Macau

Politics:

• Analysis

  Macau politics: Quick View - Chief executive promises hand-outs

  Event

  In his annual policy address on November 13th, Macau's chief executive, Fernando Chui, announced a record cash hand-out for citizens and the completion of 19,000 more public-housing units.

  Analysis

  Thanks to rapid economic growth-Macau's GDP grew by 12.6% year on year in the first half of 2012-Mr Chui is in the happy position of being able to raise spending. Permanent residents will each receive MPtc8,000 (US$980) in 2013 and non-permanent residents MPtc4,800. In total, the government plans to spend MPtc9.8bn (US$1.2bn) on subsidies next year, up from MPtc8.6bn in 2012.

  Mr Chiu also addressed the issue of high property prices with a commitment to provide more public housing and to increase land supply. He reiterated the government's plan to complete 19,000 public-housing units soon, emphasising that 80% of Macau residents would be eligible to apply for them. The territory has a tiny stock of such housing compared with neighbouring Hong Kong, where more than 40% of the population live in subsidised public housing.

  Mr Chiu said that the government will reclaim 360 ha of land from the sea over the next four years. He said that he would give "in-depth" consideration to the proposal that housing built on this land be sold only to Macau residents. Hong Kong has already earmarked a few plots on which to implement a similar plan, dubbed "Hong Kong land for Hong Kong people".

  At a press conference held after the policy speech, Mr Chiu said that he was in favour of a law requiring senior government officials to declare their personal wealth, adding that he was willing to declare his assets. His remark was made in the light of Macau's biggest corruption case in recent decades: in May Ao Man-long, the first secretary for transport and public works since Macau's handover to China in 1999, was sentenced to 29 years in prison for bribery.

  November 16, 2012

• Background

  Macau: Constitution and institutions

  The chief executive

  The chief executive is appointed by China's central government after being selected by an election committee, whose members are nominated by corporate bodies. The chief executive appoints a cabinet, the Executive Council, of between seven and 11 members. The chief executive's term of office is five years, and no individual may serve for more than two consecutive terms. The chief executive has strong policymaking and executive powers, albeit limited from above by the central government and from below (to a lesser extent) by the legislature. Mr Ho, a community leader and banker, is the first China-appointed chief executive of the Macau SAR, having replaced the last Portuguese governor, General de Rocha Vieira, on December 20th 1999. Following his reselection as chief executive in August 2004, Mr Ho will remain in office until December 2009.

  The Legislative Assembly

  The legislative organ of the territory is the Legislative Assembly, a 29-member body comprising 12 directly elected members, ten members representing functional constituencies and seven members appointed by the chief executive. The Legislative Assembly is responsible for general law-making, including taxation, the budget and socioeconomic legislation. The last election, held in September 2005, was a colourful and hard-fought affair, with 125 candidates from 18 political groups contesting the directly elected seats. Although the winners came from a variety of groups—some pro-democracy, others pro-China and a few pro-business—welfare issues figured prominently on the agendas of nearly all of the successful candidates. The city of Macau and the islands of Taipa and Coloane each have a municipal council.

  Portuguese administrators

  Mr Ho has kept a few Portuguese administrators in senior positions in his administration—Joao Manuel Costa Antunes remains director of the Government Tourism Office, and Jose Proenca Branco is still commissioner-general of the Unitary Police Service.

  Civil servants

  There were fears that apathy in the drive to localise the civil service would leave Macau without a functioning bureaucracy after the handover. Before the reversion to Chinese rule, senior positions within the civil service were dominated by Portuguese expatriates on fairly short tours of duty. As a result, a large proportion of the newly appointed civil servants in Macau are young, inexperienced and poorly trained. In order to raise standards, the government has enlisted the assistance of the Singaporean authorities in training officials.

  The legal system

  The legal system is based largely on Portuguese law. The territory has its own independent judicial system, with a high court. Judges are selected by a committee and appointed by the chief executive. Foreign judges may serve on the courts. In July 1999 the chief executive appointed a seven-person committee to select judges for the SAR. The committee recommended 24 judges who were then appointed by Mr Ho (they were sworn in after the handover). Included in the 24 were the three judges who now serve on the Macau SAR's highest court, the Court of Final Appeal (CFA)—Sam Hou Fai (the chief justice), Chu Kin and Viriato Manuel Pinheiro de Lima.

  October 18, 2007

• Structure

  Macau: Political structure

  Official name

  The Macau Special Administrative Region (SAR) of the People's Republic of China

  Form of state

  A Portuguese-administered territory for more than 400 years, Macau was handed back to mainland China in December 1999. The Basic Law, Macau's post-handover mini-constitution, is designed to ensure the survival of many of the political, economic and social structures established under Portuguese rule

  The executive

  The chief executive, appointed by a selection committee, presides over the government. The chief executive appoints an Executive Council of between seven and 11 members

  Head of state

  Hu Jintao, the president of the People's Republic of China

  Legislature

  The Legislative Assembly has 29 members, 12 of them directly elected, ten indirectly elected and seven appointed. The current members took office in 2009

  Legal system

  The legal system is based largely on Portuguese law. The territory has its own independent judicial system, with a high court. Judges are selected by a committee and appointed by the chief executive. Foreign judges may serve in Macau's courts

  Elections

  The last legislative election took place in September 2009, and the next is due in September 2013. The current chief executive, Fernando Chui, was installed in December 2009. The next chief executive election will be held in late 2014

  Main political organisations

  There are a number of embryonic political associations. Groups that gained representation via directly elected seats in the 2005 Legislative Assembly election include the New Democratic Macau Association, the Macau United Citizens' Association and the Alliance for the Development of Macau

  Chief executive: Fernando Chui

  Secretaries & other officials

  Administration & justice: Florinda da Rosa Silva Chan

  Commissioner against corruption: Fong Man Chong

  Commissioner of audit: Ho Veng On

  Commissioner-general of the Unitary Police Service: José Proença Branco

  Director-general of the Macau customs service: Choi Lai Hang

  Economy & finance: Francis Tam Pak Yuen

  President of the court of final appeal: Sam Hou Fai

  President of the Legislative Assembly: Lao Cheok Va

  Public Prosecutions Office: Ho Chio Meng

  Security: Cheong Kuoc Va

  Social affairs & culture: Cheong U

  Transport & public works: Lau Si Io

  Chairman of the Monetary Authority of Macau

  Anselmo Teng

  December 03, 2012

Economy:

• Background

  Macau: Economic background

  Main economic indicators, 2006
  Real GDP growth (%)	16.6
  Consumer price inflation (av; %)	5.2
  Merchandise trade balance (US$ m)	-16,066
  Exchange rate (av; MPtc:US$)	8
  Population ('000; year-end)	513.4
  Source: Economist Intelligence Unit.

  Download text file (csv format)

  Macau depends on the gambling sector

  Macau is heavily dependent on the gambling and related tourism services, which now form the core of the economy. The past few years have seen exceptionally strong economic growth, largely fuelled by booming investments in new casinos, as international operators establish their own casino operations, as well as strong tourism inflows, as mostly Chinese tourists visit the territory to gamble. In addition, direct taxes on gambling provided 75.8% of current government revenue in 2006. The manufacturing sector, largely textiles and clothing, accounts for a small proportion of the economy. But the prospects for the manufacturing sector are limited by competition in low-wage mainland China, as well as rapidly rising land and labour costs.

  October 18, 2007

• Structure

  Macau: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011a	2012b
  GDP at market prices (MPtc bn)	166.2	170.2	226.2	292.1	331.2
  GDP (US$ bn)	20.7	21.3	28.3	36.4	41.4
  Real GDP growth (%)	3.3	1.7	27.0	20.7	9.8
  Consumer price inflation (av; %)	8.7	1.1	2.8	5.8	6.1
  Population (m)	0.5	0.5	0.5	0.6	0.6
  Exports of goods fob (US$ m)	2,098.0	1,098.0	1,053.0	–	–
  Imports of goods fob (US$ m)	-7,224.0	-5,516.0	-6,574.0	–	–
  Current-account balance (US$ m)	4,035.0	6,758.0	12,084.0	–	–
  Foreign-exchange reserves excl gold (US$ m)	15,930.1	18,350.3	23,727.0	34,026.0	–c
  Exchange rate (av) MPtc:US$	8.02	7.98	8.00	8.02	7.99
  a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.

  Download the numbers in Excel

  Origins of gross domestic product 2010	% of total	Components of gross domestic product 2011	% of total
  Gambling	40.9	Private consumption	20.7
  Finance & real estate, etc	19.7	Government consumption	7.3
  Wholesale & retail	15.0	Fixed investment	11.6
  Administration & public services	13.3	Stockbuilding	0.8
  Construction	5.5	Exports of goods & services	113.7
  		Imports of goods & services	54.1
  Principal domestic exports 2011	MPtc m	Principal imports 2011	MPtc m
  Garments	1,070	Food & beverages	8,582
  Machines & mechanical devices	628	Fuels & lubricants	6,584
  Other textiles	269	Garments & footwear	3,927
  Footwear	82	Cars & motorcycles	2,474
  Main destinations of exports 2011	% of total	Main origins of imports 2011	% of total
  Hong Kong	44.1	China	30.8
  China	15.6	EU	21.1
  US	8.2	Hong Kong	18.8
  EU	5.8	Japan	5.6

  Download the numbers in Excel

  Download text file (csv format)

  December 03, 2012

• Outlook

  Macau: Country outlook

  Macau: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: The five-year term of Macau's chief executive, Fernando Chui, will end in late 2014. During the remainder of his time in office, Mr Chui's main priorities will be to address public discontent and tackle corruption. After allowing minor changes to Macau's electoral system in 2012, including an increase in the number of directly elected legislators, the central Chinese government is unlikely to approve further political reforms in the 2013-14 forecast period. The Macau government will introduce measures aimed at diversifying the economy, which has become dangerously dependent on the gambling sector and continued inflows of big-spending visitors from China. In tandem with the economic slowdown in China, real GDP growth in Macau is expected to decelerate to 9.8% in 2012. Growth will pick up to an average of 13.9% a year in the forecast period, compared with almost 24% in 2010-11. Consumer price inflation will accelerate to an average of 7.4% in the forecast period as food prices in China (Macau's main source of imports) and global commodity prices move higher.

  DOMESTIC POLITICS: Like neighbouring Hong Kong, Macau is a Special Administrative Region of China and has only limited political autonomy. Macau has proved less engaged politically than Hong Kong, and calls for universal suffrage have generally been more muted. Less than one-half of the members of the territory's Legislative Assembly are directly elected, and the chief executive is appointed by an election committee over which the mainland government exercises influence. Minor political reforms were introduced in 2012, but the territory's political system will remain tightly controlled. The government conducted a limited public consultation on electoral reform in January this year. Its findings were approved in February by the National People's Congress (NPC, China's rubber-stamp legislature), which has the final say on any changes to Macau's political system. In line with recent constitutional amendments in Hong Kong, the NPC approved two changes to Macau's electoral laws: an increase in the number of parliamentary seats from 29 to 33, and the expansion of the committee that elects the chief executive to 400 members, from 300 previously. Both changes were passed by the local legislature by the required two-thirds majority in August despite opposition from Macau's small bloc of pro-democracy legislators, who opposed the creation of additional indirectly elected assembly seats. The changes to Macau's electoral laws will apply to the next legislative elections, scheduled for 2013 and the selection of the next chief executive in 2014. As a result, the number of directly elected lawmakers is set to rise from 12 to 14, while the number indirectly elected by "functional" constituencies comprising business and community interests will increase from ten to 12. Seven members of parliament will continue to be chosen by the chief executive. Further political reforms are unlikely in the forecast period. Mr Chui's chief political and policy challenges in the next two years will be more practical in nature than questions of structural political reform. He will need to work hard to restore the government's image in the eyes of both the Chinese authorities and the local population. The government's standing has been damaged by corruption scandals, rising crime and increasing popular discontent linked to the perception that the growth of the gambling sector has not benefited society more widely. Salary rises have lagged behind the rate of economic growth, and non-gambling sectors of the economy have been marginalised as small and medium-sized enterprises have struggled to compete for resources with the casinos. Local residents also cite a large influx of foreign workers and sharply rising property prices as unwelcome side effects of the casino boom. These issues have led to mounting dissatisfaction with the government and have resulted in street protests. The Chinese government will be particularly anxious to see evidence that Mr Chui is capable of preventing further unrest, and will closely follow his progress on this front.

  INTERNATIONAL RELATIONS: Under the Basic Law (Macau's mini-constitution), defence and foreign affairs are the preserve of the mainland Chinese government. However, the Macau government has authority over domestic matters and external issues relating to trade, such as the territory's membership, in its own right, of the World Trade Organisation.

  POLICY TRENDS: Mr Chui has pledged to diversify Macau's economy, which has become overly dependent on the gambling sector. The territory became the world's unofficial gambling capital in 2006, when it overtook the US city of Las Vegas in terms of income derived from the sector. Tax revenue from the gambling industry accounts for over 80% of government revenue in Macau. The economy's heavy dependence on gambling makes it vulnerable to a downturn in that sector, as became evident in 2008 when the Chinese government decided to tighten visa requirements for mainland-Chinese tourists wishing to visit Macau. Macau is the only part of China where casinos are legal, and it consequently attracts large numbers of visitors from the mainland each year. This tightening of visa requirements was presumably done in an attempt to cool the overheated gambling sector and stem the flow of Chinese wealth into Macau's casinos, some of which is likely to have consisted of embezzled public funds. These restrictions were gradually relaxed in 2009, helping to support a revival in the territory's economy. Lack of clarity with regard to the Chinese government's visa policy, and about its stance on the extension of licences granted to casinos (the first of which are due to expire in 2020), continues to weigh on Macau's long-term economic prospects. The abolition of visa restrictions would provide a powerful boost to the territory's economy, but this seems highly unlikely to happen in 2013-14. Although Mr Chui has tried to encourage the development of industries such as conventions, exhibitions, logistics and culture, gambling will remain the dominant sector for some time to come. Macau's government has recorded a string of large budget surpluses since the territory embarked on its casino boom in 2001, owing to weak growth in public spending and rapidly increasing fiscal revenue from the gambling sector. The government's strong reliance on gambling tax receipts means that there is no chance that the casinos' heavy tax burden will be reduced. Macau's casinos face a much higher tax rate than those in other major international gaming jurisdictions. Of their gross revenue, 35% is paid out as direct tax, while further contributions of 2% and 3%, respectively, for social and economic purposes are also applicable in some cases, taking the maximum tax rate to 40%. In 2012 the government's budget surplus reached an estimated MPtc82.4bn (US$10.3bn), equivalent to 24.9% of GDP. In 2013-14 the budget surplus is forecast at the equivalent of 25.1% of GDP on average. Macau's currency, the pataca, is linked at the rate of MPtc1.03:HK$1 to the Hong Kong dollar, which in turn is pegged to the US dollar. As a result, the Macau authorities have little ability to adjust monetary policy, and local interest rates are determined indirectly by the Federal Reserve (the US central bank). Issuance of the pataca is fully backed by foreign-exchange reserves under the currency board system.

  ECONOMIC GROWTH: Macau is accustomed to reporting impressive economic results. Real GDP expanded by an average of 15.7% a year in 2003-10, driven by a spectacular gambling boom supported by the withdrawal, at the start of the 2000s, of the gambling monopoly enjoyed by local tycoon Stanley Ho for the previous four decades. This led a number of US-based casino companies to set up operations in the territory, helping to attract surging numbers of mainland-Chinese tourists to Macau to gamble. After a sharp slowdown in late 2008 and early 2009, Macau's economy roared back to life in 2010-11, growing by 23.9% a year on average. However, growth has decelerated again in 2012, to an estimated 9.8%, owing to a slowdown in the Chinese economy. (China's real GDP is expected to grow by 7.8% in 2012, down from 9.3% in 2011.) The Economist Intelligence Unit forecasts a return to faster economic growth in the forecast period, when real GDP will expand by an average of 13.9% a year. Our central forecast is based on the assumption that new casino projects are resumed and that Chinese visitors continue to flock to the city to gamble. In the past few years, procuring long-term financing for the development of new casinos has been difficult, in part owing to the 2008-09 global financial crisis, but the recent acceleration of development in the Cotai strip area suggests that a number of new projects will now go ahead. There is a risk that growth in visitor inflows from the mainland will slow in the forecast period, but moves this year by the Chinese authorities to loosen domestic credit flows mean that funds will remain available for gambling. Growth in Macau's gambling revenue has slowed over the course of 2012 but should remain healthy in the forecast period. Visitor arrival numbers will stay high, buoyed by rising wages in China.

  EXTERNAL ACCOUNT: Macau posted large merchandise trade deficits in 2011 and in the first three quarters of 2012. The value of domestic exports (exports of goods that are actually manufactured in the territory) has been falling for most of the past five years, owing to the continuing migration of Macau's manufacturing capacity to mainland China, where labour costs are lower and land is cheaper. The fall in merchandise export revenue has contributed to the steady deterioration in Macau's trade position, and the territory will continue to run a large deficit on trade in goods during the forecast period. Despite the deficit, Macau will record huge current-account surpluses in the forecast period, owing to the vast surplus on the services account, which is driven by gambling-related tourism earnings.

  December 06, 2012

View detailed map

Country Briefing

Land area

29.2 sq km (2009)

Macau Peninsula: 9.3 sq km

Coloane Island: 7.6 sq km

Taipa Island: 6.7 sq km

Embankment zone between Coloane & Taipa (Cotai): 5.6 sq km

Population

552,300 (end-2010 government estimate)

Climate

Subtropical

Weather

Coldest months, December-February, 16-18°C; hottest months, June-August, 28°C; driest months, December-January, average 150-153 mm of rainfall; wettest months, May-July, average 893-975 mm of rainfall; average annual rainfall, 2,123 mm

Languages

Portuguese and Chinese (Cantonese), both official

Measures

Metric system. Some local (Chinese) units are used, including: 1 tael = 37.8 g; 1 cata = 16 taels = 0.605 kg; 1 pico = 100 cata = 60.48 kg

Currency

Pataca (MPtc). MPtc1 = 100 avos. Average exchange rate in 2011: MPtc8.02:US$1

Time

8 hours ahead of GMT

Public holidays

New Year's Day, January 1st; Chinese New Year, February 3rd-5th; Ching Ming Festival, April 5th; Good Friday, April 22nd; Easter, April 25th; International Labour Day, May 2nd; Buddha's Birthday, May 10th; Dragon Boat Festival, June 6th; Hong Kong Special Administrative Region Establishment Day, July 1st; Mid-Autumn Festival, September 13th; China's National Day, October 1st; Chung Yeung Festival, October 5th; Christmas, December 26th-27th

March 01, 2012