Macau

Politics:

• Analysis

  Macau politics: Quick View - Macau sticks to bread-and-butter issues in Bei

  Event

  Macau's leaders have travelled to Beijing for the annual session of the National People's Congress (NPC, China's largely rubber-stamp legislature), and have used the occasion to hold meetings with senior mainland officials, focusing primarily on bilateral co-operation.

  Analysis

  While Hong Kong media are concerned about comments from senior mainland officials railing against subversive groups in the territory, Macau's concerns at the legislative session are, for the most part, more prosaic. This partly reflects the fact that there is less pressure from the public in Macau to increase the level of democracy in the Special Administrative Region (SAR); Macau has generally been more politically apathetic than Hong Kong since its return to Chinese rule in 1999.

  Nevertheless, Macau does have many day-to-day concerns that can be advanced during the networking that surrounds the annual double sessions of the NPC and the Chinese People's Political Consultative Conference (a powerless advisory body) in Beijing. Macau's chief executive, Chui Sai On, for example, has held discussions with Hu Chunhua, the new Chinese Communist Party secretary of the neighbouring mainland province of Guangdong. Mr Hu apparently confirmed that construction plans for the new campus of the University of Macau, which is being built on the nearby island of Hengqin in Guangdong, have been finalised and that the facility will be ready to accept students in September. Other delegates from Macau have focused on efforts to smooth the flow of visitors across the border between the SAR and China.

  Macau is also likely to be concerned about the ongoing anti-corruption campaign being waged by the central Chinese government. Historically, the territory has tended to suffer during such crackdowns as illicit money flows from mainland tourists coming to Macau to gamble are curbed. So far, this does not appear to have been the case in the latest campaign, as mainland tourist arrivals continue to expand rapidly. However, Macau's leaders will doubtless be seeking to learn more about the central government's intentions concerning the anti-graft drive.

  March 07, 2013

• 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: Lau Cheok Va

  Prosecutor-general of the Public Prosecutions Office: Ho Chio Meng

  Security: Cheong Kuoc Vá

  Social affairs & culture: Cheong U

  Transport & public works: Lau Si Io

  Chairman of the Monetary Authority of Macau

  Anselmo Teng

  March 19, 2013

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.

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  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)	166.3	170.2	226.9	295.5	326.3
  GDP (US$ bn)	20.7	21.3	28.4	36.9	40.8
  Real GDP growth (%)	3.4	1.7	27.5	21.9	7.6
  Consumer price inflation (av; %)	8.7	1.1	2.8	5.8	6.2a
  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	16,600.0a
  Exchange rate (av) MPtc:US$	8.02	7.98	8.00	8.02	7.99a
  a Actual. b The Economist Intelligence Unit estimates.

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  Origins of gross domestic product 2011	% of total	Components of gross domestic product 2011	% of total
  Gambling	44.7	Private consumption	20.7
  Finance & real estate, etc	17.8	Government consumption	7.3
  Wholesale & retail	15.6	Fixed investment	11.6
  Administration & public services	12.2	Stockbuilding	0.8
  Construction	4.9	Exports of goods & services	113.7
  Other	4.8	Imports of goods & services	54.1
  Principal domestic exports fob 2012	MPtc m	Principal imports cif 2012	MPtc m
  Machines & mechanical devices	1,426	Food & beverages	8,570
  Garments	889	Fuels & lubricants	7,628
  Other textiles	164	Garments & footwear	4,490
  Footwear	120	Cars & motorcycles	3,313
  Main destinations of exports 2012	% of total	Main origins of imports 2012	% of total
  Hong Kong	50.2	China	32.7
  China	16.8	EU	23.5
  US	6.2	Hong Kong	11.6
  EU	3.9	Japan	6.0

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  Download text file (csv format)

  March 19, 2013

• 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. To reflect the impact of China's ongoing anti-graft campaign, the Economist Intelligence Unit has lowered its real GDP growth forecast for Macau in 2013 to 9.7%, from 14.3% previously. The reduction in our economic growth forecast for 2013 will also lower inflationary pressures. We have brought down our forecast for consumer price inflation in 2013 to 5.8%, from 7.8% previously.

  DOMESTIC POLITICS: Mr Chui will face a number of challenges in the forecast period, including dealing with rising political and social discontent, and helping to diversify the territory's economy, which is overly dependent on gambling. Although the local economy returned to strong growth following the 2008-09 slowdown, it lost momentum during 2012 as exports decelerated in line with economic growth trends in mainland China. A forecast return to faster growth will take some of the pressure off Mr Chui in 2013-14, but it will not solve the problem of rising social discontent, given concerns that the casino boom of recent years has widened income disparities and brought excessive immigration. 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. We do not expect a significant pro-democracy movement to develop in 2013-14, and the territory's political system will remain tightly under the control of the central Chinese authorities. The Macau government conducted a public consultation on electoral reform in early 2012. Its findings were approved in February last year by the National People's Congress (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, two changes were made 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 territorial legislature by the required two-thirds majority in August despite opposition from Macau's small bloc of pro­democracy 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. The inbuilt pro-government majority will assure that the legislature remains quiescent. This, again, is in contrast to Hong Kong, where even "pro-administration" parties often oppose the government on specific issues, in order to build their popular credentials. 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 expansion, 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. Mr Chui has tried to encourage the development of industries such as conventions, exhibitions, logistics and culture. The government is also collaborating closely with the authorities in China's neighbouring Guangdong province to promote co-ordinated development. Plans to open a new campus of the University in Macau just over the border in Guangdong are at an advanced stage. However, growth in other sectors will continue to be outpaced by the expanding capacity in the gambling sector in 2013, particularly since government approval was granted for a new, large MGM casino in early 2013. Macau is the only part of China where casinos are legal, and it consequently attracts large numbers of visitors from the mainland each year. Although the Chinese government is not expected to permit casinos on the mainland in 2013­14, its support for Macau's gambling sector is fragile. In 2008-09 the central Chinese authorities tightened restrictions on visits from the mainland, presumably in an attempt to stem the flow into Macau's casinos of Chinese wealth, some of which is likely to have consisted of embezzled public funds. So far, the ongoing anti-corruption campaign launched since the new Chinese Communist Party leader, Xi Jinping, was selected in late 2012 has had a more complex impact. Tourist arrivals from the mainland have continued to increase, although it is possible that the flow of mainland money through Macau's gaming tables may have slowed. 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 for all mainland individuals would provide a powerful boost to the territory's economy, but this seems highly unlikely to happen in 2013-14. 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 MPtc90.5bn (US$11.3bn), equivalent to 27.7% of GDP. In 2013-14 the budget surplus is forecast at the equivalent of 30% of GDP on average.

  ECONOMIC GROWTH: Macau is accustomed to reporting impressive economic results. Real GDP expanded by an average of 14.6% a year in 2003-11, driven by a spectacular gambling boom that was supported by the withdrawal at the start of the 2000s of the gambling monopoly that had been enjoyed by a local tycoon, Stanley Ho, for the previous four decades. Growth decelerated in 2012, as slowing economic expansion on the Chinese mainland dampened both the number of tourists arriving and the amount that they spent. This led to a sharp deceleration in the pace of export growth through 2012, which was combined with a moderation in investment growth from April. Private consumption, however, held up well, supported by the tight labour market-Macau enjoys virtually full employment-and strong wage growth. Overall, the economy is estimated to have grown by 7.6% in 2012. We have lowered our forecast for economic growth in 2013, to 9.7%, from 14.3% previously. This reflects the impact of the mainland government's anti-corruption drive on gambling exports from Macau. Nevertheless, the impact of the anti-graft drive will be less serious than that launched in 2009 (when exports declined). Moreover, private consumption and investment will remain strong. The latter will be supported by developments in the Cotai strip area, including the planned new MGM casino in Taipa. Our forecast thus remains above that of the Monetary Authority of Macau (AMCM, the territory's de facto central bank). In early 2013 the AMCM said that it expected economic growth in 2013 to be in the low single digits. In 2014 we forecast that new gambling capacity and a relaxation of the mainland government's anti-corruption drive will support stronger growth in exports, driving real GDP growth in that year higher, to 13.7%. Underlying prospects for Macau's gambling exports remain bright. Although the territory is facing increased competition from a series of new casinos around Asia designed to draw mainland Chinese spenders, Macau has an established reputation in China that will be tough to challenge. Meanwhile, rising income levels on the mainland and the gradual loosening of travel restrictions on mainland Chinese citizens should support strong growth in demand for gambling from that market.

  EXTERNAL ACCOUNT: Macau posted another large merchandise trade deficit in 2012. The value of domestic exports (exports of goods that are actually manufactured in the territory) has declined in recent years, owing to the migration of manufacturing capacity to mainland China. However, re-exports through the territory rose strongly in 2012. The strong re-export performance was nevertheless insufficient to offset the rapid growth in imports, which, as in past years, was driven by tourist demand and rising local income levels. These trends will be sustained in 2013-14, resulting in a steady expansion in the territory's trade deficit. Despite the trade shortfall, Macau will record huge current-account surpluses in 2013-14, owing to the vast surplus on the services account, which is driven by gambling-related tourism earnings.

  March 20, 2013

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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