public and private-sector stakeholders.

While the development of these metrics is in its early stages, the ultimate aim is to develop a practical diagnostic tool that would function as an “MRI” for national decision-makers to assess their countries’ resilience to global risks. By revealing underlying weaknesses that more traditional risk-assessment methods may miss, we could pinpoint the structural reforms, behavioural changes and strategic investments that increased resilience requires.

The result would not only directly benefi t each country willing to engage in this process. It would also imply accelerated innovation in global governance, which we need more than ever for the sake of preserving the integrity of our most crucial systems.

LEE HOWELL MEMBER OF THE MANAGEMENT BOARD OF THE WORLD ECONOMIC FORUM

THE WORLD ECONOMIC FORUM’S GLOBAL RISKS REPORT WARNS OF THE DANGERS OF MULTIPLE SYSTEMS FAILING

While, ideally, global risks would be met with global responses, the reality is that these risks manifest themselves mainly at the national level

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Only sales of industrial premises are now exempt from the special stamp duty. People in the prop-

erty business say the exemption may at-tract investors.

Estate agents warn that speculation

BY ALEXANDRA LAGES

MONEY-MAKING FACTORIESINDUSTRIAL BUILDINGS MAY BECOME THE NEXT LUCRATIVE TARGET OF SPECULATIVE REAL ESTATE INVESTORS

in industrial property is risky because the market is small and relatively illi-quid. Macau only has about 100 indus-trial buildings.

Ricacorp (Macau) Property Agency Ltd’s executive director, Jane Liu Zee

Ka, says that although the market is qui-et, there is some demand for industrial property. Ms Liu says some investors are trying to buy all the space in some in-dustrial buildings so they can turn them into housing. This is in line with the

67

FEBRUARY 2013

government’s drive, begun in 2010, to have run-down industrial buildings converted into blocks of fl ats.

Such conversions can be diffi cult. Old industrial buildings often have sev-eral owners, making it hard to get them all to agree to a conversion proposal, Ms Liu says.

Jones Lang LaSalle’s managing director in Macau, Gregory Ku, says conversion of an industrial building re-quires patience.

“If you want to convert it from in-dustrial into residential, it takes a long time. Although the government has said they want to speed up the process, it still takes years to get approval,” Mr Ku says. In the fi rst year of the govern-ment’s conversion drive, it received only eight proposals and approved none defi nitively.

Rose Lai Neng, a real estate spe-cialist at the University of Macau, says that not only is there little industrial property in Macau, but that what there is old. Almost all industrial buildings here were built before 1999.

Zero supplyMs Lai is uncertain whether there is speculation in the market for industrial space. “Any rational investor should not target such property because the value is just not there, unless it is extensively transformed,” she says.

But she does not rule out the pres-ence in the market of unseasoned inves-tors, who are willing to buy property at high prices without properly evaluating its potential, and who expect its value to rise just because the rest of the real estate market is booming.

Prices of industrial property are, indeed, rising. Centaline (Macau) Prop-erty Agency Ltd’s review of last year says the average price of industrial premises rose by 59 percent last year.

Other estate agents think the rise was a lot slower. Mr Ku of Jones Lang LaSalle says the average price rose by 15 percent or more last year be-cause there was “additional specula-tive money” in the market. He forecasts that it will rise by 10 percent this year “because there is no new supply and quality stock”. Rents are increasing by around 10 percent a year, he adds.

Ms Liu of Ricacorp says “everything is increasing” in the real estate market and that prices of industrial property are no exception. “Because there is no supply, prices are increasing by around 20 to 30 percent,” she says.

Ph

oto

: Lu

ís A

lmo

ste

r

68

FEBRUARY 2013

Statistics and Census Service data show that the average price per square metre of industrial property was MOP18,844 (US$2,356) in the third quarter of last year, barely 0.5 percent more than in the second quarter, but 28 percent more than a year before.

The number of industrial premises sold in the fi rst 11 months of last year was 223 or 19 percent more than a year before.

Productive purpose“Most of this space is occupied by end-users, either for warehousing or light-industry purposes,” says Mr Ku of Jones Lang LaSalle. He says that it is why the government has exempted sales of indus-trial property from the special stamp duty. It hopes industrial property will be used for productive purposes, creating jobs.

Sellers of property used for residen-tial, offi ce or commercial purposes, or for parking, must pay a special stamp duty of 20 percent if they have owned the property for less than a year, or 10 percent if they have owned it for a year or more but less than two years.

Mr Ku forecasts that the number of industrial premises sold will increase steadily. But he says this is mostly be-cause of speculators taking advantage of the exemption from special stamp duty to make a fast buck.

Not only businesses use industrial property. Several cultural groups occu-py industrial premises because they are cheaper to rent than other kinds of prop-erty and big enough for their purposes.

The Live Music Association pro-motes live performances by bands from Macau and abroad. It established a con-cert room in an industrial building in 2008, when the rent was MOP13,000 a month. The rent is now MOP20,000.

The association invested almost MOP700,000 in its venue but the lease expires in October and the new owner has told the group that he wants the premises back. The head of the Live Mu-sic Association, Vincent Cheang, says the group may simply have to do without a concert room.

“We cannot afford to rent another place and set everything up again if we have the risk of having to change after one year,” Mr Cheang says. “We spent lots of money on decoration and we don’t want to take the risk again.”

The show may be nearly over for the Live Music Association but it seems in-vestors in industrial property may only just be tuning up.

DREAM HOME? DREAM ON!Property prices will continue to rise this year, estate agency Jones Lang LaSalle

forecasts in its review of 2012.Jones Lang LaSalle says it expects prices of mass-market and mid-range hous-

ing to increase by 10 percent to 15 percent this year.It predicts that prices of offi ce space will rise by between 15 to 20 percent, and

that the increase in offi ce rents will be similar.The estate agency forecasts that demand for commercial property, especially in

prime shopping areas, will continue to increase at a “double-digit” rate.

Q1 Q1 Q1Q2 Q2 Q2Q3 Q3 Q3Q4 Q4

20032002

FEB

FEB

FEB

MAR

MAR

MARAP

R

APR

APR

MAY

MAY

MAYJUN

JUN

JUN

JUL

JUL

JUL

AUG

AUG

AUG

SEP

SEP

SEP

OCT

OCT

OCT

NOV

NOV

NOV

DEC

DEC

JAN

JAN

JAN

2010 2011 2012

2004 2005 2006 2007 2008 2009 2010

2010 2011 2012

2011 2012 (JAN-NOV)

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

1,400

1,200

1,000

800

600

400

200

0

45

40

35

30

25

20

15

10

5

0

AVERAGE PRICE OF INDUSTRIAL SPACE

COMBINED VALUE OF SALES OF INDUSTRIAL SPACE

SALES OF INDUSTRIAL PREMISESM

OP p

er sq

uare

met

reM

OP m

illion

Num

ber o

f sal

es




Property

69

FEBRUARY 2013

Building units completed

- Residential

- Commercial and offi ces

- Industrial and others

Building units started

- Residential



Macau

- Macau Peninsula

- Taipa

- Coloane

Under MOP1 million

MOP1 million to MOP1.9 million



MOP4 million or above

Total units transacted

- Residential

- New building

- Old building

Resident buyers (as percentage of total buyers)


Resident buyers (as percentage of total buyers)


Total value of total units transacted (2)

- Residential

- New building

- Old building



2,545

2,433

98

14

1,590

1,526

48

16

-69.4

-73.0

-45.9

67.6

148.2

162.9

8.9

100

21.6

32.9

1.4

6.4

-46.8

-13.4

4.7

15.6

62.5

-6.7

-4.5

26.8

-20.7

-1.8

13.7

-12.6

-17.5

34.4

28.1

41.0

5.4

93.0

10.9

-7.7

-2.1

-8.3

3.0

3.0

0.8

7.3

-24.6

33.9

24.8

16.4

45.0

68.2

65.3

93.8

135.1

-56.6

-73.1

-26.1

-25.5

-42.9

-15.8

6.8

8.4

-0.5

-5.0

-46.8

-27.3

-3.6

18.7

40.7

Construction - private sector

Average transaction price of residential units (3)

Transaction price of residential units (1)

Transactions (1)

2011

2011

2011

2011







Month-on-month change (%)


Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Dec 2012

Dec 2012

Dec 2012

Dec 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

1,387

1,099

231

57

2,159

2,053

86

20

27,624

17,176

7,783

9,393

87.1

3,128

81.5

7,320

MOP76.3

MOP58.9

MOP41.4

MOP17.5

MOP12.7

MOP4.7

MOP45,027

MOP43,569

MOP41,501

MOP68,208

2,690

4,628

3,162

1,818

4,878

MOP70,407

MOP71,159

MOP64,138

MOP79,008

1,375

3,230

2,856

2,022

6,469

24,023

15,952

6,753

9,199

89.8

2,874

91.5

5,197

MOP95.4

MOP69.9

MOP45.9

MOP24.0

MOP18.5

MOP7.1

billion

billion

billion

billion

billion

billion

billion

billion

billion

billion

billion

billion

/m2

/m2

/m2

/m2

/m2

/m2

/m2

/m2

So

urce

: Sta

tistic

s an

d C

ensu

s S

ervi

ce a

nd F

inan

cial

Ser

vice

s B

urea

u

(1) The data covers transactions with stamp duty paid during the reporting period, including transactions exempted from stamp duty(2) Figures are rounded, therefore they may not add up exactly(3) The data covers transactions with stamp duty bill issued during the reporting period, including transactions exempted from stamp duty

percentage points

percentage points

percentage points

percentage points

Property Statistics

70

FEBRUARY 2013

70 Property | Market Watch

Note: L/F - Low fl oor; M/F - Middle fl oor; H/F - High fl oor

District Property Price per sq.ft. (HK$)Sale price (HK$)Floor area (sq. ft) Unit

Type Property Price per sq.ft. (HK$)Rent price (HK$)Floor area (sq. ft) Unit

Source: Midland Realty (Macau) Ltd

Note: L/F - Low fl oor; M/F - Middle fl oor; H/F - High fl oor

Notable residential property rentals - 01/12 to 31/12, 2012

Macau One Central Block 3, H/F, unit A 2,636 55,000 20.86

Macau Lake View Tower M/F, unit E 1,545 27,000 17.48

Taipa Prince Flower City Block 2, H/F, unit A 1,645 18,000 10.94

Taipa The Pacifi ca Garden Block 2, L/F, unit G 1,725 18,000 10.43

Taipa Prince Flower City Block 1, L/F, unit D 1,665 17,850 10.72

Taipa One Grantai Block 3, L/F, unit J 2,019 17,000 8.42

Macau Villa de Mer Block 2, M/F, unit A 1,703 16,000 9.40

Macau The Residencia Block 5, L/F, unit B 1,696 15,000 8.84

Taipa Nova City Block 6, L/F, unit A 1,080 13,000 12.04

Taipa The Pacifi ca Garden Block 1, L/F, unit F 1,188 13,000 10.94

Taipa Nova City Block 6, L/F, unit D 1,050 12,500 11.90

Macau La Cité Block 1, H/F, unit C 1,069 10,000 9.35

Macau Villa de Mer Block 2, L/F, unit E 824 9,500 11.53

Macau La Cité Block 1, H/F, unit C 1,066 9,500 8.91

Macau Villa de Mer Block 4, L/F, unit G 829 8,800 10.62

Taipa Hung Fat Garden Block 3, L/F, unit D 1,180 8,800 7.46

Macau Villa de Mer Block 2, H/F, unit G 826 8,500 10.29

Taipa Fast Garden Block 1, M/F, unit E 980 8,500 8.67

Macau Villa de Mer Block 3, H/F, unit D 698 7,200 10.32

Notable residential property transactions - 01/12 to 31/12, 2012

Macau One Central Block 5, M/F, unit E 2,312 20,345,600 8,800

Macau The Paragon H/F, unit F 1,838 19,779,000 10,761

Macau Pearl Horizon Block 15, L/F, unit D 1,462 10,663,750 7,294

Macau Pearl Horizon Block 15, H/F, unit D 1,303 9,387,000 7,204

Macau Pearl Horizon Block 15, H/F, unit D 1,303 9,152,000 7,024

Macau Pearl Horizon Block 15, M/F, unit D 1,302 8,847,000 6,795

Macau Pearl Horizon Block 15, L/F, unit D 1,302 8,447,000 6,488

Macau Pearl Horizon Block 15, H/F, unit G 1,183 8,409,000 7,108


Macau Pearl Horizon Block 7, H/F, unit A 1,128 8,162,000 7,236


Macau Pearl Horizon Block 7, H/F, unit B 1,128 7,990,000 7,083

Macau Pearl Horizon Block 15, M/F, unit G 1,183 7,954,000 6,724

Macau Pearl Horizon Block 15, M/F, unit G 1,183 7,849,000 6,635

Macau Pearl Horizon Block 15, L/F, unit G 1,183 7,449,000 6,297

Macau Pearl Horizon Block 15, H/F, unit F 952 7,073,000 7,430

Macau Pearl Horizon Block 15, H/F, unit E 938 6,982,000 7,444

Macau Pearl Horizon Block 15, H/F, unit F 962 6,973,000 7,248

Macau Pearl Horizon Block 15, H/F, unit E 952 6,882,000 7,229

Macau Pearl Horizon Block 15, M/F, unit F 962 6,603,000 6,864

Macau Pearl Horizon Block 15, M/F, unit E 938 6,512,000 6,942

Macau Pearl Horizon Block 15, L/F, unit F 958 6,353,000 6,632

Macau Pearl Horizon Block 15, L/F, unit E 938 6,262,000 6,676

Macau Villa de Mer Block 3, H/F, unit F 824 5,380,000 6,529

Macau Pearl Horizon Block 15, M/F, unit H 767 4,755,000 6,200

Macau Pearl Horizon Block 15, L/F, unit H 767 4,605,000 6,004

Coloane One Oasis Cotai South Block 5, L/F, unit H 650 3,430,000 5,277

Source: Midland Realty (Macau) Ltd

71

FEBRUARY 2013

FOUNTAINSIDE’S NEW PHASE UP FOR SALE IN SECOND QUARTERA new phase of the residential project Fountainside, on Penha Hill, will be up for sale in the second quarter, developer Macau Property Opportunities Fund Ltd announced. The London-listed fund said in an investor update that the 42-unit property would be substantially completed by March. The fund managed by Sniper Capital Ltd has already sold 20 units and expects to sell the remaining 18 fl ats and four villas for an average of US$800 (MOP6,400) and US$1,400 per square foot, respectively.

CLOSE TO 100,000 PEOPLELIVE IN PUBLIC HOUSINGSome 17 percent of the population is living in public housing apartments

A total of 98,700 people live in public housing fl ats, which represents 17 percent of the population.According to data compiled by Lusa news agency, of those, 79,900 are living in economic housing units (81 percent) and 18,800 in social housing.The government’s public housing policy includes social

housing for rent, and economic housing for sale at controlled prices. Currently, there are 36,287 economic housing units and 8,138 social housing units.As of 2012-end, there were 3,615 families on the waiting list to get an economic housing unit, while 6,207 were waiting for a social housing apartment.

ON THE WAITING LISTThe average assessment time by the Lands, Public Works and Transport Bureau for private construction projects stood at 96 days in 2011. The bureau released the fi gure last month in an offi cial statement. In 2010, the department took 99 days on average to handle private construction project assessments. According to Macau law, the bureau has up to 105 days to assess private construction projects before making a decision.

LA SCALA TRIAL POSTPONED AGAINThe trial of Chinese Estates Holdings Ltd boss Joseph Lau Luen Hun and BMA Investment chairman Steven Lo Kit Sing, regarding the land where the luxury residential project La Scala is being built, has again been postponed. The trial was set to start last month but it was postponed because Mr Lau was absent, as well as fi ve other defendants. No new date was announced. Mr Lau, Mr Lo and six others are accused of being part of the web of corruption woven by Ao Man Long when he was secretary for transport and public works. The trial was initially due to start in September last year.

72

FEBRUARY 2013

Payment in kindThe government says only Sands China and Galaxy Entertainment will be granted more live tables this year

Sands China Ltd’s sizeable invest-ment in non-gaming attractions is paying off handsomely in reward

in the form of live gaming tables.The operator announced last month

it would be granted some 200 new addi-tional tables by the government, some of which will be online in time for the busy Lunar New Year holiday.

“We received a letter from the gov-ernment” confi rming the table alloca-tion, Sands China chief executive Ed-ward Tracy told reporters last month.

The allocation is the result of a decision by the government to reward casino operators who have stepped up

to the plate in terms of non-gaming in-vestment. According to Secretary for Economy and Finance Francis Tam Pak Yuen, only Sands China and Galaxy En-tertainment Group Ltd will be entitled to increase their live gaming table allo-cations this year.

Galaxy Entertainment will get 50 new tables.

“When the fi rst phase of Galaxy Macau was completed, the government allotted a total of 450 gaming tables to the company; 400 tables were approved when it was opened and 50 more gaming tables are to be approved,” Mr Tam said last month.

He stressed that this year, the gov-ernment would not be approving any more tables to existing casinos belong-ing to the other gaming operators. SJM Holdings Ltd executive director Angela Leong On Kei had already confi rmed earlier that the gaming operator planned to apply for more tables.

Mr Tam says there will not be a sig-nifi cant increase in the number of tables operating in the upcoming two years, until new casino properties start open-ing in Cotai.

As of the end of December, the city had 5,485 live gaming tables, close to the maximum limit of 5,500 tables set

Gaming

73

FEBRUARY 2013

Citigroup forecasts that Sands China Ltd is going to be the only gaming operator in Macau to see a rise in market share this year.The investment bank expects Sands China’s share to increase by three percentage

points, to 22 percent, as Cotai Central completes its fi rst full-year of operations.According to Citigroup, Sands China was already one of the two biggest market

share gainers last year, alongside Galaxy Entertainment Group Ltd. Both operators had a 19-percent stake last year, both up by three percentage points in comparison to 2011.

Citigroup expects Galaxy Entertainment Group to lose one-percentage point of mar-ket share this year, most of it likely to come from casino hotel StarWorld and as a result of Cotai Central’s fi rst full-year of operations.

Both SJM Holdings Ltd and Wynn Macau Ltd should continue to lose market share this year, the investment bank says, after falls last year.

SANDS ADDS TO SHARE: BANK

by the government for the 2010-2012 period.

Revenue boostSands China’s request for 200 new gam-ing tables is old news. The company was fi rst expecting to be granted the tables last September, when it opened a second casino in Sands Cotai Central.

But with the 5,500-live table cap imposed by the government virtually used up, the company’s request was left unattended. Instead, it had to shift tables around its properties.

Now Sands China has its tables, an-alysts expect the operator to reinforce its dominance in Cotai, especially in mass-market gaming. The fi rm will now hold about 26 percent of the total table count in Macau.

However, the company still needs to work with the gaming regulator regard-ing when and where the tables will be allocated. CLSA analysts Aaron Fischer and Richard Huang have forecast that the additional tables could translate into an extra US$511 million (MOP4.1 billion) in net revenue a year for Sands China if allocated to the mass market.

This latest 250-table grant leaves some questions unanswered. There are concerns the remaining supply will not meet the needs of new projects opening in Cotai.

In 2011, Mr Tam announced that the

government would restrict gaming table growth to an average rate of 3 percent per year, starting this year. Last month, he reaffi rmed the goal, adding that the overall number of live gaming tables should only increase by 2,000 in the next 10 years.

The announced 250 new gaming ta-bles already represent an increase of 4.6 percent.

With at least six new casinos set to open in Cotai in the upcoming years – one per gaming operator – each property would be allowed about 300 tables on average.

It is less than what most operators want. SJM said in a press release it plans to develop a casino in Cotai with the capacity for up to 700 gaming tables, while MGM China Holdings Ltd wants its property there to have about 500 live tables.

Mr Tam says that the government has yet to decide on the number of gaming tables to be assigned to each of the new gaming projects already approved for Cotai. Again, investment in non-gaming facilities will be taken into consideration.

“The decision to assign gaming ta-bles does not come out that quickly be-cause we have to consider all the new projects in Cotai and give out the ap-proval as a whole,” he said last month.

Macau-based economist Albano Martins says it is a mistake for the gov-ernment to cap the number of live gam-ing tables.

“This policy makes no sense, espe-cially since the government says it wants to promote mass gaming,” Mr Martins told Lusa news agency. “That is also what casinos want because it is more benefi cial for them” since, unlike VIP gaming, they do not pay commissions to junket operators.

But with table supply restricted, the shift is harder to make.

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FEBRUARY 2013

Gaming

After its fi rst year-on-year drop in over three years in the third quarter of 2012, VIP revenue went up by 2.9 percent in the three months ended December. But the

shift towards mass play continues, analysts say.“As the combined high-margin business of mass-market

tables and slots continues to grow well into the double digits ... the revenue mix shift should continue,” analysts Grant Govert-sen and Felicity Chiang, from Union Gaming Research, wrote in a note released last month.

“We think the 2013 revenue mix should move towards 65 percent VIP and 35 percent mass market/slots.”

For full-2012, VIP baccarat accounted for 69.3 percent of Macau’s casino gross gaming revenue, reaching MOP210.9 billion (US$26.4 billion). Revenue was up by 7.5 percent year-on-year.

As for the mass market, revenue hit MOP93.3 billion, up by 30 percent in comparison with the previous year.

Figures released last month by the Gaming Inspection and Coordination Bureau show that the city’s casinos report-ed MOP54.8 billion in VIP gross gaming revenue during the fourth quarter. That marked a rebound in the VIP market, after revenue dropped by 1.1 percent year-on-year in the previous three months. The last time VIP gaming revenue contracted was in the second quarter of 2009.

Meanwhile, growth in mass gaming revenue (including slot-machines) further accelerated. It went up to 28.4 percent year-on-year, an increase of 1.6 percentage points over the pre-vious three months.

Hail to the massesVIP play is back in growth mode but behind mass market

Mr Govertsen and Ms Chiang say that the mix shift is good news for gaming operators, since the margins are higher in the mass market than in VIP play.

Union Gaming forecasts that VIP gross gaming revenue will grow about 10 percent this year, while the mass market (including slots) is set to soar by around 30 percent. Overall, the casino consultancy expects the market to go up by 16 per-cent in comparison to 2012.

Upward revisionThe consensus among analysts is that the mass market will continue to grow stronger than VIP play.

Morgan Stanley forecasts Macau’s gaming market will expand by 13 percent in 2013. Analysts Praveen K. Choudhary and Katherine Sun say they expect VIP gross gaming revenue to go up by 10 percent year-on-year, while the mass market is set to soar by 20 percent.

“Though we project a slowdown in mass growth in 2013, it should still grow faster than VIP,” they wrote in an investors note last month.

HSBC also revised upward its growth estimate for Macau’s gaming industry for full-2013. Analysts Sean Monaghan and Sachin Varma increased HSBC’s 2013 gross gaming revenue growth estimate to 13.5 percent, up by 0.6 percentage points. They now have a full-year VIP growth estimate of 7.9 percent and a mass growth forecast of 26.1 percent.

UBS followed a similar path: the Swiss-based bank lifted its full-year growth forecast from 7 percent to 12 percent, based on expectations of higher VIP growth, revised upward from 2 percent to 8 percent, and steady growth in the mass market, up by 22 percent versus the previous estimate of 18 percent.

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q1

Q2

Q2

Q2

Q2

Q2

Q2

Q2

Q2

Q3

Q3

Q3

Q3

Q3

Q3

Q3

Q3

Q4

Q4

Q4

Q4

Q4

Q4

Q4

Q4

2009

2009

2010

2010

2011

2011

2012

2012

120

90

60

30

0

-30

60,000

50,000

40,000

30,000

20,000

10,000

0

GROSS GAMING REVENUE EVOLUTION

GROSS GAMING REVENUE

Year

-on-

year

gro

wth

rate

(%)

MOP

milli

on

SOUR

CE: G

AMIN

G IN

SPEC

TION

AND

COO

RDIN

ATIO

N BU

REAU

Overall market

VIP revenue growthMass market revenue growth

VIP revenue Mass-market revenue

75

FEBRUARY 2013

The restrictions on smoking in ca-sinos, which came into force only last month, have already come in

for some harsh criticism. Trade unions say the rules on smoking fail to protect the health of casino staff and that the quality of the air in casinos has declined. They want the rules to change.

Early feedback about the smoking restrictions suggests gross gaming rev-enue has not been affected. “Checks re-port very little business interruption since the January 1 partial smoking ban imple-mentation,” Sterne Agee says in a note to clients issued last month. The note, writ-ten by analyst David Bain, says enforce-ment has not caused too much disruption.

But casino employees are less pleased. The Macau Gaming Enterpris-es Staff Association, which has about 500 members, says the restrictions fail

Smoking blowbackTrade unions are already calling for changes to the restrictions on smoking in casinos

to protect the health of casino workers. The group says casino operators have concentrated as many gaming tables as they can in smoking areas. The worse cases are in VIP rooms, it argues.

“The smoking and non-smoking ar-eas should be divided according to the number of gaming tables in operation and not the total area. For example, if a casino has 30 gaming tables, not all 30 tables are operating 24 hours,” the head of the association, Howard Chan Siu Meng, told reporters last month.

“Sometimes when there is more business, 20 of the gaming tables might be operating. Then 10 of the tables should be in the non-smoking area or it would be unfair to other workers.”

The rules on smoking in casinos al-low smoking areas to take up 50 percent of gaming fl oors. Casinos must separate

smoking and non-smoking areas either with 4-metre-wide buffer zones, air cur-tains or 2-metre high walls, or by using special ventilation systems to achieve the same effect.

The rules do not do say what pro-portion of a casino’s gaming tables or slot machines must be in non-smoking areas. Nor do they make any distinction between the main casino fl oors and VIP rooms.

Patience, pleaseThe Macau Gaming Industry Workers Association is also dissatisfi ed. It says staff working in smoking areas face grave threats to their health. The union suggests that casino operators offer an extra day off or additional cash, and re-duce working hours to make up for their inhalation of second-hand smoke.

Illu

stra

tio

ns:

Lu

ís A

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76

in the portfolio of Secretary for Social Affairs and Culture Cheong U.

He says it is too soon to consider changes to the restrictions. The govern-ment needs time to assess the effect of the restrictions and see if they need to be changed. A review is planned in 2015.

The Health Bureau says casinos are obliged to ensure that the quality of the air in smoking areas meets a minimum standard. Casinos must send the govern-ment reports on air quality in smoking areas every month.

Grey areasTo protect their health, employees must be rotated between smoking and non-smoking areas. Employees that are preg-nant or that have recently given birth, and employees with cardiac or respira-tory ailments are not allowed to work in smoking areas. The government can punish casinos that break the rules by reducing the size of their smoking areas or by banning smoking on their premis-es altogether.

Smoking is not permitted in res-taurants and cafes. Casinos are allowed smoking areas because the government was persuaded that a complete ban on smoking would be bad for the gaming business in particular and the economy in general.

The trade unions have an unlikely ally: directly elected member of the Legislative Assembly Angela Leong On Kei. Ms Leong, who is also an executive director of gaming company SJM Hold-ings Ltd, has on several occasions urged the government to ban smoking in casi-nos altogether.

“Several casinos have transferred the most popular table games to the smoking areas. Therefore, the majority of staff and gamblers still continue to be subject to second-hand smoke. Owing to this high concentration of smokers, air quality has worsened,” she said last month.

Another directly elected member of the assembly, Kwan Tsui Hang, is also unhappy with the restrictions. Ms Kwan, a member of the Federation of Trade Unions, says casinos are taking advan-tage of grey areas in the law.

“Some casinos put less labour-inten-sive table games or slot machines, which don’t need staff to handle them, in the non-smoking areas,” Ms Kwan says.

“This is against the purpose of the ban. The ban aims to protect the rights of casino workers and tackle second-hand smoke.”

The gaming industry employed al-most 53,000 people at the end of June last year. More than 23,000 people were croupiers, and many of the rest had other jobs on casino fl oors, such as cage cash-iers, pit bosses or attendants.

Chief Executive Fernando Chui Sai On has said enforcement of the re-strictions is being fi ne-tuned in light of

complaints by the trade unions. Mr Chui called for patience.

“We hope that the public can give us and the industry more time to work through the smoking ban, so that we can better protect the health of residents and tourists,” he said.

The Health Bureau is in charge of enforcing the restrictions. The bureau is

A HABIT WORTH GIVING UPResearch in Macau has conclud-

ed that the potential benefi ts of making casinos smoke-free are twofold: to free workers from the threat posed by second-hand smoke, and help workers that smoke to stop or reduce their habit.

The results of the study were published last year by Joanne Chan Sow Hup and Penny Wan Yim King, from the University of Macau, and Paul Pilkington from the University of the West of England.

Their study in the International Journal of Hospitality Management concluded that most casino work-ers that smoke believe exposure to second-hand smoke at work makes it harder to stop smoking. About one-quarter say this belief is the reason for them minding other peo-ple smoking near them at work.

The study was based on a survey of 315 casino workers, one-quarter of whom smoked, conduct-ed in 2008. More than 40 percent of the workers surveyed thought they would try to stop smoking if smoking was not allowed in their workplaces. More than 19 percent thought they would smoke less.

“The fi ndings demonstrate how smoke-free casinos could lead to a healthier workforce, not just due to reduced exposure to danger-

ous chemicals in second-hand smoke but also from the potential reduction in smoking among workers,” the research says.

Some of the data collected in the survey had already been used for a paper by Ms Wan and Mr Pilkington published in 2009.

That research concluded that most casino workers did not enjoy being exposed to second-hand smoke at work, saying it was a danger to their health. The workers surveyed said they supported the establishment of non-smoking areas on gaming fl oors.

Gaming

77

FEBRUARY 2013

SJM ANNOUNCESSALARY HIKE

SJM Holdings Ltd announced last month a salary increase of fi ve to six percent for all its employees, effective from January. The gaming

operator said in a statement that it would also offer a bonus payout for the year of 2012. Employees with a monthly salary of MOP11,000 (US$1,375) or below will receive 175 percent of a month’s salary. Other employees will receive a bonus of 125 percent of a month’s salary, which will not be less than MOP19,250, the gaming operator said.

GOVT MAKES COTAI LAND GRANTThe contract was fi nally published in the offi cial gazette

The government has fi nally made the Cotai land grant to MGM China Holdings Ltd offi cial. The contract was published last month in the offi cial gazette.The gaming operator had already announced in October last year that it had accepted the government’s terms for the land grant. The plot covers an area of 71,833 square metres.

MGM China fi rst fi led its request in 2007. The gaming operator, currently with only one casino in Macau, will develop a HK$20-billion (US$2.5 billion) casino resort in Cotai.The property is expected to open in 2016. But to break ground, MGM China still needs to get the construction approvals from the government.

PYE RAISES HK$3.2 BILLION FOR BOUTIQUE CASINOHong Kong-listed Paul Y Engineering Group Ltd announced last month it has raised HK$3.2 billion (US$413 million) for its boutique casino hotel project in Cotai. The fi rm raised the money from the sale of new shares and convertible bonds. Paul Y Engineering Group is teaming up with former investment banker Stephen Hung and his son Sean Hung for the project. The US$800-million casino hotel is planned to be located next door to the residential complex One Oasis. It has yet to obtain approval from the Macau government.

GAMING-RELATED PROBES UPThe number of gaming-related criminal cases handled by the Judiciary Police reached 2,070 in 2012, up by 2.1 percent year-on-year. There was an increase in the number of gaming-related cases of false imprisonment, up to 23 in 2012 from 20 the previous year. The number of cases of loan-sharking dropped from 175 in 2011 to 150 in 2012. Last year, the Judiciary Police probed 16 cases related to criminal syndicates, up by 9 in comparison to 2011. The majority were linked to gaming, the Judiciary Police said in a press release.

TO MGM CHINA OFFICIAL

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78

FEBRUARY 2013

BY GILES HEWITT*

Gambling apartheidAsian casinos are thriving, but locals are not welcome

The casino industry is booming across Asia, offering anyone looking for high-stakes action a

wide choice of venues, from high-tech South Korea to the Himalayan nation of Nepal and communist Vietnam.

Anyone, that is, except South Kore-ans, Nepalese or Vietnamese.

For conservative Asian countries, the fi nancial pros and social cons of ca-sino gambling pose something of a di-lemma – one that several have chosen to resolve by adopting a foreigner-only

access policy. The upsides are obvious in a region where rapid development has nurtured a taste and capacity for high-end leisure activities.

Casinos provide a consistent source of hard currency revenue, fuel tourism – especially from sought-after high rollers from mainland China – and boost the local economy. But the social impact of gambling is equally well documented, in terms of addiction and broken families, as well as criminal activities like loan-sharking.

So a number of Asian countries have tried to have their cake and eat it, by building glitzy casinos but barring – or strictly limiting – entry to their own citizens. That is not the case for Macau, where locals are allowed to gamble with no restrictions.

Kim Jin-Gon, director of tourism in South Korea’s Culture Ministry, cites a widely-held belief that Koreans are par-ticularly susceptible to gambling addic-tion.

“Our feeling is that Korea does not

Gaming

79

FEBRUARY 2013

have a mature culture that could enjoy gambling simply as a leisure activity,” Mr Kim says. “We block Koreans from casinos because the fallout would be too big.”

Remote exceptionSouth Korea’s ban is not total. Of the country’s 17 licensed casinos, one – Kangwon Land Resort – is open to lo-cals. Its remote location in a mountain-ous area, several hundred kilometres and a three-hour express bus ride from Seoul, was supposed to deter salary-men from nightly excursions during the working week.

But special “bullet taxis” offer a high-speed, white-knuckle service that promises to get punters there in half the time, and attendance and revenue fi gures seem to support the theories about Kore-ans’ proclivity for gambling.

Kangwon Land pulls in an average 10,000 visitors a day – around fi ve times the actual seating capacity – and boast-ed revenue of nearly 1.2 trillion won (MOP8.6 billion) in 2011, more than all the 16 foreigner-only casinos combined. This despite rules that restrict any in-dividual from gambling more than 15 days a month – ID cards must be shown – and impose a maximum house wager of 300,000 won (MOP2,160).

The overcrowding led to calls for other casinos to be opened to Koreans but the government has resisted, insist-ing that Kangwon Land was a one-off project with the sole aim of revitalis-ing an economically depressed area. Mr Kim warns that other casinos, especially in major cities, would be swamped if ac-cess was extended to all.

“If we let Koreans in, there would be no room left for foreigners, which would defy the whole purpose of the ca-sinos in the fi rst place,” he says.

Nepal and Vietnam operate 100 percent foreigner-only casino policies, although in the case of Nepal it is a regu-lation often observed in the breach.

Vietnam’s fi rst casino opened in 1992 and there are now seven, with two more in the pipeline. According to the fi nance ministry, casinos generated around 1.5 trillion dong (MOP580 mil-lion) in tax revenues in 2012.

For Vietnamese nationals, all gam-bling apart from a state-run lottery is banned, although illegal betting – on everything from cock-fi ghting to Eng-lish Premier League football matches – is widespread.

For conservative Asian countries, the fi nancial pros and social cons of casino gambling pose something of a dilemma

FITCH BETS ON GAMING IN JAPANFitch Ratings said last month that it

continues to believe that gaming liberalisation in Japan remains a good likelihood within the next several years.

The recent emergency stimulus measures approved by the Japanese government do not include specifi c reference to the legalisation of casino resorts, but there is mention of promot-ing tourism, encouraging investment and creating employment opportunities, said Fitch.

According to the ratings agency, casino legalisation in Japan could result in increased competitive risk to estab-lished markets in the region, like Macau.

The current ruling Liberal Demo-cratic Party supported the legalisation of casino resorts when it was previously in power. LDP’s coalition partner, New Komeito Party, also appears to be in support of casinos, the rating agency said.

CAESARS JOINS KOREAN CASINO PROJECTLas Vegas-based Caesars Entertain-

ment Corp has joined Hong Kong-listed Lippo Ltd in a casino project in South Korea.

According to a Lippo statement to the Hong Kong Stock Exchange, the two companies agreed last month to the terms under which they will seek permission from the South Korean government to develop a casino resort in Incheon, a city near the country’s capital of Seoul.

Caesars will own 40 percent of the venture, Lippo will own 20 percent, and another partner will hold the remaining 40 percent, but no more details were given.

MACAU RESIDENTS SEEK CASINO BANA total of 30 Macau gamblers applied

for a voluntary ban from casinos in November and December.

Of those, 27 gamblers directly presented the request, while relatives submitted the applications for the remaining three cases, Portuguese-language newspaper Jornal Tribuna de Macau reported.

New rules for entering casinos came into effect in November last year and include a provision that allows people to request a voluntary casino entry ban. They also state that only people above 21 years of age are allowed to enter or work in casinos premises.

Resorts World Sentosa

80

FEBRUARY 2013

While Vietnamese gamblers have no access to a place like Kangwon Land, they can simply cross into Cambodia, where huge casinos have been built near the border that cater almost exclusively to Vietnamese tourists. Cambodians, needless to say, are not legally allowed to gamble in their own casinos, though presumably they would be welcomed at those in Vietnam.

An “anxious” compromisePerhaps aware of the contradictions thrown up by foreigner-only policies, Singapore has opted for a compromise of open casino access but with special restrictions for the island state’s citi-zens and long-term residents. A Sg$100 (MOP645) entry fee aimed to fi lter out low-income gamblers, while any Sin-gaporean who had fi led for bankruptcy or received long-term fi nancial state aid was automatically barred.

After a 2011 offi cial survey showed an increasing proportion of low-income gamblers playing with large sums, the ban was expanded in June last year to include the unemployed and those on short-term welfare. Casinos that fail to comply face a maximum fi ne that used to be capped at Sg$1.0 million but can now reach as high as 10 percent of an-nual gross gaming revenue.

Despite these measures, Prime Min-ister Lee Hsien Loong admitted during a visit to Australia in October that his gov-ernment was still “watching anxiously” to determine the impact of the casino experiment – Singapore’s fi rst casino opened its doors in February 2010.

“From a social point of view, we would like to say that it has been all right, but it is too early to say,” Mr Lee said.

Commercially, Singapore’s two ca-sino resorts have been an undeniable success, with a combined gaming rev-enue of around MOP40 billion in 2011.

That level of return has fuelled de-bate in countries like Japan about lift-ing its ban on casinos, which forces Japanese gamblers to travel to South Korea, Macau and Singapore to play the gaming tables.

Taiwanese, meanwhile, may soon have a domestic option after the people of outlying Matsu island voted in July last year to open Taiwan’s fi rst legal casino. The casino would be open to everyone except, perhaps inevitably, the Matsu islanders themselves.

* AFP NEWS AGENCY

Seven Luck Casino - Seoul

Resorts World Sentosa

Marina Bay Sands

Gaming

81

FEBRUARY 2013

NEVADA REGULATOR VISITS MACAUThe three members of the Nevada Gaming Control Board visited Macau last month. The trip included a meeting with the Gaming Inspection and Coordination Bureau. The visit was both “an effort to re-establish the relationship” with the Macau regulator and a ‘fact-fi nding’ mission, the Las Vegas Review-Journal reported. The body has meanwhile invited the head of the Gaming Inspection and Coordination Bureau, Manuel Joaquim das Neves, to visit the United States, our sister publication Business Daily reported.

JAPANESE SLAYS RED DRAGONPokerStars Macau held last month its 17th instalment of the Macau Poker Cup. The poker series took place from January 11 to January 20. It attracted a total of 1,700 players and awarded HK$10.1 million (US$1.3 million) in prize money, the organisers said. Japan’s Yoshitaka Okawa won the Red Dragon main event after beating a 532-player fi eld. He took home HK$1.1 million.

NEW SUPPLIERS ASSOCIATION LAUNCHEDThe Macau Gaming Equipment Manufacturers Association was offi cially launched last month. It aims to further develop the local manufacturing of casino equipment and to promote the sector via annual exhibitions and training of Macau talent. Jay Chun, chairman of Paradise Entertainment Ltd, the parent company of local casino equipment maker LT Game Ltd, is the chairman of the new body.

The government had already accepted ‘in principle’ the introduction of a casino in the Studio City project after a request fi led in 2006 by one of the original developers. The information was made public last month, in a written reply by the Gaming Inspection and Coordination Bureau director, Manuel Joaquim das Neves, to an enquiry from Legislative Assembly member Ho Ion Sang.Mr Neves said the government “granted

GOVT AGREED TO STUDIO CITYCASINO BACK IN 2006Agreement ‘in principle’ was given several years ago, according to the gaming regulator head

an authorisation in principle” to the introduction of gaming facilities in the Cotai project after the 2006 request. The gaming regulator head stated that the initial approval was given considering that Studio City “was a development based on non-gaming activities”, namely movie industry-related facilities, “which matched the government strategy to develop other sectors”.Mr Neves added that after Melco Crown Entertainment Ltd took over

the project in 2011, the company reiterated the intention to include a casino in the project.“The government kept its previous position”, Mr Neves said in the reply. He noted that the revised Studio City project, approved last year, still includes movie industry-related facilities.But the fi nal approval of a casino at Studio City is yet to be issued, Mr Neves said.

82

FEBRUARY 2013

Gaming

Sheldon Adelson’s US$743 million (MOP5.9 billion) gamble on what was a hulking and rusty Bethle-

hem steel mill has paid off handsomely. Las Vegas Sands Corp’s Pennsylvania casino, in the United States, is now top of the state’s table games market and a close second in overall revenue.

Still, the company – the parent of Macau-based gaming operator Sands China Ltd – is looking to sell the prop-erty, which opened in May 2009.

Sands Bethlehem has blown away rivals in Pennsylvania’s two larg-est cities, generating double the table game revenue of either Philadelphia’s SugarHouse or the Rivers Casino in Pittsburgh, according to numbers re-ported by the Pennsylvania Gaming Control Board.

Leader to beThe Sands Bethlehem is beating big-city rivals in Pennsylvania. But Sheldon Adelson wants to sell itBY SCOTT VAN VOORHIS*

The success of Mr Adelson’s casino, built in a cavernous old steel plant, has turned conventional logic on its head, with Philadelphia always seen as the in-evitable home of Pennsylvania’s fl agship casino. That is a distinction Las Vegas Sands is close to grabbing, just a few million off the number one spot in the state, now held by Parx, a racino (a com-bined race track and casino) in Philadel-phia’s suburbs.

The only cloud on the horizon is state regulators’ plans to license a sec-ond Philadelphia casino, with Mr Adel-son’s rival Steve Wynn leading the list of potential competitors.

“It is just a brilliant location and, of course, everything Mr Adelson touches turns to gold,” William Thompson, a professor and gaming industry expert

at the University of Las Vegas-Nevada, says of Sands Bethlehem’s success.

Despite the strong results of its Bethlehem casino, Las Vegas Sands is looking at a possible sale.

“If we get our price, we think it may not fi t in the long run for our company,” the president and chief operating offi cer of Las Vegas Sands, Michael Leven, said last month.

“It’s a smaller product. We’ll prob-ably look to sell it. However, somebody’s got to pay the price. We’re just as happy to keep it.”

Bussing puntersAlthough Philadelphia is far larger than the sleepy old steel town of Beth-lehem, Mr Adelson picked the loca-tion of his Pennsylvania casino with a

83

FEBRUARY 2013

shrewd eye. The casino is located near a four-lane highway that cuts across densely populated New Jersey through to New York City.

Regular buses leave New York’s Port Authority bus terminal daily carry-ing gamblers to the Sands casino, giv-ing Mr Adelson the ability to siphon off punters who had been making the longer trip from the Big Apple, which has slots but no table games, to Atlantic City, which has both.

“Bethlehem is drawing a lot of folks who would otherwise have gone to At-lantic City,” says Linda Shorey, a partner in K&L Gates law fi rm and a member of the fi rm’s betting and gaming practice group.

Sands Bethlehem in 2011 further boosted its attractiveness to high roll-ers from New York by opening a US$50 million hotel, an amenity crucial for leveraging its complement of table games, while the casino has added an array of hip restaurants and other at-tractions as well.

The architecture of Sands Beth-lehem also stands in stark contrast to SugarHouse, the downtown Philadel-phia casino, which has been derided for its boxlike design, says J. Scott Kramer, a Philadelphia attorney who is the co-chair of global law fi rm Duane Morris LLP’s gaming practice.

“It is just a tremendous location and [Las Vegas Sands] has done a beautiful job,” Mr Kramer says. “It was a decaying steel factory, it was just a rusted building and now it is a beautiful place to go.”

Hard evidence that Mr Adelson’s bet on the Pennsylvania market has paid

* GAMBLINGCOMPLIANCE

off can be found in the slot and table games numbers compiled by the state gaming board.

Sands is now number one in Penn-sylvania table game revenue. Its fl eet of 152 tables averaged between US$12.4 million and US$12.7 million over the second half of 2012 — double, triple and even quadruple the monthly take of some of its competitors.

Sands’ table revenue is a good notch above the US$7 million to US$8 mil-lion that Parx in suburban Philadelphia brings in, and with a larger number of tables, 163, to boot. Harrah’s Philadel-phia, also in the city’s suburbs, manages US$6 million to US$7 million a month off 121 tables.

Old rivalIn slot revenue, Sands is a highly competitive number two, averaging between US$22 million and US$24.6 million per month in gross terminal revenue. That puts it ahead of Har-rah’s Philadelphia, at US$20 million a month, but behind Parx, which has been bringing in roughly US$31 mil-lion a month.

Maybe the only immediate threat to Sands Bethlehem’s continued rise comes from Philadelphia.

SugarHouse has underperformed, with investors batting internally over whether to expand or stick with the cur-rent, more bare-bones formula. But that has left the door open to developers in-terested in building a second casino in Philadelphia, one that would provide the big-city glamour, appeal and amenities that SugarHouse lacks.

With the state gaming board seek-ing bids, Wynn Resorts Ltd, parent of Macau-based Wynn Macau Ltd, has emerged with a proposal for a 2,500-slot, 100-table game casino on a 240,000-square-metre site in Philadel-phia along the Delaware River.

Several other developers are also pushing high-end proposals, including a project from Penn National Gaming Inc and a French-themed, US$700 million proposal by local builder Bart Blatstein and Hard Rock International Inc.

Mr Wynn, Mr Adelson’s long-time rival, in particular would represent a threat to Sands Bethlehem, says Mr Thompson, the University of Las Vegas-Nevada professor.

“He would give him competition, just because he would do it big and do it the right way.”

THE SECOND LARGEST CASINO STATEPennsylvania became America’s

second-largest commercial gaming jurisdiction in 2012, reporting total casino revenues up more than 4 percent to almost US$3.2 billion (MOP25.6 billion).

The board reported that 2012 gross gaming revenue from slot ma-chines grew 2.7 percent to US$2.47 billion. Gross table games revenue increased 11 percent to US$687.4 million.

The fi gures meant the state last year brought in US$1.44 billion in gaming taxes, which are used mainly for local property tax relief. The num-bers also confi rmed that Pennsyl-vania surpassed New Jersey, where Atlantic City is, as the second largest commercial casino state in the United States, behind only Nevada.

Atlantic City’s casino market was worth US$5 billion in 2005 and US$5.2 billion a year later, but since then has slid into a precipitous de-cline. Last month, New Jersey’s Divi-sion of Gaming Enforcement said the state’s casino market fell to US$3.05 billion in 2012, down 8 percent from US$3.32 billion the previous year.

Nevada’s casino market is expected to have been worth in the region of US$10.5 billion to US$11 billion last year.

California’s Indian gaming market of almost 60 Native American casinos is worth just shy of US$7 billion per year. Oklahoma is also estimated to be a US$3 billion-plus tribal gambling market.

Pennsylvania fi rst authorised slot machine gambling at racetracks and a limited number of standalone casinos in 2004. Table games were legalised in early 2010 and launched later that year.

The state is currently home to 11 casinos and racinos, with three more in the works.

Sands Bethlehem has blown away rivals in Pennsylvania’s two largest cities, generating double the table game revenue of either Philadelphia’s SugarHouse or the Rivers Casino in Pittsburgh

84

FEBRUARY 2013

Gross gaming revenue (2012)

Gaming tables

Slot machines

Number of casinos

SJM Holdings Ltd

Galaxy Entertainment Group Ltd

Sands China Ltd

Wynn Macau Ltd

Melco Crown Entertainment Ltd

MGM China Holdings Ltd

Greyhound Racing

Horse Racing

Chinese Lottery

Instant Lottery

Sports Betting - Football

Sports Betting - Basketball

Roulette

Blackjack

VIP Baccarat

Baccarat

Fantan

Cussec

Paikao

Mahjong

Slot machines

3-Card Poker

Fish-Prawn-Crab

3-Card Baccarat Game

Craps

Texas Holdem Poker

Lucky Wheel

Live Multi Game

Stud Poker

Casino War

Fortune 3 Card Poker

13.5 10.714.3

1

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13.98.87.5

36.118.016.2

-23.7190.0

15.910.5

-56.923.5-9.34.30.0

187.812.5

8.846.1

-8.23.12.9

34.626.312.6

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12.5175.4

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1

Casino gaming

Market share per casino operator*

Gross revenue from other gaming activities

Gross revenue from casino games

2011

2011

2012

2012






Month-on-month change (%)



Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Jan 2013Dec 2012Dec 2012Dec 2012

Jan 2013Jan 2013Jan 2013Jan 2013Jan 2013Jan 2013

Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012

Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012Oct-Dec 2012

MOP 304.15,302

16,056 34

27%19%19%12%14%10%

MOP205MOP356

MOP6MOP0.0014

MOP418MOP111

MOP55MOP96

MOP1MOP0.0005

MOP99MOP36

MOP892MOP2,950

MOP210,850MOP66,251

MOP249MOP5,546

MOP87MOP203

MOP13,244MOP211

MOP22MOP347MOP137MOP289

MOP35MOP895

MOP1,472MOP246MOP206

MOP234MOP773

MOP54,831MOP18,763

MOP72MOP1,466

MOP19MOP43

MOP3,504MOP54

MOP6MOP84MOP33MOP77

MOP9MOP314MOP410

MOP64MOP70

26%19%21%11%14%

9%

MOP 26.95,485

16,58535

billion

casinos

millionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillion

millionmillionmillionmillionmillionmillion

millionmillionmillionmillionmillionmillion

millionmillionmillionmillionmillionmillionmillionmillionbillionmillionmillionmillionmillionmillionmillionmillionmillionmillionmillion

billion

casinoscasino casino

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: Gam

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* Figures are rounded to the nearest unit, therefore they may not add exactly to 100 percent

percentage pointspercentage points

percentage point

percentage points

percentage points

percentage point

percentage point

percentage point

Gaming

85

FEBRUARY 2013

OKADA ASKS COURT TO BLOCKWYNN MEETING TO REMOVE HIMJapanese businessman Kazuo Okada has asked a U.S. federal judge for an injunction to stop a special Wynn Resorts Ltd shareholders’ meeting, at which they will vote on his removal as a company director. The meeting is scheduled for February 22. The gaming operator claims that Mr Okada breached his duty as a corporate director, by knowingly breaking U.S. anti-corruption laws and putting his own interest in developing a casino resort in the Philippines above that of Wynn Resorts. Wynn Resorts has already forcibly redeemed Mr Okada’s 20 percent stake in the company.

Taiwanese prosecutors are probing a subsidiary of gaming operator Melco Crown Entertainment Ltd for allegedly carrying out huge illegal money transfers for use in Macau casinos, circumventing strict forex rules.

TAIWAN PROBES MELCO CROWN UNITTaiwanese prosecutors are investigating the fi rm for allegedly carrying out huge illegal money transfers

The company allegedly accepted deposits by Taiwanese gamblers allowing them to withdraw the money once they were in Macau.Prosecutors, who declined to identify the fi rm, said they suspected it was behind

NON-RACING SPORTSBETTING REVENUE UPNon-racing sports betting revenue in Macau increased by double digits last year, offi cial data shows. Gross revenue from football betting went up 15.5 percent year-on-year, to hit MOP418 million (US$52.3 million). As for basketball betting, gross revenue reached MOP111 million in 2012, soaring by 29.1 percent. As for horse and greyhound racing, gross revenue dropped last year, to MOP356 million (-19.1 percent) and MOP205 million (-31 percent), respectively.

PAWNSHOPS GAINIMPORTANCE IN GAMINGThe role of pawnshops as informal channels for mainland Chinese to bring funds to Macau is set to increase, as casinos are keen to attract more premium-mass gamblers, says Gabriel Chan, an analyst in Hong Kong for the Credit Suisse Group AG. Mainlanders often use their UnionPay or credit cards to bypass the limitations on the cash they are allowed to take out of the mainland. They use the cards to buy watches and jewellery at Macau’s pawnshops, immediately reselling them to get cash to fund their gaming activities here. Pawnshops usually charge 5 to 10 percent of the cash refund as commission.

a total of US$179 million (MOP1.4 billion) in illegal transactions.An investigation by consultancy GamblingCompliance.com revealed the fi rm was a Taiwan branch of Hong Kong-registered MCE International Ltd.

87

FEBRUARY 2013

BY ALEXANDRA LAGES

PHOTOS CARMO CORREIA

TOUGH IN HER FIRST IN-DEPTH INTERVIEW

SINCE TAKING CHARGE OF THE MACAU GOVERNMENT TOURIST OFFICE,

MARIA HELENA DE SENNA FERNANDES OFFERS HER VISION

FOR THE FUTURE OF TOURISM

The new director of the Macau Government Tourist Offi ce, Maria Helena de Senna Fernandes, knows what needs to be done. Mrs Senna Fernandes

acknowledges the city can no longer cope with high rates of growth in tourist arrivals, and that it is time to target more free-spending tourists.

“Our focus is really to attract tourists to stay longer, to stay in hotels and spend more money in Macau,” she told Macau Business in an exclusive interview.

Mrs Senna Fernandes took over in December, at a diffi cult time for the tourism industry. Since May the number of visitors each month has been, without exception, lower than a year before.

“For 2013, we hope at least the fi gure does not continue dropping. We

will try to stabilise before we look at further growth,” Mrs Senna Fernandes says. Her bureau sees the baseline for tourists at 28 million arrivals a year. But stagnation of the global economy has curbed tourism worldwide.

Macau had 28.1 million visitors last year, more than ever before, but the number was just 0.3 percent higher than in 2011 – the smallest rate of growth since 1999.

The tourist bureau is now concentrating on enticing visitors to keep coming back and persuading them to stay longer. More than 13.5 million tourists, 48 percent of the total, stayed overnight last year, 5 percent more than in 2011. But the average length of stay was under two days, less than in 2011.

Mrs Senna Fernandes says tourism is hampered by Macau no longer being a novelty in this part of the world. That no new casino resorts are due to open until 2015 exacerbates the feeling among tourists considering coming back that they have done everything

there is do here and seen everything there is to see.

“During a certain period of time, Macau enjoyed a lot of new things coming in. Probably we need to continue with that,” she says.

FINDING MACAUNew attractions are being planned and the bureau wants to better promote less-visited parts of the city.

“The tourist offi ce will continue to work with the Cultural Affairs Bureau, the Civic and Municipal Affairs Bureau and the neighbourhood associations to promote other cultural elements and areas beyond the historic centre,” Mrs Senna Fernandes says.

She says she is considering better promotion of places near the Ruins of St Paul’s, in the north of the peninsula and even on Coloane. The tactic is to promote aspects of those places that are special to each, such as the food, the temples or the churches, and to hold more events in each of them.

DECISIONS

EXCLUSIVE INTERVIEW

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EXCLUSIVE INTERVIEW

“There are tourists that want to explore more in Macau. We want to give them more things to do,” Mrs Senna Fernandes says. “In the long run, this can make them stay longer, as they can go to different areas to spend money and understand the culture.”

Competition for visitors is also becoming more intense.

The tourism authorities here must keep working with their counterparts in the Pearl River Delta to attract more foreign tourists and to promote tours that take in Macau, Hong Kong and Guangdong all in one go, she says.

But Macau must also consolidate its status as a tourist destination in its own right, Mrs Senna Fernandes stresses, so it can keep attracting visitors from places near at hand, such as the mainland, the city’s main tourist market.

The December opening of the Gongbei Station, the last stop on the Guangzhou-Zhuhai high-speed railway, will mean more visits by mainlanders. But it will take a while for the increase and infl uence of tourists to become clear, she notes.

SAY ‘YES’In replacing her predecessor, João Manuel Costa Antunes, Mrs Senna Fernandes has big shoes to fi ll. Mr Costa Antunes headed the Macau Government Tourist Offi ce from 1988 until last year. He has played a pivotal role in the development of tourism here for two decades.

Mrs Senna Fernandes says she will continue the work done by Mr Costa Antunes. She was his deputy director for almost 15 years.

On several occasions Mr Costa Antunes ruled out restrictions on the number of visitors allowed in, saying the city could cope with more than 28 million tourists per year. Mrs Senna Fernandes also rejects the idea of a cap.

“As a tourism destination, we are not going to say no to visitors coming in. Obviously we want tourists coming to Macau and there is no denying that tourism is a very, very important industry for Macau,” she says.

“We don’t want to shrink. We need to fi nd ways to better receive visitors and let residents feel they are not being prejudiced because of so many visitors.”

The Hong Kong government has said it will keep an eye on Hong Kong’s ability to absorb more visitors. Here, a

recent study by the Institute for Tourism Studies concluded that Macau could sustain a maximum of 29 million visitors a year.

“You can’t just put that in a simple number,” Mrs Senna Fernandes says.

The city’s ability to cope with larger numbers of tourists is ever-changing, depending on new developments, such as hotels and infrastructure, and the hours the border crossings are open, she argues.

MANAGEMENT DRIVEMrs Senna Fernandes says some attractions are swamped by tourists, causing “negative feelings” among residents. But rather than capping the number of visitors, the city should manage its tourists better.

The key is to “more effectively space out people” by directing tourists to less–visited parts of the city, she says. The need to prevent overcrowding is another reason for her intention to develop new tourist spots.

This month, to relieve the pressure on the crowded Senado Square, the tourist offi ce will for the fi rst time put on two Lunar New Year parades. One will be in the city centre, as usual, and the other in the northern part of town.

She is hopeful that the development of Hengqin Island will help Macau better manage the infl ow of tourists from the mainland. It may mean more mainland visitors entering Macau through Cotai instead of the Border Gate, she says.

Further development of Cotai and the reclamation of 3.5 square km of land from the sea will increase the city’s capacity for tourists, Mrs Senna Fernandes adds.

NAMASTE, SPENDERSReducing the city’s dependence on tourists from Greater China, who make up almost 90 percent of the

“Our focus is really to attract tourists to stay longer, to stay in hotels and spend more money in Macau,” says Maria Helena de Senna Fernandes

total, is a major priority. In particular, mainlanders make up 60 percent of all arrivals.

“We defi nitely need to look at other markets that will not become big in size, but that over time will be important,” she says.

The tourist offi ce is eyeing India and Russia in particular. Neither country was severely hobbled by the global fi nancial crisis. The numbers of Russians and Indians holidaying abroad are rising fast. The tourist offi ce likes the idea of more Russian and Indian visitors because they stay longer, owing to the distance they have to travel, and so spend more.

The number of visitors from India dropped by 11.1 percent last year to fewer than 151,000 people, offi cial data shows. Mrs Senna Fernandes is unfazed. Russia and India still have much potential as sources of tourists, particularly holidaymakers that may be tempted by tours that take in Macau, Hong Kong and Guangdong in one trip, she says.

Direct fl ights between India and Macau would help. Although low-cost carrier SpiceJet Ltd, which has one-third of the Indian market, has shown interest in fl ying to Macau, there is no clarity on when that fi rst fl ight might be.

Even so, Mrs Senna Fernandes says the tourism industry has other ways to tap the Indian market. “If we don’t have a direct link, we can start working with other places nearby. Hong Kong is a very good place to work with. Through Air Asia’s connections, we are also getting a lot of Indian visitors.”

The number of visitors from Russia has been rising fast in the past three years. Almost 27,000 visited last year, 62.6 percent more than in 2011. The tourist offi ce is close to completing a study of the Russian market. It expects to appoint a representative there soon.

Some analysts say Air Macau’s monopoly of routes originating in Macau is hindering the development of tourism here. They say the airline has no inclination to fl y medium-haul or long-haul routes, and is content with fl ying mostly to the mainland.

Mrs Senna Fernandes plays down the issue of whether or not the monopoly is a hindrance. “We cannot say whether a monopoly or an open market would lead to a certain result. It’s not such a simple equation.”

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Maria Helena de Senna Fernandes, the new head of the Macau Government Tourist Offi ce

is easygoing, talkative and jolly. She says she is no workaholic. Instead, she likes to enjoy the good things in life.

“I like to eat, that’s a very important hobby for me, to go out with friends and have a casual gathering,” says the soft-spoken Macanese, punctuating the list with laughter.

Mrs Senna Fernandes has a bachelor’s degree in business administration from the University of Macau. She has been a civil servant since 1988, holding down the position as deputy director of the tourist offi ce from 1998 until December, when she became its director.

Mrs Senna Fernandes is married but has no children. “I don’t have time for kids,” she says.

She herself is the offspring of one of the most notable Macanese families. The Macanese are Macau’s distinctive Eurasian minority, with a unique culture.

“Being Macanese, I defi nitely want to be able to keep the Macanese culture in tourism. It’s not just about promoting Chinese elements but it’s also about keeping the Portuguese and Macanese elements in Macau, because this is what makes Macau different from all the rest,” she says.

“This is a responsibility for me as a Macanese.”Mrs Senna Fernandes is a cousin of Miguel

de Senna Fernandes, who heads the Macanese Association. Mr Senna Fernandes has played an important role in keeping alive the Macanese creole, called Patuá, through theatre.

Mrs Senna Fernandes says she feels no pressure to make her own contribution to the effort. “Luckily, I have a very prominent cousin. He shoulders that responsibility,” she says.

Mrs Senna Fernandes is fl uent in Cantonese, Mandarin, Portuguese and English. She likes classical music and pop, and has played the piano.

She is an avid snowboarder. Every winter, she takes a break to hit the slopes.

“You feel very free and easy on the mountains and the slopes,” she says.

EXCLUSIVE INTERVIEW

SENSE OF BALANCE

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he pace of growth of Macau’s high-end hotels, restaurants and bars has easily outstripped the pace of improvement in their quality of service. The

new director of the Macau Government Tourist Offi ce, Maria Helena de Senna Fernandes, says there is much work ahead to improve.

The tourist offi ce is setting up a training and quality management department to do some of the work. Its purpose is to increase the skills of the workforce in the tourism industry, skills being crucial to the success of a tourist destination.

“We are looking at continuing or even adding more training opportuni-ties, together with the different local businesses involved in tourism, not only travel agencies and hotels, but also the retail sector, and food and beverage,” Mrs Senna Fernandes says.

She aims to involve everybody in Macau in this effort. The tourist offi ce has just revived its drive to inculcate in residents courtesy towards visitors. The offi ce estimates that one-fi fth of residents will take part in activities as-sociated with the drive.

The tourist offi ce will also continue its campaign against illegal inns. Last year the authorities closed down 116 premises suspected of being used as

BEYOND THE BETTER SERVICE FROM WORKERS IN THE HOSPITALITY INDUSTRY IS HIGH ON SENNA FERNANDES’ WISH-LIST

Mrs Senna Fernandes intends to review several laws affecting the tourism industry

unlicensed lodgings. The tourist offi ce and its counterparts in Macau’s main sources of visitors are collaborating in efforts to warn tourists against staying in illegal inns. The offi ce has also recruited 40 new inspectors of tourist accommo-dation. It now has about 370 staff.

LEGAL BACKINGSimultaneously, Mrs Senna Fernandes says she will push for more cheap but legal lodgings here. Her offi ce will make it simpler for operators of such accom-modation to get licences, she says.

The tourist offi ce is supporting a website set up in November by the Hoteliers and Innkeepers Association. The website lists cheap lodgings in the city and allows visitors to book rooms in some of them online.

Low-cost accommodation includes two-star hotels and guesthouses. The city has 13 two-star hotels and 33 guesthouses. Together they have nearly 1,500 rooms. In contrast, roughly two-thirds of the city’s 28,000 rooms are in fi ve-star hotels.

Mrs Senna Fernandes intends to review several laws affecting the tour-ism industry.

She says a bill on the regulation of travel agencies should be ready for submission to the Legislative Assembly this year.

Changing the rules for bars, restau-rants and hotels will take more time. The tourist offi ce published a draft set of rules for public consultation in 2011. Mrs Senna Fernandes says it is still considering the opinions collected from the industry. The draft set of rules would ban people under 16 years of age from bars, prohibit bars in residential buildings and oblige all establishments to keep complaint books.

COMFORT ZONE

BY ALEXANDRA LAGES

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Hospitality92

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BY LUCIANA LEITÃO

The number of tourists visiting Macau each month has been dropping for eight consecutive

months, while the numbers visiting Hong Kong have been growing at rates of well over 10 percent. How is it possi-ble that the fortunes of these neighbours, which both get most of their visitors from the mainland, are so different?

One city is only a short boat trip from the other but they are worlds apart

Worlds apartMacau’s tourism sector struggles to grow but Hong Kong’s is expanding rapidly. Why the difference?

as tourist destinations. Offi cial data shows that Macau had 28.1 million visi-tors last year, 0.3 percent more than in 2011. But since May, without exception, the numbers arriving each month have been lower than a year before.

In contrast, Hong Kong had over 48.6 million visitors last year, 16.0 percent more than in 2011. In December, Hong Kong had 15.1 percent more tourists than a year before, while Macau had 2.0 percent fewer.

Amy So Siu Ian, the programme coordinator for hospitality and gam-ing management at the University of Macau, says Macau needs new sources of tourists if it is to catch up with Hong Kong’s growth rates. Ms So says Macau must consider whether its infrastructure can cope with more tourists. The city already has bottlenecks, allowing it to handle only small increases in numbers of visitors, she notes.

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Hospitality

Ms So argues catching up with Hong Kong is not so important. “Satis-faction of tourists and residents should be the priority.” Overcrowding will dis-satisfy them, she says. “Macau still has big room for improvement.”

Ms So suggests more border cross-ings. Two are being planned: one on the peninsula and the other on Hengqin Is-land. She also suggests better manage-ment of tourist fl ows and more tourist attractions.

Usual suspectsHenry Lei Chun Kwok, an assistant professor of business economics at the University of Macau, says comparisons of the rates of growth of visitor numbers in Macau and Hong Kong are hard to in-terpret, because the two places are quite different. “While the main purpose of going to Hong Kong is for shopping and sightseeing, tourists are attracted by the casinos to come to Macau,” Mr Lei says.

He says the weak growth in visitor numbers here last year had a lot to do with what was happening in the main-land. The economic slowdown there and

global economic uncertainty deterred many mainlanders, especially gamblers, from visiting Macau, and nervousness due to the once-a-decade handover of political power in Beijing had a similar effect, he says.

Mr Lei says the mainland customs authorities also reduced visitor numbers by tightening control of informal cross-border trading. Informal traders buy goods here to sell in the mainland and vice-versa. Many cross the border sever-al times a day, and count as visitors each time they enter Macau.

The number of mainlanders that vis-ited Macau rose by 4.6 percent last year to 16.9 million. The number of main-landers that visited Hong Kong was 34.9 million, 24.2 percent more than in 2011.

The most disappointing of Macau’s main sources of tourists last year was Hong Kong. About 7.1 million Hong Kong people visited, about 500,000 few-er than in 2011.

Quality peopleWhat the visitor numbers obscure is that last year was a good year for casino

custom, according to Union Gaming Research. “The fl at headline visitation growth fi gure notably understates what we believe was a double-digit increase in foot traffi c across most casino fl oors,” Union Gaming Research said last month in a note written by analysts Grant Gov-ertsen and Felicity Chiang.

“While total visitation from the mainland was up 4.6 percent during 2012, the key segments of these visi-tors that contribute to casino foot traf-fi c, namely individual visa scheme visi-tors and package tours, saw visitation increase 8.2 percent and 21.2 percent, respectively,” the note said. Union Gam-ing Research estimates that the number of visitors from all sources, excluding transit passengers and informal traders, rose by over 4 percent last year.

Hong Kong has several advantages over Macau in attracting ever-greater numbers of tourists. Hong Kong is 37 times the size of Macau, has 12 times the number of people and has one of the world’s busiest airports.

Michael Hitchcock, the dean of the faculty of hospitality and tourism man-

FEB

FEB

MAR

MARAP

R

APR

MAY

MAYJUN

JUN

JUL

JUL

AUG

AUG

SEP

SEP

OCT

OCT

NOV

NOV

DEC

DEC

JAN

JAN

2010 2011

25

20

15

10

5

0

-5

-10

GROWTH IN TOURIST NUMBERS

Year

-on-

year

gro

wth

rate

(%)

SOURCES: STATISTICS AND CENSUS SERVICE, HONG KONG TOURISM BOARD

Macau Hong Kong

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is a tourism hub, with connections to places all over the world. “Hong Kong’s major drivers are business travel and big retail,” Mr McCartney says.

Macau needs a greater variety of tourist attractions besides gambling. It could do more to attract business travel-lers, he argues.

Mr McCartney suggests that better use could be made of Macau’s physi-cal heritage. He says a bit of liveliness should be injected into historical areas to attract more tourists. “Singapore has beautiful venues in heritage sites but in Macau we haven’t gotten there yet.”

Mr McCartney says better coordi-nation between the government and the private sector is required. A master plan and closer collaboration would make it easier to diversify the tourism market, he says.

First and foremost, the city needs to improve its marketing strategy, pro-moting itself better abroad, Mr McCa-rtney stresses. “In the end, it’s about the perception of a destination,” he says. “When we arrive at the ferry terminal, the fi rst impression is terrible.”

agement at the Macau University of Sci-ence and Technology, says Hong Kong has much more variety than Macau. Macau, in view of its size, is probably reaching the peak of its capacity for tourists, according to Mr Hitchcock.

He says Macau needs not just large quantities of tourists, but tourists of bet-ter quality. By tourists of better quality, he means tourists that stay for longer, among other things.

“We have a lot of day-trippers. That is okay, but the real economic benefi t comes from people who stay two or three days,” Mr Hitchcock says. He says tourists that stay longer are more likely to spend money on things other than gambling, thus benefi ting retailing and entertainment businesses.

Transport linksMr Hitchcock says that although the city would do better with improved in-frastructure, the present infrastructure is “not as bad as people think”. How-ever, he admits the airport could per-form better. “It is actually a very nice airport but it seems to me it’s working

under capacity,” he says.“Basically, any transport link will

help Macau,” Mr Hitchcock says. The Hong Kong- Zhuhai-Macau bridge, now under construction, is an example. “It will be a big boost for Macau in terms of tourism.”

Mr Hitchcock says Macau needs to get a better idea of who its visitors are and why they come. “We don’t really have a clear picture of who is a tourist in Macau and who is just crossing the border for all other kinds of reasons,” he says.

The common belief that Macau’s only attraction is the casinos may be wrong, Mr Hitchcock notes. Recent re-search found that shopping is a big at-traction, that the city’s heritage is a strong inducement to visit, and that en-tertainment is beginning to lure tourists. “Macau is diversifying in very interest-ing ways,” he says.

Glenn McCartney, an assistant pro-fessor of hospitality and gaming man-agement at the University of Macau, says growth in visitor numbers here is slower than in Hong Kong because Hong Kong

FEBFEB MARMAR APRAPR MAYMAY JUNJUN JULJUL AUGAUG SEPSEP OCTOCT NOVNOV DECDEC JANJAN

2010 2011

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

TOURIST ARRIVALS TO MACAU AND HONG KONG

Num

ber o

f visi

tors

SOURCES: STATISTICS AND CENSUS SERVICE, HONG KONG TOURISM BOARD

Macau Hong Kong

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Proving Macau is a city of more than just casinos, its unique Macanese gastronomy, coupled with sever-al high-end restaurants, is helping carve the city a

niche as a gourmet destination.Last month, Macau was named the home of Asia’s best

restaurant in the latest edition of the Miele Guide. Grand Lis-boa’s Robuchon au Dome, a three-Michelin star outlet, won the distinction.

A study released last year by Ruth Yeung Mo Wah from the Institute for Tourism Studies and Wallace Yee from the University of Macau found that 23 percent of tourists travel-ling here on their own accord were here to eat.

The chairman of the United Association of Food and Bev-erage Merchants of Macau, Chan Chak Mo, says the diversity in the city’s food scene is an advantage. Traditional Portuguese and Macanese delicacies, plus Chinese dishes and high-end

BY MANDY WONG

Tasteful tourismThis is a city increasingly regarded as a gourmet tourism destination, although held back by a lack of talent

Western restaurants, make the city appealing to tourists from a number of markets.

A case in point is Lord Stow’s Bakery, home to signature egg tarts, which began selling the delicacies two decades ago and now moves 10,000 of the treats a day, mostly to tourists.

Gastronomy tourism however lacks the right promotion, Mr Chan says. The Macau Government Tourist Offi ce and community-based associations should work together to put more information online about the food scene, he says.

Macau was named the home of Asia’s best restaurant in the latest edition of the Miele Guide – Robuchon au Dome

Hospitality

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FEBRUARY 2013

Businesses should also play a part, becoming more proac-tive, Mr Chan adds. They should renew menus regularly and develop websites.

Mr Chan is the managing director of restaurant operator Future Bright Holdings Ltd, a leading Macau-based food and beverage player. It has more than doubled its number of outlets in less than three years, to 37 as of June. It manages everything from Chinese and Portuguese restaurants, to food courts, and had a HK$308.6 million (US$40 million) turnover in the fi rst six months of last year.

Dirty jobsMr Chan admits the city’s foodie reputation is not all about glitz and glam. Small eateries are struggling, facing increasing overheads, including skyrocketing rent, and competition from international chains.

Several family-run businesses around Senado Square have either shut down or relocated. One of the casualties was the popu-lar 66-year-old Long Kei Chinese Restaurant, which closed down in 2011.

“The phenomenon of restaurants relocating can be posi-tive,” says Mr Chan. “If a restaurant is truly good, it can keep expanding its customer base, accumulating frequenters and enjoying good business, while probably boosting the commer-cial environment in its new area.”

There were 1,660 restaurants and similar establishments

operating here in 2011, up by almost 5 percent year-on-year, according to the latest available data. The sector generated revenue of MOP6.1 billion (US$762,500), a 10.7-percent in-crease on 2010.

About 23,000 people are employed in the restaurant in-dustry but a manpower shortage is making it diffi cult to attract new blood. Mr Chan says younger workers are looking for bet-ter salaries in other industries.

The average monthly wage for a restaurant employee was just MOP7,890 last September, according to offi cial data.

He says it is particularly hard to fi nd waiters, dishwashers and cleaners. Trained Chinese chefs are also in high demand.

To bridge gaps in supply, The Institute for Tourism Studies has offered a bachelor’s degree in culinary arts management since 2011.

The head of the United Association of Food and Beverage Merchants, Chan Chak Mo, says the diversity in the city’s food scene is an advantage

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Unhappily ever afterDo you remember Grumpy, one of the dwarfs in “Snow

White and the Seven Dwarfs”? Despite being arguably the most capable and competent of the group, he was

a negative fellow. He was stubborn and made a fuss about everything. He often questioned the capabilities of Doc, the team’s leader.

By the end of the fairy tale, Grumpy has changed. Despite his initial negative attitude towards Snow White, he takes the lead in chasing the Evil Queen after she poisons the princess.

Unfortunately, there are no happy endings for the hospitality industry in Macau. Managers are obliged to put up with grumpy staff and there is little hope of turning around their attitudes.

Diffi cult employees wi th a poor attitude are common here. They cost the industry. They tend to be less productive and less valuable to their organisations.

They are a drain on the resources of individual hotels, in terms of wasted time and greater ineffi ciency, and in extreme cases, they can lead to customer losses.

Negative feelings directed towards the company clash with organisational goals and harm the workplace environment.

Snide remarks that diffi cult staff may make about their superiors and the company can also have a negative impact on other workers. They can wreck morale, harm perceptions of job satisfaction and lead to greater levels of stress and frustration.

Policy perversionKnowing how to manage diffi cult employees is a crucial leadership skill. Its importance is highlighted when managers do not share the culture or language of their staff, as is often the case in Macau.

Macau’s peculiar labour market and manpower shortages make it harder to deal with diffi cult workers. With the city’s unemployment rate at an all-time low, diffi cult staff know that managers have few options but to put up with them. Managers even have to think twice before punishing staff, as that could lead them to quit.

Diffi cult staff know Macau’s lack of manpower also means they can quit at anytime and fi nd a new job. More likely than not, they will fi nd work at another hotel the very next day and – mother of all ironies – earn a higher salary.

The situation gives diffi cult employees the freedom to challenge their managers. For instance, they can refuse to perform tasks just to prove a point. But, most of the time, these workers simply stand idle at their workstations, playing with their smartphones, instead of serving guests.

The government has turned a blind eye.Offi cials have yet to acknowledge that the labour laws do

little to improve the quality of the workforce. Despite calls for more fl exibility in recruiting workers from outside Macau, the government has not proposed any signifi cant amendments to its policy.

For hotel managers, the only thing left to do is weigh up the costs of managing diffi cult employees. Finding the best way to

do so can, for example, save an organisation the expense of hiring new staff. According to some research, the average cost to replace a frontline employee, including lost productivity, can amount to 150 percent of their annual salary.

Collective bargainThe solution to managing diffi cult workers is to fi nd the source of their bad attitudes. Identify them, and managers will have an easier time of coaching staff and dealing with the poor behaviour without it escalating.

A long-term approach would be to promote collective action among the hospitality industry players. This is not going to be easy but the potential gains would be sizeable. For instance, the industry players could achieve a consensus with all hotels agreeing not to hire someone who has been fi red or who has quit a job in the previous six months.

However, competition for human resources and political considerations means it is unlikely to happen any time soon.

The hospitality industry is left hoping that the government will act.

As all responsible parents know, one of the worst things you can do is give a child everything they want. Making do with what you have is part of the development process and helps children develop into fully independent adults.

It is the same with staff. Give them everything at once – a high salary, guaranteed employment and status – and you harm their development. They no longer need to work hard and improve their skills to progress their careers.

If a government was to spoil its workers, it would prevent them from fully using their potential and creativity. It would be encouraging workers to stay within their comfort zones, to become sluggish and stagnant.

The result is the proliferation of diffi cult employees. When pushed by their managers to perform on par with international standards, they act as if persecuted. The city’s hospitality industry loses but, in the end, the biggest loser is Macau itself.

MACAU’S HOSPITALITY SERVICE STORY IS A TALE OF IRRITABLE STAFF, WIELDING INFLUENCE OVER FELLOW WORKERS, AND POOR GOVERNMENT POLICY

GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - [email protected]

Diffi cult employees wi th a poor attitude are common here

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FEBRUARY 2013

Tourism statistics

Total

- Same-day visitors

- Overnight visitors

Average length of stay

Hotel and guest-house rooms

Hotel guests

Hotel average occupancy rate

Average length of stay

Total spending (excluding gaming)

- Non-shopping spending

- Shopping spending

Per-capita spending

Asia

- Mainland

- Guangdong

- Fujian

- Zhejiang

- Hunan

- Beijing

- Shanghai

- Tianjin

- Chongqing

Individual visit scheme

- Hong Kong

- Taiwan

- Japan

- South Korea

- Others

America

Europe

Oceania

Others

28,082,292

14,504,994

13,577,298

1.0

26,055

8,642,379

82.8

1.40

MOP 13.3

MOP 6.9

MOP 6.3

MOP 1,822

27,356,924

16,902,499

7,929,668

811,288

620,196

587,904

326,469

505,280

127,635

194,420

7,131,904

7,081,153

1,072,052

395,989

444,773

1,460,458

306,521

262,692

129,165

26,990

12.2

15.6

8.4

--

11.3

11.0

4.3

-0.01

20

23

16

7

12.4

22.2

131.1

164.2

140.1

191.9

185.6

159.0

151.2

166.8

20.1

1.6

-6.0

-4.2

20.2

-0.6

4.5

3.0

0.3

8.8

0.3

-3.8

5.0

0.1

16.7

10.9

-0.8

-0.13

10

13

5

12

0.3

4.6

-3.3

-13.0

7.7

10.2

3.7

7.2

26.9

12.9

8.2

-6.6

-11.8

0.0

11.5

-4.6

-1.3

4.3

0.9

8.6

Visitor arrivals

Hotels

Visitor expenditure

Visitors by place of residence

2011

2011

2011

2011









Latest

Latest

Latest

Latest

Notes

Notes

Notes

Notes

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Dec 2012

Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jan-Nov 2012

Jul-Sep 2012

Jul-Sep 2012

Jul-Sep 2012

Jul-Sep 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

Jan-Dec 2012

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d C

ensu

s S

ervi

ce

28,002,279

15,077,119

12,925,160

0.9

22,356

8,612,127

84.1

1.53

MOP 45.3

MOP 22.9

MOP 22.4

MOP 1,619

27,287,076

16,162,747

8,196,139

932,316

575,595

533,495

314,696

471,366

100,585

172,140

6,588,722

7,582,923

1,215,162

396,023

398,807

1,531,414

310,608

251,748

127,983

24,864

days daysdays

nights

billion

billion

billion

billion

billion

billion

nights nightsnights

percentage points

percentage points

100

FEBRUARY 2013

MAINLAND PLANS CARD-FORMATPERMIT TO VISIT MACAUThe new smart card would be used for both Hong Kong and Macau border crossings

TOURIST PRICE INDEX UPBY 6 PERCENT IN 2012The average Tourist Price Index for the whole year of 2012 increased by 6.05 percent year-on-year, roughly in pace with the infl ation rate for the same period. The Tourist Price Index refl ects the price changes of goods and services purchased by visitors. The index for the fourth quarter increased by 4.45 percent year-on-year, offi cial data shows. This was attributable to dearer prices of handbags and rising charges for restaurant services.

MORE VISITORS ONNEW YEAR HOLIDAYA total of 581,000 tourists visited Macau between December 30 and January 3. The fi gure was up by 4.92 percent compared to the same period last year, data from the police shows. Authorities reported over 1.8 million border crossings during the New Year holiday, including residents. The Border Gate remained the city’s busiest checkpoint with 660,000 movements.

GUIDES NEEDGRADING SYSTEMThe Macau Tourist Guide Association has urged the implementation of a grading system to categorise the level of expertise of tourist guides here. The head of the association Angelina Wu Wai Fong said last month that this measure would incentivise further training and improve service quality. Ms Wu was speaking on the sidelines of the 15th World Federation of Tourist Guide Associations International Convention, which took place at Galaxy Macau.

Mainland customs authorities are considering implementing Hong Kong-Macau visitor permits in a smart card format for mainland residents. The goal is to ease congestion at the borders, as these permits can be read by automatic checkpoints.Zeng Xiang from the Gongbei Customs Checkpoint was

quoted by public broadcaster TDM as saying that mainland residents are still using booklets for their Hong Kong-Macau visitor permits, and this reduces the effi ciency of customs proceedings.Over 90 million crossings were recorded at the Gongbei border checkpoint last year, according to media estimates.

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FEBRUARY 2013

Demand for yoga classes is on the rise as people seek to ease the stress of living in a city that

never sleeps. Enthusiasts should beware: the business is unregulated.

Business for yoga studios is good because of the economic boom, says Norika Chio, the managing director of Macau Fitness, a health club in AIA Tower which offers classes.

Ms Chio says the number of new yogis, or practitioners of yoga, at Macau Fitness has risen by more than 50 per-cent in the past two years.

“Some foreign professionals work-ing in Macau who are under pressure at their workplaces, fi nd in these fi tness centres a way to release their stress and, at the same time, gain physical fl exibil-ity by practising yoga,” she says.

She is optimistic about the future, al-though high rents and fi nding staff can be problems. “Macau is a small place and I do not see severe competition in the yoga business. As long as we provide good-quality services, customers will come.”

There is no offi cial data on how many yoga studios and health clubs of-fer yoga classes here, or on how many yogis there are. The government subsi-dises some classes and private concerns run others.

Yoga instructor Carmon Chan says demand for her services has boomed, especially after the government intro-duced its training subsidy scheme in 2011. The scheme, which runs until the end of this year, entitles residents aged 15 or older to a three-year subsidy of MOP5,000 (US$625) to improve their skills. Taking a yoga course counts as improving one’s skills and the govern-ment pays the cost.

“Many local people use the money to learn yoga,” Ms Chan says. “I have seen an obvious boom in student num-bers since 2011.”

Certifi cate shortcutMs Chan once taught belly dancing professionally but switched to yoga three years ago after she was certifi ed

as an instructor. She now teaches yoga classes funded by the Education and Youth Affairs Bureau and the Sports Development Board, and at classes run by private concerns.

“As long as you have a teaching certifi cate, it is not hard to secure a job as yoga instructor in a fi ve-star hotel,” she says. She says some studios hire un-certifi ed instructors because the busi-ness is unregulated.

“Sometimes a person attends many yoga classes and they eventually feel confi dent they can become an instruc-tor. If the owner of the yoga studio be-lieves in that person’s ability, it is not necessary for the instructor to have a teaching certifi cate.”

However, if private yoga studios of-fer classes for the government’s train-ing programme, they must have prop-erly certifi ed instructors.

At least three institutions here train yoga instructors. None is entitled to certify instructors on its own. Instead, they certify instructors on behalf of

Let’s get physicalFunding for self-education courses has unwittingly helped create a boom in yoga classesBY CHERRY LEE

Business

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FEBRUARY 2013

Business

yoga governing bodies in India, Hong Kong or the mainland.

An intensive 20-hour course lead-ing to certifi cation as a basic yoga in-structor can cost up to MOP10,000. Students must already be experienced yogis.

Instructor Surya Vedant teaches at Yoga World in Rua do Campo and says it can take up to four years to gain a degree in yoga teaching in India. “Yoga instructors are like doctors, who are

There has also been a boom in individual yoga tutoring. The average cost is about MOP500 an hour

giving a treatment to their students. Whenever a new student comes to my class, I need to check their physical condition and adjust the training ac-cordingly,” he says.

Sweaty workMr Vedant says the monthly pay of-fered to a yoga instructor trained in India ranges from MOP10,000 to MOP13,000. Being a foreign instruc-tor does not necessarily mean higher salaries.

“It all depends on one’s working experience and popularity,” he says.

Many instructors who are Macau residents, do not receive a salary but are paid by the hour instead. Ms Chan says this allows them to earn more. A non-resident instructor must be paid a salary and can only have one employer.

Ms Chan says an instructor is paid anything from MOP100 to MOP500 for teaching a class of 12 to 20 students for one hour, depending on the instructor’s experience and whether the classes are funded by the government or run by a private concern.

There has also been a boom in in-dividual tutoring. The average cost is about MOP500 an hour.

“Practitioners who need private classes are not necessarily from the up-per classes. Instead, they are usually people with special needs, from physi-cal to mental, such as autism or back pains,” says Renu Dhawan, a specialist in yoga therapy at Yoga World. “Unlike group lessons, private yoga classes are tailored to meet students’ unique needs and can be very therapeutic.”

Mr Vedant says one of the peculi-arities of yoga here is that yogis are not so keen on spiritual meditation. “Un-like yoga practitioners in India, who mainly practise yoga for mental peace, the local students prefer sweating and releasing their energy during classes,” he says.

Trivial exerciseBut Mr Vedant says instructors must also adapt.

“Just like McDonald’s offers dif-ferent types of hamburgers in differ-ent countries, we too need to adjust the teaching strategy according to the de-mand of the local people,” he says.

With a wide range of instructors and types of yoga available here, con-sumers are increasingly able to mix and match to suit their preference.

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FEBRUARY 2013

FINANCIAL CONTORTIONSDespite the recent growth

in the popularity of yoga, a dark cloud hovers over the business. Its image has been tarnished by a string of closures of yoga studios here and in Hong Kong.

The Consumer Council handled 80 cases arising from complaints about yoga studios in Macau in 2010 and 2011. The complain-ants had a variety of gripes. Most commonly, clients were dissatisfi ed with the service they got, or were worried that their studios were about to close.

At least two yoga studios here have closed suddenly in recent years. More have closed in Hong Kong. In 2010 alone, three yoga studios there shut up shop, leaving more than 14,000 members in the lurch.

The most notable closure here was that of the Universal Yoga Asia studio in the Macau Square building. It drew down

the shutters suddenly in 2009, without giving any notice to customers or employees. The busi-ness was evicted from the building and a court ordered the seizure of its assets because it was 10 months behind with its rent.

Yoga studios com-monly demand payment in advance for member-ship, discounting the price if members sign up for long periods. If the studio

goes bust, members are among the last to get any money back. Un Ut Mui of the Consumer Council says those that sign up for long periods take the greatest risk be-cause of the amount of money they put up.

When Universal Yoga Asia collapsed, the members lost at least MOP1.75 million (US$219,000) in advance payments, ac-cording to newspaper reports. Some had reportedly paid up to MOP20,000 for a fi ve-year membership.

“I prefer overseas yoga teachers,” says one expat yogi. “Comparatively, I think the Indian yoga instructors are better than local teachers.”

She says she attends only those classes taught by her favourite Indian instructor.

“They speak good English and I like their design of the yoga practic-es. It seems like they are more in tune with our body demands,” she says.

Another yogi, who is a local, pre-fers instructors from Macau. “The Indian yoga masters may be excellent in yoga demonstration, but it does not necessary mean that they are good at teaching,” she says.

She complains that some Indian instructors never explain the benefi t of yoga postures or the precautions that students need to take while ex-ercising. “The local instructors teach us how to breathe, how to sit, how to stand, how to walk, how to eat, how to relax, even how to think. This is very trivial stuff, which might be tak-en for granted by some Indian yoga instructors. But that is what we come here for,” she says.

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FEBRUARY 2013

Technology and the employment challenge

New technologies of various kinds, together with globalisation, are powerfully affecting the range of employment options for individuals in advanced and

developing countries alike – and at various levels of education. Technological innovations are not only reducing the number of routine jobs, but also causing changes in global supply chains and networks that result in the relocation of routine jobs – and, increasingly, non-routine jobs at multiple skill levels – in the tradable sector of many economies.

How, then, should policymakers confront the new and diffi cult challenges for employment (and, in turn, for the distribution of income and wealth), especially in developed economies? From recent research, we have learned a number of interesting things about how the evolution of economic structure affects employment.

The tradable side of advanced economies has not generated any real net increases in employment for at least two decades, while the jobs that it has created are concentrated in the upper-income and upper-education ranges, with employment declining in the middle and lower range of income and education. Growth in high-end services employment is matched by contraction in high-employment components of manufacturing supply chains.

Until the crisis of 2008, middle- and lower-income job growth occurred entirely in the non-tradable sector of the economy, which accounts for roughly two-thirds of advanced countries’ output and employment. Here, incomes and value added per employee remained largely fl at. Jobs could be eliminated by technology, but not by global competition; and, unsustainable, debt-fuelled domestic-demand growth helped to delay the current employment defi cits.

The hi-tech wayAs a result, the advanced economies have been shedding routine jobs at a rapid rate, while adding non-routine jobs (for example, those that cannot yet be replaced or reduced by machines and networked computers). This has fuelled a dramatic rise in the return on education and high-level skills, with the share of total income received by owners of capital and high-end employees increasing in advanced countries for more than two decades.

Growth and employment are thus diverging in advanced countries. The key force driving this trend – technology – is playing multiple roles. The replacement of routine manual jobs by machines and robots is a powerful, continuing and perhaps accelerating trend in manufacturing and logistics, while networks of computers are replacing routine white-collar jobs in information processing.

Part of this is pure automation. Another important part is disintermediation – the elimination of intermediaries in banking, online retail and a host of government services, to name just a few affected areas.

But technology’s impact does not stop there. The same class of information technologies that automate, disintermediate and reduce the costs of remoteness are also enabling the construction of increasingly complex and geographically diverse global supply chains and networks.

Global supply chains – constantly in fl ux, owing to rising

developing-country incomes and shifting comparative advantage – locate productive activities where human and other resources make those activities competitive. Links in these chains include not only intermediate products and assembly, but also a growing range of services – research and development, design, maintenance and support, customer service, business processes and more – as transaction, coordination and communication costs fall.

The result is what is sometimes called the “atomisation” of global supply chains: increasingly fi ne subdivisions are feasible, more effi cient and locatable almost anywhere. Proximity still matters in terms of transport and logistics costs. But, with the developing world accounting for the largest new markets and most of the growth in global demand, the logic driving atomisation should become even more compelling.

Adapt and surviveThe effi cient ongoing decomposition of global supply chains, networks and services has two related consequences. First, the tradable part of the global economy – where competition for economic activity and jobs is direct – is becoming a larger share of the whole; the same is true of individual economies. Second, parts of global supply chains that were not competitive are no longer protected by being adjacent to parts that were. Adjacency is no longer a requirement.

These dynamics and related challenges are not confi ned to advanced countries. Over the next decade, for example, China will replace much of its labour-intensive assembly employment with higher-value-added employment in manufacturing and services, not only in the tradable sector, but also – even more noticeably – in the rapidly growing non-tradable part of its economy. The expanding scope and diminishing costs of automation and additive manufacturing may affect labour-intensive functions globally, including in earlier-stage developing countries.

A key factor in adapting to these forces is investment. For individuals, businesses, educational institutions and governments in advanced countries, broad-based, elevated and effi cient investment in education and skills is critical. Closing wide information gaps in the market for skills would also increase the effi ciency of these investments.

Across-the-board upgrading of human capital will improve income distribution both directly and indirectly (by reducing the supply of lower-skill workers relative to demand). It will also (partly) mitigate the concentration of wealth that results from a highly skewed income distribution.

On the tradable side, competitiveness depends not only on human capital but also on a host of other factors: infrastructure, tax systems, regulatory effi ciency, policy-induced uncertainty, and energy and health-care costs.

There is no guarantee that taking the right steps in these areas would entirely overcome the employment challenges that individuals and countries face, though doing so would help. In fact, it is possible that we are entering a period in which major adaptations in employment models, work weeks, contract labour, minimum wages and the delivery of essential public services will be needed in order to maintain social cohesion and uphold the core values of equity and intergenerational mobility.

MICHAEL SPENCE NOBEL LAUREATE IN ECONOMICS AND PROFESSOR OF ECONOMICS, NEW YORK UNIVERSITY

GROWTH AND EMPLOYMENT ARE DIVERGING IN ADVANCED COUNTRIES. THE KEY FORCE DRIVING THIS TREND IS TECHNOLOGY

105

FEBRUARY 2013

Dreaming of having television and Internet services in a single, bundled package, as happens al-

ready in several countries? Dream on.The government has rejected Macau

Cable TV Ltd’s proposal to provide In-ternet services using its installed cable network.

The Bureau of Telecommunications Regulation told Macau Business that Macau Cable TV’s request didn’t com-ply with the rules overseeing the Inter-net sector. The decision was made last year, but was never made public.

Macau Cable TV’s operations direc-tor, Ricky Tam Mong Teng, confi rms the refusal.

“The Bureau of Telecommunica-tions Regulation didn’t accept our pro-

BY LUCIANA LEITÃO

Cable TV offl ineThe government rejects Macau Cable TV’s proposal to offer Internet services

posal on the basis that our company can only provide pay television service and that Internet services are not included in our contract,” he told Macau Business.

Mr Tam slams the decision as a waste of resources. With just a few up-grades, Macau Cable TV’s installed wir-ing system across the city would be able to provide Internet and other telecom-munication services, he says.

“The Macau Cable TV network is already good enough. Why doesn’t the government make better use of our re-sources?”

Mr Tam says Macau Cable TV is still in contact with the government about this matter. “It is our understand-ing that, according to the concession contract, Macau Cable TV can operate

telecom services. But, of course, we need to get a licence.”

He says the company is now decid-ing what steps to take.

The government has already an-nounced it will not extend Macau Cable TV’s exclusive pay television concession contract after it expires in 2014. The head of the Bureau of Telecommunica-tions Regulation, Lawrence Tou Veng Keong, said in December that the gov-ernment wants to open up the cable TV market.

Still waitingMacau Cable TV says it planned to pro-vide broadband Internet services for half the price of those of telecommunications operator CTM, the city’s sole Internet

Technology

106

FEBRUARY 2013

provider. It fi rst submitted its request to the government in 2011.

The company expected to invest MOP500 million (US$62.5 million) into the project.

That is half of the amount newly-created Companhia de Telecomuni-cações de MTEL Lda intends to invest in Macau if it is granted a licence to operate landline telecommunications services here. MTEL is the only bidder in a public tender to break CTM’s mo-nopoly on landline telecommunications, although the government was expecting to introduce two new players into the market.

The public tender closed in March last year, but MTEL’s proposal is still under review. If the locally-incorporated company succeeds in its bid, it will set up a joint-venture with mainland tel-ecommunications equipment and net-work solutions provider ZTE Corp.

MTEL representatives said last year the telecom company would invest as much as MOP1 billion in Macau should

CITIC ACQUIRES CTMCable & Wireless Communications

and Portugal Telecom have agreed to sell their shareholdings in CTM, Macau’s largest telecom operator, to Hong Kong-listed CITIC Telecom Inter-national Holdings Ltd. The announce-ment was made last month.

Cable & Wireless, CTM’s control-ling shareholder, will sell its 51-percent stake to CITIC Telecom for US$749.7 million (MOP6.0 billion). Portugal Tel-ecom will sell its 28 percent stake in the business for US$411.6 million.

CITIC Telecom already has a 20-percent stake in CTM. The transac-tions are expected to be completed within six to nine months.

Government-owned Macau Post will continue to hold the remaining 1 percent of the company.

Citic Telecom is part of state-owned conglomerate Citic Group Corp, with extensive business interests including fi nance and mining.

Tony Rice, chief executive of Cable & Wireless, said the decision to sell its Macau business was part of the company’s strategy to re-focus on the pan-America region.

“The change of ownership will not affect our focus,” CTM’s chief execu-tive, Vandy Poon, said in a statement. “We remain fully committed to the long-term prosperity of Macau by deliver-ing the best services and value to the Macau community.”

Macau Cable TV did not bid for a fi xed-line telecommunications licence. The company says the public tender terms were not attractive

it get the approval. In addition, as many as 1,000 jobs would be created.

Last month, Bureau of Telecommu-nications Regulation Mr Tou told Radio Macau that MTEL would get its licence soon. He was quoted as saying that the bureau was only waiting to receive some additional information to licence the company.

Contacted by Macau Business, the Bureau of Telecommunications Regu-lation was laconic, saying a decision would be announced “in due course”.

Macau Cable TV did not bid for a fi xed-line telecommunications licence. Mr Tam says the public tender terms were not attractive, scaring away poten-tial bidders.

One of the tender terms was for new operators to lay their own network lines to cater for a minimum coverage of 30 percent of residential buildings when the operator commenced business – no later than 18 months after winning a licence. That, according to Mr Tam, would mean a very initial high cost for newcomers.

Technology

107

FEBRUARY 2013

107

February

Date: 5th – 7th

Event: ICE Totally Gaming 2013Venue: ExCeL Centre, London, United KingdomOrganiser: Clarion EventsTel: (44) 020 7384 8121Website: www.icetotallygaming.comE-mail: [email protected]

Date: 13th – 14th

Event: Asia Retail Congress 2013Venue: Taj Lands End, Mumbai, IndiaOrganiser: Asia Retail CongressAddress: 402, Savoy Chambers, Dattatraya Road, Santacruz Jn., Santacruz (W), Mumbai - 400 054, IndiaTel: (91) 22 2660 3124Fax: (91) 22 2660 3124Website: www.asiaretailcongress.comE-mail: [email protected]

Date: 27th – 28th

Event: GES – Gaming Executive Summit LatAm 2013Venue: Trump Ocean Club International Hotel and Tower, Panama City, PanamaOrganiser: TerrapinnAddress: 96 Spring Street, 4th fl oor, New York, NY 10012, United StatesTel: (+1) 212 379 6322Fax: (+1) 212 379 6319Website: www.terrapinn.com/2013/gaming-executive-summit-latamE-mail: [email protected]

March

Date: 8th – 10th

Event: 27th Wedding, Banquet, Beauty & Jewelry ExpoVenue: Venetian Macao-Resort-Hotel, MacauOrganiser: A Plus PR & Advertising CoAddress: Room 1408, 14/F Luso International Bank Building, Rua do Dr Pedro José Lobo, MacauTel: (853) 2870 3930Fax: (853) 2871 6297E-mail: [email protected]

Date: 12th – 14thEvent: iGaming Asia Congress 2013Venue: Grand Hyatt, MacauOrganiser: Beacon EventsAddress: 20/F, Siu On Centre, 188 Lockhart Road, Wanchai, Hong KongTel: (852) 2219 0111Fax: (852) 2219 0112Website: www.igamingasiacongress.comE-mail: [email protected] : A Macau Business partner event

Date: 21st – 23rd

Event: 2013 Macao International Environmental Co-operation Forum & ExhibitionVenue: Venetian Macao-Resort-Hotel, MacauOrganiser: Macau GovernmentTel: (853) 8798 9675Fax: (853) 2872 3322Website: www.macaomiecf.comE-mail: [email protected]

Date: 29th – 31st

Event: 4th Macau International Real Estate FairVenue: Venetian Macao-Resort-Hotel, MacauOrganiser: Macau Decheng International Media Co LtdTel: (853) 2892 0009Fax: (86) 2892 0007Website: www.v-8.cnE-mail: [email protected]

April

Date: 10th – 12th

Event: APAC Investments Summit 2013Venue: Venetian Macao-Resort-Hotel, MacauOrganiser: Marcus EvansAddress: 9 Demostheni Severi Avenue, Nicosia 1080, CyprusTel: (357) 22 849 300Fax: (357) 22 849 307Website: www.apacinvestmentssummit.comE-mail: [email protected]

Date: 18th – 19thEvent: Mobile Payments & NFC World Summit 2013Venue: Eaton Smart Hong Kong, Hong KongOrganiser: Symphony GlobalAddress: 10 Anson Road, #26-04 International Plaza, Singapore 079903, SingaporeTel: (65) 6474 1471Fax: (65) 6725 8438Website: www.symphonyglobal.comE-mail: [email protected]

If you know of an event that you believe should be listed with Macau Business, please drop us an e-mail: [email protected]. In the subject bar,type in “List me as an event”.

FEBRUARY 2013

108

FEBRUARY 2013

Arts & Culture

Ten new movie screens open each day in the mainland as the popu-larity of cinema soars in China,

but the appeal of Chinese fi lms has failed to maintain the pace.

Box offi ce receipts jumped 30 percent last year to RMB17 billion (MOP21.8 billion), lifting the mainland up to become the world’s number two cinema market behind the United States, fi gures last month showed. Yet foreign titles took the bulk of the money, scoop-ing up just over half the revenue in 2012 despite facing an annual cap of only 34 releases – while Chinese fi lmmakers produced 893 fi lms last year.

“The successful movies are nearly all Hollywood blockbusters,” says Pen Kang, a researcher for the Hong Kong Baptist University Academy of Film.

“Chinese domestic fi lms have no

BY SEBASTIEN BLANC*

Box offi ce cloutMainland moviegoers show Hollywood the money

advantages compared to these Holly-wood fi lms. The production standards and technology are less advanced.”

The mainland only increased its for-eign movie quota from 20 in 2012 after long pressure from Hollywood and the World Trade Organisation. As a result foreign fi lms edged out domestic ones in ticket sales for the fi rst time in a decade, taking 51.5 percent of the total.

Naxin Ping, who manages an an-tique shop in Beijing, says she went to the cinema several times last year, watching both foreign and domestic titles including “The Amazing Spider-Man”, “Mission Impossible: Ghost Pro-tocol”, martial arts fi lm “The Grand-master” by Hong Kong director Wong Kar-wai and “Renzaijiongtu”, a Chinese comedy. “That’s my taste,” she says.

She is typical of the mainland’s

growing middle-class population will-ing and able to pay the relatively high price of movie tickets – around MOP100 – that has made theatres such an attrac-tive market. The country’s leading prop-erty group Wanda became the world’s biggest cinema owner last year after ac-quiring U.S. company AMC for US$2.6 billion (US$20.8 billion).

Lagging behindBut State Administration of Radio, Film and Television vice minister Tian Jin in November urged domestic fi lmmak-ers to “enhance creativity”, saying their movies faced tremendous pressure and needed to be more competitive.

In recent years, Hollywood block-busters such as “Avatar” and “Trans-formers: Dark of the Moon” have brought in whopping sums, though the

109

FEBRUARY 2013

low-budget mainland comedy “Lost in Thailand” unexpectedly upended them in December to become the country’s biggest-ever box offi ce hit. But Robert Cain, a producer who has worked in China for 25 years, points out that it was among the successful domestic mov-ies that “drew large audiences in the mainland because they released at times when Hollywood movies were blocked out of Chinese theatres”.

Mega blockbusters such as the lat-est James Bond movie “Skyfall” and the widely anticipated “The Hobbit”, based on the J.R.R. Tolkien novel, hit cinemas around the world last year but have 2013 release dates in the mainland – by which time many potential viewers will al-ready have seen them on pirated DVDs.

Too softJust as Chinese movies have lagged do-mestically, they have also struggled to garner signifi cant popularity or renown abroad, despite being the world’s third most prolifi c fi lm industry, according to the State Administration of Radio, Film and Television. And despite being the world’s most populous country, China has failed to produce anything with the global cultural impact of South Korean singer Psy’s “Gangnam Style” or Indian musician Ravi Shankar.

MADE IN HONG KONG Hong Kong’s fi lm industry has pref-erential access to the mainland

market, with quota-free access for Hong Kong-produced Chinese language fi lms.

The city is among Asia’s largest fi lm exporters. In 2010, 54 locally produced fi lms were released.

In recent years, the mainland has become a vital market for Hong Kong movies. An increasing number of movies have been co-produced by Hong Kong and mainland fi lm production compa-

President Hu Jintao acknowledged last year that the mainland’s soft power had not kept pace with its growing po-litical and economic stature, saying: “The international infl uence of Chinese culture does not correspond with the in-ternational status of China.”

Rance Pow, an industry analyst who heads the consultancy Artisan Gateway, is optimistic that domestic fi lmmakers will steadily improve. “Chinese fi lms remain on course to produce commer-cial hits not only for the China market but for international audiences as well,” Mr Pow says.

The diffi culty comes in part from

nies. These are treated as mainland productions after receiving approval from mainland authorities.

Some foreign production companies interested in tapping into the mainland market have also chosen Hong Kong as their regional base in Asia. For example, U.S.-based Legendary Pictures LLC, which produced “Inception” and “The Hangover”, has set up a subsidiary in Hong Kong to produce movies with Chi-nese elements.

the censorship that the mainland exer-cises over fi lm and other cultural pro-ductions. The Communist Party imposes strict rules over what fi lms are allowed to be seen by the public, banning what it considers any negative portrayal of con-temporary politics or issues it says might lead to social unrest.

In an open letter last December, award-winning Chinese director Xie Fei said the censorship system had “be-come a corrupt black spot for control-ling the prosperity of the cultural and entertainment industry, killing artistic exploration and wasting administrative resources”. * AFP NEWS AGENCY

110

FEBRUARY 2013

CHEQUES FOR CHARITYFollowing the sixth Annual Macau Business Charity Golf Tournament in October, a luncheon to present the cheques to the benefi ted charities took place last month.Team Wynn I, made up of Dave Williamson, Dennis Hudson and Ryan Beauregard, was the net score tournament winner. As such, its members had the right to nominate a charity to forward their winnings to – HK$100,000 (US$12,900). They chose the Cradle of Hope Association.The gross score tournament winners were Mike Bolsover, Tim Shepherd and Rodney Hall, from Silver Heritage team. They nominated Olga’s Promise, a Nepali-based organisation that works in the fi eld of children’s welfare, to forward their HK$100,000 winnings to.A special HK$48,000 donation was made by BNU bank, telecommunications provider CTM, Portuguese news agency Lusa and Portuguese-language newspaper Jornal Tribuna de Macau to the Association of Rehabilitation of Drug Abusers of Macau.Long-term patron Melco Crown Entertainment Ltd continued its support as an event partner of the Macau Business Charity Golf Tournament, sponsoring the cheque presentation luncheon, which took place at Aurora restaurant, in Altira.

Moments110

Group photo

Katherine Liu, on behalf of Wynn I team, turns over their HK$100,000 winnings to Ng Pui, from the Cradle of Hope Association

Raymond Lei, from Melco Crown, hands over the HK$100,000 cheque to Jo Lyn, representing the Silver Heritage team – the winnings were forwarded to Nepali-based Olga’s Promise

José Rocha Dinis, on behalf of Jornal Tribuna de Macau, Lusa, CTM and BNU, presents a special HK$48,000 donation to tournament director Stefan Kuehn, representing the Association of Rehabilitation of Drug Abusers of Macau

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FEBRUARY 2013

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FEBRUARY 2013

PONDS ON PLANNING FAST TRACKThe Civic and Municipal Affairs Bureau clearly has something against peace and quiet.

First, it wants to ruin the calming surroundings of the Sai Van Lake by opening a night market.

Now, it has surprised many by starting construction on fi ve “ecological ponds” in the wetlands near the Taipa-Houses Museum.

The bureau says the ponds will improve the water quality of the existing marshland and will not disturb the egrets that breed there.

Strangely enough, the project seemingly lacked any sort of promotion before it went ahead.

Environmental groups say they were unaware of it. The Environmental Protection Bureau says it does not have record of the plan.

The wetlands are one of the most valuable natural areas in Macau. The public treasures them. It demonstrated its passion for the tiny green pocket last year when the wetlands were earmarked for a traffi c information centre.

For a government that has arranged a public ballot to name a pair of pandas, these projects should be brought up for public discussion too.

More importantly, any development in this quiet corner of Macau should be backed by a proper environmental impact assessment.

THE MOST HAIR-BRAINED OF HEISTSJudiciary Police head Wong Sio Chak announced last month that the number of casino-related crimes had increased last year. Some involved increasingly sophisticated high-tech scams.

The Frozen Spy’s mind was set racing, pondering the intricate swindles that could be taking place. Perhaps something along the lines of those made popular by Hollywood’s Ocean’s Eleven and its sequels?

A little digging and it seems the reality of the high-stakes world of gambling cons is far less hairy than the police had hinted at.

Last month, the police detained a 27-year Hong Konger, parading him and his less-than-elaborate, no-tech scheme to the media.

The man had taped a 50-cm-long strand of hair to a HK$1,000 (US$129) gambling chip. At the baccarat tables,

he would bet on “bank” to win. If “player” won, he would tug on the strand, dragging the attached chip to “player” on the table.

What is surprising about this follicular fi end is he used the hair do-dad fi ve times before getting dragged by the police net.

LEONG’S BID TO CLEAR THE AIRMany gambling industry analysts have called the bluff of Legislative Assembly member Angela Leong On Kei’s demand to ban tobacco outright from the city’s casinos.

Their take is Ms Leong is making a populist play to be re-elected. After all, they note, casino workers are her main constituency. Plus, if she was serious about a ban, she could push to scrap smoking at SJM Holdings Ltd’s casinos, where she is an executive director.

But Ms Leong has put her money where her mouth his, at least partially.

Le Royal Arc casino, a privately held venture she runs under a service agreement with SJM Holdings, may be Macau’s least smoky casino, with offi cial data showing its designated smoking area occupies the smallest ratio of the city’s gaming fl oors at 35 percent.

A KINDLY WORDThe Macau Government Tourist Offi ce announced last month it would launch a tourism awareness campaign to cultivate courtesy towards visitors. It expects one-fi fth of the public will participate.

Frozen Spy would support any campaign to improve courtesy and good manners.

The public could do with a lesson in sharing a friendly smile with a stranger and, between taxi drivers and shady shopkeepers, tourists are often easy targets for rip-offs.

That being said, many tourists to Macau could do with an awareness campaign of their own. Seldom do Macau residents appreciate public urination, queue jumpers or shouting at harried restaurant staff.

Thank you for your kind attention, tourists.

112

FEBRUARY 2013

Ao Grama Page 73 www.aogramaasia.com

Aristocrat Page 17 www.aristocratgaming.com

Bally Technologies Page IFC www.ballytech.com

BNU Page 21 www.bnu.com.mo

Galaxy Entertainment Group Pages 09, 19 & 53 www.galaxyentertainment.com

Goldfi sh Page 109 www.goldfi shmacau.com

IPIM Page 07 www.ipim.gov.mo

Macau Cultural Centre Page IBC www.ccm.gov.mo

Macau Post Offi ce Page 103 www.macaupost.gov.mo

MGM China Page 01 www.mgmchinaholdings.com

MGTO Page 37 www.macautourism.gov.mo

Morton’s The Steakhouse Page 106 www.mortons.com

PokerStars Macau Page 02 www.pokerstarsmacau.com

Reed Exhibitions Page 03 www.reedexpo.com

SHFL Entertainment Page 04 www.shfl .com

Sands China Pages 05 & 49 www.sandschinaltd.com

SJM Page 39 www.sjmholdings.com

Wynn Macau Page 63 www.wynnmacaulimited.com

Zung Fu Motors – Mercedes BC www.zungfu.com.mo

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