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2015
There is a Need to Out-guess the Economy a Long Time into the Future
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'Sanctions always hurt wrong person,' open dialogue needed
 
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A German Expert’s Global Vision on China
Economic Reforms in China: which model of development?
 
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China’s New Role in the Global Arena
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Spotlight on Macau

By João Manuel Costa Antunes, Director, Government Tourist Office, Macau SAR Speech held on the occasion of the 5th Global China Business Meeting

 

The Year 2009 is a special one to Macau as it marks the commemoration of the 60 th anniversary of the establishment of the People's Republic of China and the 10 th anniversary of the establishment of the Macau Special Administrative Region; today I am honoured to represent the Macau SAR to share with you the recent development of this compact yet unparalleled city, especially with a highlight on the economic dynamism and tourism industry.

As most of you know that Macau has a long standing and well established connection with Portugal. It has been under Portuguese administration for more than 4 centuries; therefore Macau 's legal and administrative systems, culture and tradition have inherited the essence of that of Portugal. The convergence of eastern and western cultures has turned Macau into a unique historical destination with distinctive characteristics.

On the 20 th December 1999, China resumed its sovereignty from the Portuguese Government. Since then, Macau has become a Special Administrative Region of the People's Republic of China. With the full support of the Central Government and efforts of all walks of life of Macau, the principles of “One Country, Two Systems”, “Macau People Governing Macau” with a “High Degree of Autonomy” have successfully been implemented. Under these principles, it is allowed for Macau people to run Macau except that the Central Government is responsible for foreign affairs and defence in order to maintain a unified China and territorial integrity.

During the past decade, Macau has undergone an accelerated economic transformation, especially in the service industry in which there have been a development boom in tourism, finance and business services, including banking, insurance, real estate, as well as a wide range of other professional and consultancy services.

In a report published by The Heritage Foundation, a leading public policy research institute of the United States together with the Wall Street Journal, Macau 's level of economic freedom ranked the Sixth out of 41 countries in the Asia-Pacific region, making its economy the 21 st freest of the global index in 2009. With an attractive and favorable investment environment, Macau has attracted large amount of investment. In accordance to the Direct Investment Statistics, at the end of 2007, the stock of foreign direct investment (FDI) to Macau amounted 7.8 billion US dollars, an increase of 178% compared to 2.8 billion US dollars in 2001. The figures show that the majority of Macau 's foreign direct investors were from Hong Kong, the United States and the Mainland China.

In term of employment situation, there was a substantial increase in the number of labour force, the total labour force increased from 209 thousand in 1999 to 333 thousand in 2008, an increase of 59%. The labour force participation rate was 70.7% in 2008, an increase of 5.2 percentage points compared to 1999. Besides, the stable economic environment has helped maintaining a relatively low unemployment rate which has halved from 6.3% in 1999 to 3.0% in 2009. These indicators have reflected a sound employment situation and economic stability of Macau.

The economic prosperity and social harmony provides a competitive environment for Macau. According to the 2009 Blue Book of City Competitiveness in China, a leading report published by the Chinese Academy of Social Sciences. The result of a quantitative research and analysis of the comprehensive competitiveness of over 200 cities in China indicates that Macau ranks the Third in competitiveness of the resident's quality of life.

In 2005, the “Historic Centre of Macao” was successfully inscribed as a World Heritage Site at the 29 th Session of the World Heritage Committee hosted by UNESCO. Such recognition has further affirmed the importance of Macau as a meeting point of two civilizations, especially the cultural and architectural exchange between Portugal and China for more than 400 years.

Macau 's economic structure was mainly supported by the tertiary industry, namely gaming, tourism and provision of services. As most know, the incredible transition of Macau 's economy was resulted from the government's decision to end the monopoly of gaming concession in 2002. Presently there are 6 gaming concessionaires in Macau. Since the liberalization of the gaming operating concessions, many new hotels and large-scale tourism facilities and projects have been launched, which enhanced the number of tourist attractions and also elevated Macau's image to an international tourist destination and centre of entertainment.

In 2008, Macau registered 23 million visitor arrivals; such record marks an increase of over 200% comparing to the 7 million in 1999. The three main tourist generating markets of Macau are respectively the Mainland China, Hong Kong SAR and Taiwan, China. Apart from the Greater China region, Macau has been diversifying its tourism products and enriching its cultural contexts to attract visitors from different source markets, and there has been a significant improvement in the number of international visitors. The percentage of international visitors has increased from 7.8% in 1999 to a double digit of 13% in 2008.

The performance of hotel sector has been outstanding as well. Currently there are a total of 90 hotel establishments in Macau. The number of hotel rooms increased from 8 thousand in 1999 to more than 20 thousand in October 2009 while the average hotel occupancy rate rose from 53% in 1999 to 74% in 2008. The visitor per capita expenditure also increased by 25% from 1999 to 2008 and the total visitor expenditure was up from 2.6 billion US dollars to 15.5 billion US dollars during these ten years' time.

As a tourism city, the development of aviation industry is crucial. The Macau International Airport commenced its operation in 1995. At present, we can fly direct from Macau to more than 25 destinations covering most of the key cities in the Mainland China and Southeast Asia. In the future development plan, it is hoped to connect to more long-haul destinations, in addition to the existing route to Australia, so that the source of visitors will be further diversified.

With its strategic location at the doorway to the Mainland China, Macau is most suitable to serve as a regional hub for trade, commerce and investment. An important bilateral agreement “ T he Closer Economic Partnership Arrangement (CEPA)” was signed between the Mainland and Macau in 2003. Under CEPA, relevant products of Macau origin can enter China with zero tariff treatment, and it relaxes the market access conditions for Macau service providers, companies with manufacturing operations and multinationals with subsidiaries in Macau to have better access to China.

Another noteworthy policy of CEPA was the implementation of the Individual Visit Scheme (IVS) in 2003, which was a preferential treatment that allows residents of 49 cities of Mainland China to visit Macau in their individual capacity . As a result of this scheme, visitor arrivals from Mainland China surged from 1.6 million in 1999 to 11.6 million in 2008, an increase of 625%.

Macau has been long serving as a business and trade service platform for the Pan-Pearl River Delta Region and the western part of Guangdong Province. The Pan-Pearl River Delta Region, also known as “9+2”, is an economic zone comprising 9 Chinese Provinces neighouring the Guangdong Province plus two administrative regions Hong Kong and Macau. This entire region altogether is about 2 million square kilometers, with a population of about 453 million. That is around half of the area of the European Union with a similar size of population.

As at international level, fully utilizing the historical connections with Portugal, Macau has been designated by the Central Government to serve as a platform for “Economic Cooperation between China and Portuguese Speaking Countries”. A permanent secretariat has been set up in Macau to strengthen and increase economical and trade ties with these countries. Significant increase in the level of bilateral trade between China and Portuguese speaking countries was achieved. In 2008, the trade volume has reached 77 billion US dollars, an increase of 66% compared to 2007.

Based on the above discussion, Macau progressed remarkably in the past 10 years. This small territory with an area of 29.5 square kilometers and a population of 544 thousand achieved over 17 billion US dollars GDP in 2008, three times as much as that of ten years ago. The total government revenue in 2008 was 6.4 billion US dollar, treble the amount of 1999 while the exchange reserves increased from 2.8 billion US dollars to 16 billion US dollars over 10 years.

However, it is not an easy process to attain these economic achievements. Over the past ten years, a number of challenges have affected Macau, but the government and its people confronted with confidence. In 2003, the outbreak of SARS posed enormous economic repercussion in Asia. Although Macau was fortunate to remain safe from it, our economy was also affected by the macro environment as a whole.

Last year, the global economy was severely hit by the financial crisis, followed by the later outbreak of the Pandemic Influenza H1N1. Impacts on the local economy surfaced in the middle of year 2008 and prevailed in 2009. As at August 2009, the GDP of Macau recorded a negative growth of 12.8%, while the number of visitor arrivals also dropped by 9.6% as compared to the same period of 2008. Taken note of the situation, however, the Macau SAR government drew a number of stimulus policies to mitigate the strike. The economy is believed to be fully re-energized by next year, if not sooner, as shown by the many recovery signs.

Looking ahead for the future, Macau has to identify available opportunities and continuously strive to sharpen its competitive edge to meet the needs of the ever-changing global environment. In December 2008, the National Development and Reform Commission of the People's Republic of China released “The Outline of the Plan for the Reform and Development of the Pearl River Delta (2008-2020)”. The plan, by outlining the long-term development and cooperation between the Pearl River Delta Region, Hong Kong and Macau SARs in the areas of tourism, environmental protection, infrastructural and transport arrangements, further solidifies Macau as a global center of tourism and recreation.

Likewise, the State Council approved the feasibility study report of the Hong Kong-Zhuhai-Macau Bridge Project this October. The construction of the main bridge will start in phases by next month and is projected to be completed in 5 years. This bridge in total length of 36 kilometers is of strategic significance with the purpose to enhance connectivity of Hong Kong and Macau with other cities in the Pearl River Delta Region in the southern China. It is important for Macau to grasp the opportunities of regional cooperation and strengthen its function as a regional platform, so as to pursue economic diversification to support a long-term sustainable development.

Horasis is a global visions community committed to enact visions for a sustainable future. (http://www.horasis.org)

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