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Macau Business, a 132-page monthly magazine is De Ficção Multimedia Projects’ flagship publication. Launched in May 2004, focuses on Macau’s business community and economy and has achieved immense market credibility and penetration – in both circulation and reach – owing to its present monthly circulation of 25,000 issues and an aggregate growth rate of 800 percent to date. Besides local and international availability, Macau Business maintains a highly visited website – which recently logged its nine millionth pages viewed. Its subscribers span South East Asia, North America and Europe.
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EXCLUSIVE INTERVIEW
Macau MOP 35
Hong Kong HK$ 40
Mainland China RMB 35
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Politics 24 The 12 Labours of Chui Chief executive faces several challenges this year that could change his political fate
Special 32 Hail the dragon Chinese New Year is also the best time to do business
Property 48 Market watch Preliminary estimates suggest 2011 was one of the best years yet for the sector
CEO Interview 52 Francis Lui Galaxy Entertainment’s vice chairman says he wants an even spread of tables across the city’s six gaming operators
Gaming 60 Billions race Gross gaming revenue growth reaches new all-time high in 2011 62 Stock watch Citigroup says there is still “appreciable upside” for gaming stocks 66 Outer limits Sands China is updating the high-limit gaming area at the Venetian Macao 68 Resort reality check Asia’s casino resorts still rely heavily on gaming for their survival 74 Digital betting The mainland online community is creating tremendous opportunities for local casinos keen on digital marketing 76 The biggest ever ICE Totally Gaming 2012 to welcome over 400 exhibitors
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MB Report 80 Stubbed out Ban on smoking in most public venues is stirring controversy
Technology 92 Big tech trends Ovum’s main business IT predictions for 2012 Human resources 94 A crisis of creativity A lack of creativity in the workplace in Macau is cause for concern 98 Playing for keeps Is pay the only way to lure and retain talent?
Business 103 Capitalism for a cause Social enterprises have yet to take off in a big way
Opinion 10 From the publisher’s desk Paulo A. Azevedo 13 Editorial Emanuel Graça 21 Follow the leader Bill Kwok-ping Chou 28 Hopeful of change José I. Duarte 78 Champs and chumps Gustavo Cavaliere 91 Should we ban cigarettes? Peter Singer 101 Trouble in paradise Keith Morrison 106 Demystifying the Chinese economy Justin Yifu Lin
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We Deliver Decision Makers
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Silence on roadsafety is deadlyA SIGNIFICANT NUMBER OF MACAU’S motorists appear to have no driving skills at all. In any civilized society they would be labelled savages, such is the way they behave on the roads. They do not respect the traffi c code, morals or common sense. They are a disgrace to the city’s image.
It is one thing if they are poor driv-ers because they are not prepared prop-erly but when chaos runs wild because the authorities do nothing about it, it is something altogether different.
There is an argument that Macau drivers are not inherently bad. They drive poorly because they do not know any better. Some driving schools are sub-standard and the traffi c police do not always do a good job. Bad drivers multiply because the Transport Bureau insists it has no tools to change the cur-rent situation.
Unlike Hong Kong, Macau does not educate drivers through constant road safety awareness campaigns. Ef-forts aimed at prevention are minimal.
Accidents caused by disrespecting basic road rules – a pedestrian was hit and killed on a crosswalk just a few weeks ago – should have been long eradicated by education campaigns, greater supervision of the training provided by driving schools and more severe punishments
In the end, as is typical here, people are left with a bunch of rules that no one enforces.
Accidents caused by disrespecting basic road rules – a pedestrian was hit and killed on a crosswalk just a few weeks ago – should have been long eradicated by education campaigns, greater supervision of the training provided by driving schools and more severe punishments for those who fail to respect the traffi c code.
Producing more laws while al-lowing drivers’ attitudes to remain unchanged because those same laws cannot be policed is nonsense. The re-sponsibility must go all the way to the top of the pyramid. It is unacceptable and deplorable to have government sec-retaries unwilling to bear responsibility for the complete inability of the teams they supervise.
How long until the silence of the guilty ends? More importantly, when will Macau witness a change of mind-set, which seems frozen in time?
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A NEWSPAPER PUBLISHED A REPORT ON THE growing public dissatisfaction towards the city’s sole Internet service provider last month. The report said the number of complaints to the Consumer Council had grown exponen-tially year-on-year in 2011.
Macau’s slow Internet connection speed is nothing new. CTM’s investment in its network is still less than ac-ceptable. For many, fi bre-optic broadband connection is but a mirage as the service is not widely available.
Every time you call the company to complain about Internet speed, it is quite upsetting to just hear someone on the other end of the line advising you to “switch off the modem and switch it on again”.
While it is true that the cost of Internet access is not high, it is also true that the poor service Macau is provided is due to the lax
THE COMPANY TO WHICH Macau Business belongs is about to launch a new editorial project, a busi-ness newspaper, to be led by Tiago Azevedo. This year also marks the re-structuring of the group.
Soon, the fi rst issue of the newspaper will be out, hopefully fulfi lling the growing need for a business daily focused on Macau and the surrounding region. At the same time, Macau Business will intensify its vocation as an investi-gative news publication, hiring more staff, namely Sara Farr as deputy editor-in-chief.
The De Ficção – Multimedia Projects company, publisher of Macau Business and its Chinese-language sister magazine Business Intelligence, is now part of Proj-ect Asia Corporation, which also includes Global Asia Media, the joint-venture that publishes luxury publication Essential Macau; Gold-fi sh creative agency; MBSK Events, which organises the biggest annual local charity golf tournament; and Signature Events, a premium events company.
High-speed expectation
supervision of regulators.CTM, as a business-savvy
company, behaves in the usual Macau way, doing its best to remain “politically cor-rect”. Instead of increasing its investment in such an impor-tant area for business, in a world that demands ever faster access to online information, it took the easy way out and dropped prices. Consumers feel they are getting justice – while the service remains slow, at least it is cheaper – and the shareholders are left happy, with annual results sur-passing the projected targets.
Shareholder happiness is not a problem, nor should it be blindly condemned. What we would like is for CTM, as a provider of a public service, to stop hiding its head in the sand and boost its investment in infrastructure, even if a long overdue liberalisation is looming on the horizon for the fi xed-line telecommunication market.
Boost to editorial quality
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Editorial CouncilPaulo A. Azevedo, Albano Martins, Duncan Davidson
VOL.1 Nº93
Founder and PublisherPaulo A. [email protected]
Editor-in-ChiefEmanuel Graç[email protected]
Assistant Editor-in-ChiefSara [email protected]
Executive Director Business DevelopmentLuis [email protected]
Senior AnalystJosé I. [email protected]
Hong Kong BureauMichael Hoare (Chief), Anil [email protected]
Special CorrespondentMuhammad [email protected]
Beijing CorrespondentMaria João [email protected]
Manila CorrespondentMax V. de [email protected]
Assistant to the PublisherWeng [email protected]
Art DirectorsConnie Chong, Luis [email protected]
PhotographyAntónio Mil-Homens, Carmo Correia, Greg Mansfi eld, Gonçalo Lobo Pinheiro,John Si, MSP Agency, Agencies
IllustrationG. Fox, Rui Rasquinho
Contributing EditorsAlexandra Lages, Christina Yang Ting Yan, Derek Proctor (Bangkok), Filipa Queiroz, Helder Beja, Joana Freitas, João Francisco Pinto, José Carlos Matias, Kahon Chan, Kim Lyon, Lia Carvalho, Lois Iwase, Luciana Leitão, Ray Chan, Sara Silva Moreira, Sofi a Jesus, Steven Chan, Tiago Azevedo
Regular Contributors 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
AdvertisingXu Yu, [email protected]
Advertising AgentsBina [email protected]é [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, Hoje Macau,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]
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]
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Make your mind up
Emanuel GraçaEditor-in-Chief
One of Fernando Chui Sai On’s main headaches for 2012 will be deciding which casino operator or operators will be given the green light to break ground in Cotai
an industry already facing a high degree of uncertainty. Such a failure would also detract from the government’s international credibil-ity, which is already suspect because it lacks a clear strategy and fl ip-fl ops in making policy for the gaming industry.
Grand fi nalistsThe only question remaining then is: which casino operators will be authorised to break ground in Cotai in 2012? It is unlikely that all projects awaiting approval will be given the thumbs-up this year. The simultaneous con-struction of four or more mega-developments would not be feasible.
All contenders have sound reasons to go fi rst. SJM Holdings Ltd. has built what is the city’s second-most recognisable landmark after the Ruins of Saint Paul’s – the Grand Lisboa. MGM China Holdings Ltd. can point out that the non-gaming expertise of its parent com-pany, MGM Resorts International, would bring added value to Cotai. Wynn Macau Ltd. may highlight that when its peninsula casino-hotel opened, it established new standards for the industry.
Even Melco Crown Entertainment Ltd., already present in Cotai, can say to the govern-ment that when it acquired the majority stake in the Macau Studio City project it solved a tricky problem for offi cials. It would be disap-pointed, to say the least, not to be authorised to undertake the project soon, gaming facili-ties and all. Adding more drama to the plot, Galaxy Entertainment Group Ltd. and Sands China Ltd. still have land in Cotai yet to be developed.
Choosing which company should go fi rst will be far from easy. Whatever the govern-ment’s choice, it will be criticised. The only way to blunt the criticism is to ensure that the decision is properly explained and that the process is open to scrutiny. The past practice of suddenly publishing casino land grant contracts in the offi cial gazette without a word of expla-nation is no longer acceptable.
THIS YEAR IS SET TO BE THE MOST IMPORTANT SO far, politically, for chief executive Fernando Chui Sai On. There are several events that will defi nitely infl uence how people judge his performance.
One of Mr Chui’s main headaches will be deciding which casino operator or operators will be given the green light to break ground in Cotai. Nobody is expecting further delays to this decision. After more than three years of postponements, the government needs to take a stand on this matter this year, for several reasons.
Sands Cotai Central will fi nally open, ending the fi rst stage of the development of Cotai. As the construction work fi nishes, hun-dreds of construction workers will be out of a job and many subcontractors idle. There is a need for big new projects to keep them busy and avert social instability.
The casino resort projects in Cotai still awaiting government approval would do the trick. That is, unless offi cials are expecting to use the laid-off construction workers and idle subcontractors to help build the light rail tran-sit system. Since the government has yet to present anything resembling a comprehensive employment policy, one can only guess.
Keeping the building momentum going in Cotai would also benefi t Macau’s economic growth during a period of international fi nan-cial and economic uncertainty.
Although growth in gross domestic prod-uct is driven by gross gaming revenue, the con-struction of casino resorts is a big contributor to gross fi xed capital formation. It also pumps up inbound foreign direct investment.
By failing to issue any casino construc-tion permit in 2012, the government would be sending the wrong signal to casino operators and fi nanciers, since offi cials have already in-dicated that all casino concessionaires will be allowed a foothold in Cotai. With no schedule announced yet for the renewal of the gaming concessions – or clea r procedure for going about it – such a failure would only rattle
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CorrectionsIn our December issue, there was a design fl aw on the opinion article “Seize the day” by Carlota Proença de Almeida, on pages 76 to 78. The line numbers on the left-hand text column of page 78 where incorrectly placed one line up.
We offer sincere apologies to the author and to our readers.
Write a letter to the editorTo submit a letter to the editor e-mail [email protected] with the subject “Letters to the Editor”.
Letters may also be sent by regular mail to this address: Letters to the Editor, Macau Business, Block C, Floor 9, Flat H, Edf. Ind. Nam Fong, No 679 Av Dr Francisco Vieira Machado, Macau.
Please include your full name, address and a telephone number for confi rmation purposes. Letters should be 200 words or fewer and all are subject to editing.
Parking ticket immunityI don’t understand why motorcycles are al-lowed to park in the “no parking” area between Macau Square and the Luso Bank Building.
Can anyone explain?
It seems that motorcycles have some kind of immunity. They accumulate like fl ies on rotting meat. As soon as one parks illegally others rapidly appear. It’s like some kind of safe haven. Is it because, on the rare occasions when tickets are issued, it takes so long for each one? Safety in numbers?!
Surely, if parking is illegal it should be penalised, every time! It happens daily, so it is not diffi cult to do so. And if it takes too long then take a photograph and send the ticket by mail later.
Of course cars do the same, but they get tickets, although it takes the same amount of time to issue a ticket for a car as for a motorcycle.
Parking restrictions exist for two main purposes: to main-tain space around sensitive areas and to facilitate traffi c fl ow. So, may we have some attention to this matter, please?
Of course, one important side effect of this would be to make it easier for government chauffeurs to park illegally in that area of the city, something that already happens.
Can anyone explain why so few tickets are issued for il-legal motorcycle parking?
I don’t understand.Roy Goss
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MINIMUM SUBSISTENCE INDEX ADJUSTEDThe minimum subsistence index will go up roughly around 7.5 percent starting this month. For a three-member family, the value will be increased to MOP8,160 (US$1,020), from MOP7,340. The minimum subsistence index was last updated in April 2011. It establishes an income ceiling for a minimum living standard in Macau, allowing people under that to apply for government support.
GAMING DRIVES ECONOMY
SKY SHUTTLE SELLS HELICOPTERSSky Shuttle Helicopters Ltd., the sole operator of helicopter services connecting Hong Kong, Macau and Shenzhen, has sold four of its old Sikorsky S76C+ helicopters that were withdrawn from service in 2009 when they were replaced by AgustaWestland AW139 aircrafts, a company source told Macau Business. The buyer was Eagle Copters Ltd., a private, family-owned company from Canada. In 2010, one of Sky Shuttle’s AW139 helicopters had to make an emergency landing at sea shortly after taking off from Hong Kong. The two pilots and 11 passengers were all plucked to safety. In September 2011, the company had to temporarily ground four of its fi ve AW139 helicopters to undergo thorough checks to replace tail rotor blades after emergency airworthiness directives were ordered by several aviation regulators following an accident in Brazil involving a AW139 aircraft. Sky Shuttle is owned by Chan Un Chan, the third wife of Stanley Ho Hung Sun.
GROSS NATIONAL INCOME SOARSMacau’s gross national income (GNI) at current prices amounted to MOP201.88 billion (US$25.2 billion) in 2010, up by 25.0 percent in real terms. In comparison to gross domestic product for the same period, GNI was lower by MOP24.39 billion, with the difference further widening in comparison to the MOP15.34 billion registered in 2009, the Statistics and Census Service said. GNI indicators less than GDP implies that the income earned by non-local investors from Macau was higher than the foreign investment income earned by local investors from abroad.
Macau becoming more dependent on casinos, data shows
Macau’s economic dependence on gaming further increased in 2010, according to data unveiled last month by the Statistics and Census Bureau.
In 2010, the relative importance of gaming to the territory’s gross domestic product soared by 8.9 percentage points year-on-year, to 40.9 percent.
Macau is overall becoming more dependent on the tertiary sector, which saw its weight in the local economy increase to 92.6 percent in 2010 from 89.1 percent in the previous year.
The relative importance of wholesale and retail to GDP rose to 7.0 percent from 5.9 percent a year before, while the hotel sector’s economic relevance went up by 0.3 percentage points to 4.6 percent.
Meanwhile, the relative importance of the secondary sector to the GDP declined to 7.4 percent in 2010 from 10.9 percent a year before.
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DAGONG MAINTAINS MACAU’S RATING
NEED TO IMPROVE ACCOUNTING STANDARDSMacau needs to improve its audit and accounting standards, upgrading them to match the international standards in this area, the Macau Society of Registered Auditors says. For new standards to be adopted, fi rms must be willing to reveal more data on their business, said Denis Vong Hou Piu, the association’s chairman of the board of directors, quoted by TDM. “The requirements for international fi nancial standards are higher as more information has to be revealed. In other words, we need more experienced accountants or offi cers,” he added.
NO MAJOR CHANGES IN CORRUPTION PERCEPTIONMacau continues ranked in 46th position in the 2011 Corruption Perceptions Index, issued last month by Transparency International. Macau’s score rose to 5.1 points from 5.0 last year. The SAR is one of only eight countries and regions in Asia awarded a positive mark. Results show that the country perceived as the least corrupt in the world is New Zealand, with a score of 9.5, while Denmark and Finland rank the second, both with a score of 9.4. Singapore ranks fi fth, scoring 9.2. Hong Kong and the mainland rank 12th and the 75th, scoring 8.4 and 3.6 respectively. The ranking includes a total of 183 jurisdictions.
MONETARY AUTHORITY BOOSTS INTERNATIONAL COOPERATIONThe Monetary Authority of Macau has become the 20th regulator to join the multilateral memorandum of understanding of the International Association of Insurance Supervisors, it was announced last month. The document governs the basic cooperation requirements relating to the exchange of confi dential information and the assurance that such information will only be deployed in the process of supervision. The International Association of Insurance Supervisors was founded in 1994. Its members come from 140 countries covering over 190 jurisdictions.
China’s domestic rating agency expects Macau’s economic growth to reach 16 percent in 2012China’s domestic rating agency Dagong Global Credit Rating Co. Ltd. decided last month to maintain the credit rating of Macau at AA+ with a stable outlook.
Given strong domestic demand and the relatively stable outlook for gaming, Dagong estimated that the economic growth rate of the city in 2011 would reach 21 percent, dropping to 16 percent in 2012, Xinhua offi cial news agency reported.
Dagong expects the fi scal surplus of Macau in 2011 and 2012 will be equal to 22.1 percent and 18.4 percent of domestic gross domestic product, respectively.
However, Dagong warned that a lack of core competitiveness, the high dependence of leading industries on external economies and tightening labour conditions are likely to restrict Macau’s growth in the long term.
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COMING SOON
For more information visit macaubusiness.com or write to [email protected]
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RAINBOW GROUP INCREASES FOOTHOLD AT GRAND LAPARetail company Rainbow Group is taking over three more shops at the Grand Lapa Hotel, a source close to the deal told Macau Business. The shops are located on the ground fl oor of the 5-star hotel. Rainbow Group already operates other shops in the hotel’s shopping arcade. “It is a good move for the retail group but will leave the hotel very dependent on one group,” an analyst told Macau Business. Rainbow Group declined to provide information both on the deal and brands that will occupy the shops. The Rainbow Group is Macau’s largest distributor of high-end brand products, holding exclusive dealerships for more than 10 brands in Macau – including Emporio Armani, Cartier, Ermenegildo Zegna and Burberry.
A total of 51 shops included in the Consumer Council’s “Certifi ed Shop” mechanism where found to not be fulfi lling all the required standards.
According to a press release from the Consumer Council, around 4 percent of the 1,241 adherent shops evaluated to receive the 2012 “Certifi ed Shop” emblem did not pass the assessment, mainly due to unqualifi ed sales policies or the number of complaint cases fi led against them.
The council indicated that another of the problems identifi ed was the unclear display of prices at shops where payments are accepted in currencies other than patacas, especially when exchange rates are not displayed.
The Consumer Council added a fi ve-class grading standard to its assessment system for 2012. Of the 1,190 qualifi ed shops, only nine were included in the top category.
The council also launched last month a “Supermarket Price Information Platform” iPhone app. The app provides consumers with retail prices of around 300 kinds of products from over 10 local supermarkets.
The price data included in the application are updated monthly and the application can be downloaded for free. The interface and content is available in Chinese, English and Portuguese.
NOT GOOD ENOUGHOver 50 stores fail Consumer Council’s “Certifi ed Shop” assessment
NEW RECORD AT MACAU TOWERAfter setting the world record of the highest commercial bungee jump fi ve years ago, Macau Tower joined hands with students from the Institute for Tourism Studies to set yet another new Guinness World Record: the largest canvas pieced together as a postcard mosaic. The “Z Generation, One Destination” postcard mosaic puzzling event gathered the efforts of 50 students, combining 20,000 postcards to form a giant canvas reaching 29.6 metres x 10.5 metres in size.
BEST EVER GRAND PRIXThe 2011 Macau Grand Prix generated a total revenue of MOP36 million (US$4.5 million), establishing a new record, the organising committee announced. The total revenue included MOP10 million from ticketing, with the rest of the money coming from title sponsors and other sponsorship. The organisers didn’t say how much the previous record was. The Grand Prix also attracted more visitors to Macau. During the four-day period, 454,000 visitors arrived in the city, representing an 18.9 percent increase over the same period in 2010, with hotel occupancy rates reaching 92.3 percent. The 59th Macau Grand Prix will be held from November 15 to 18.
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Follow the leaderBeijing’s policy toward Macau can be regarded as an
extension of its policies toward the mainland’s frontier regions, which emphasises maintaining political control.
There are three main reasons for the central government’s preoccupation with ensuring control over those areas.
First, frontier regions are usually areas where ethnic minorities live. Owing to stark cultural differences between these minorities and the mainland’s Han ethnic majority, they are generally more reluctant to accept central government authority.
Frontier regions are also strategically important for China’s security because they abut neighbouring countries.
There is also a concern among those in power that some of these regions will fi nd it diffi cult to integrate politically with the People’s Republic of China. Some frontier areas became part of the mainland only recently. In certain cases, differences in political systems persist and the sense of belonging to Greater China is weak among citizens of these regions.
Economic integration with the mainland is one of the tactics Beijing employs to maintain political control over Hong Kong, Macau and other frontier regions. The central government provides funds, technology, labour and privileged access to mainland markets, and promotes development projects. This way, frontier regions can be helped to achieve economic and social development, weakening any anti-central government sentiment.
Grumpy neighboursTo maintain a high degree of autonomy for Macau, Beijing did not vigorously promote economic integration right after the handover. But it did open some doors. For instance, the central government prescribed that, with its own approval and the Macau government’s consent, mainland provincial or municipal governments could establish representative offi ces in the SAR. Similarly, provincial or municipal governments and Macau could enter into cooperation agreements if these agreements were struck on Macau’s own initiative.
However, right after 1999, the Macau government’s focus was on internal affairs. Also, offi cials had no experience in dealing with the mainland and this was another obstacle to economic integration.
With relations between Macau and Zhuhai less than perfect, in the early years the cross-border industrial zone was the only material product of direct cooperation between both cities. As for Hengqin, Macau initially hinted that it hoped to rent the whole island but the Guangdong provincial government and the Zhuhai municipal authorities dragged their feet and this hope, although hotly debated for years, was eventually dashed.
Unintended consequencesThe turning point came in 2003, when 500,000 people in Hong Kong demonstrated their opposition to a national security bill – a law required by the Hong Kong Basic Law. To weaken opposition sentiment in Hong Kong, Beijing undertook a series of economic integration measures later that year. Those measures included granting mainland Chinese individual visas to visit the city as solo travellers, rather than as members
of tour groups, pressing ahead with the Closer Economic Partnership Arrangement and giving the green light to the Hong Kong-Zhuhai-Macau Bridge project. Eventually Macau got the same treatment, although anti-Beijing sentiment here was far less of a threat than in Hong Kong.
Individual visas boosted the rapid development of Macau’s gaming industry and, concurrently, the city’s economy. But it also aggravated problems in the mainland such as money laundering and the propensity of offi cials to gamble away public funds.
In 2008, in view of Macau’s increasing dependence on the gaming industry, Beijing demanded that the SAR take steps to diversify the city’s economy. The Macau government announced that it would not accept any new casino projects – an announcement clearly prompted by the central government.
Soon after, the National Development and Reform Commission issued “The Outline of the Plan for the Reform and Development of the Pearl River Delta”, which defi ned the policy framework for the integration of Macau into the Pearl River Delta region.
All aboardThe document clearly shows the central government’s hope to intensify cooperation with Taiwan through the Pearl River Delta region in areas such as trade, high-technology manufacturing, tourism, education and culture. The integration of Macau into the Pearl River Delta region was one more move by Beijing in the complex chess game that its policy toward Taiwan has become.
Because an acute shortage of land was hampering the diversifi cation of Macau’s economy, vice-president Xi Jinping declared in January 2009 that Macau and Guangdong would jointly develop 5 square km of land on Hengqin Island. The fi rst project approved was an industrial park for the Chinese traditional medicine business.
Macau was also allowed to lease a plot of 1.1 square kilometres on the island for a new campus for the University of Macau. The land will be under Macau’s jurisdiction. The lease runs until December 19, 2049, but is extendable if approved by the Standing Committee of the National People’s Congress.
To boost relations between Macau and Zhuhai, the number of cross-border cooperation mechanisms has been increasing. For example, a task force was set up following a joint conference between Guangdong and Macau authorities in December 2008. In April 2009, three sub-groups were established to deal with the upgrade of the cross-border industrial zone, cross-border city planning and traffi c, as well as border checkpoint management.
All this points one way: after a slow start, Beijing has become the main locomotive of economic integration, following its own political agenda and with a view to reaching its own political goals. The Macau government has just been pulled along behind. The result is a peculiar state of affairs: the economic integration of Macau with the Pearl River Delta region is more of a political undertaking by Beijing in Beijing’s interests than an economic undertaking by Macau in Macau’s interests.
BILL KWOK-PING CHOU ASSOCIATE PROFESSOR OF POLITICAL SCIENCE, UNIVERSITY OF MACAU
MACAU’S ECONOMIC INTEGRATION WITH THE MAINLAND IS THE CONSEQUENCE OF BEIJING’S WILL RATHER THAN MACAU’S INCLINATION
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DECEMBER 2011
EXPORTS UPMacau’s total merchandise exports for November amounted to MOP651 million (US$81.4 million), up by 14.2 percent year-on-year, the Statistics and Census Service reports. Even so, that growth rate was outpaced by the total merchandise imports, which went up notably by 51.9 percent year-on-year, to MOP6.23 billion.
BANK DEPOSITS POST INCREASETotal deposits with the Macau banking sector grew 4.3 percent in October from a month earlier to MOP408.1 billion (US$51 billion), the monetary authority announced. Domestic loans to the private sector edged up 0.1 percent on a monthly basis to MOP165.1 billion. On the other hand, external loans rose 0.4 percent to MOP148.3 billion.
UNEMPLOYMENT REACHES NEW LOWMacau’s unemployment rate for September-November was 2.3 percent, down by 0.1 percentage points over the preceding period (August-October) and the lowest ever since at least 1992, when the Statistics and Census Service’s online data starts. This is the second time in a row that an all-time low for the unemployment rate has been set. The number of unemployed in September-November decreased by about 300 to 8,100, with 15.3 percent being fresh labour force entrants searching for their fi rst job.
FAMILY PORTRAITThe Statistics and Census Service released the preliminary results of
the 2011 population census last month. The fi gures paint a portrait of a society growing in numbers, and where home ownership rate is
declining. The full results will be made public in April
2.4%The annual average rate of population
growth in the past 10 years. As of August 2011, the population of Macau totalled 552,500 people (including non-resident workers)
of which 52.0 percent were female
142,300The number of people per square km
living in Areia Preta and Iao Hon, the most densely populated areas in the world.
Overall population density in Macau stands at 18,600 people per square km,
up by 10.3 percent in comparison with 2001, when the last census was conducted
36.0 yearsThe median age of the population, an increase of 2.7 years from 2001.
People aged 65 and above represent 7.2 percent of the total population
41.1%The percentage of Macau’s population that was actually born here. The majority of the
people, 46.1 percent, were born in the mainland while 3.4 percent come from Hong Kong
170,700Total number of households in Macau,
up by 26.5 percent from 2001. The average household size
is 3.08 members
70.4%The percentage of households living in residential
units they own, down substantially by 6.1 percentage points in comparison
with the 2001 census. One quarter of households live in a rented home, up from less than
20 percent one decade ago
SOURCE: STATISTICS AND CENSUS SERVICE
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JANUARY 2012
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Weekend Chocolate and Tapas Afternoon Tea BuffetTime: Saturday and Sunday, 3pm – 6pmPrice: MOP228* per person for each buffet or MOP298* for both
* Prices quoted are per person and subject to 10% service charge
Vida Rica BarMandarin Oriental, Macau | Avenida Dr Sun Yat Sen, NAPE, MacauReservations and enquiries: +853 8805 8928
Nestled on the second floor of Mandarin Oriental, Macau and with spectacular sights of the city’s vibrant skyline, Vida
Rica Bar is famous for offering patrons a unique array of stellar palate experiences. The venue has outdone itself once again, with the addition of a new weekday semi-lunch buffet to its offering, which already includes the weekend favourites chocolate and tapas afternoon tea buffets.
While Executive Chef Dirk Haltenhof showcases his signature creations at Vida Rica Restaurant, he now extends his popular daily lunch by presenting the irresistible lunch buffet at Vida Rica Bar. Expect only the finest ingredients in a smorgasbord of fresh seafood, salads, cold cuts, cheese, meats and soups.
Wait, there is more! The delicious buffet also includes a wide selection of chef’s daily recommendations for main courses, plus dozens of delectable desserts, including
Sumptuous culinary delights on offer at Vida Rica BarBuffet Pleasures
a variety of freshly baked cakes and pastries, homemade warm puddings, mousses and all manner of tasty sweet treats. Tea or coffee is included.
On weekends, the Vida Rica Bar transforms itself into the best spot in town for an afternoon full of fun and scrumptious choices of tapas and chocolate desserts with family and friends. Its signature weekend chocolate and tapas afternoon tea buffets top the city’s offering.
The tapas buffet includes bruschettas, warm and cold tapas, Portuguese delicacies and different kinds of cheeses. For those with a sweet tooth, the chocolate buffet will satisfy beyond expectations, with a chocolate fountain, chocolate cakes, pralines, mousse cakes, macaroons and soufflés.
Enjoy the vivid flavours of Vida Rica Bar, where gourmet delicacies are juxtaposed with fabulous views of Macau.
Politics24Il
lust
rati
on
: Ru
i Ras
qu
inh
o
26
JANUARY 2012
26
JANUARY 2012
JUST LIKE HERCULES IN GREEK MYTHOLOGY HAD TO PERFORM 12 TASKS TO RECOVER HIS HONOUR AND EVENTUALLY BECOME IMMORTAL, CHIEF EXECUTIVE FERNANDO CHUI SAI ON ALSO FACES 12 CHALLENGES THIS YEAR THAT COULD CHANGE HIS POLITICAL FATE
INFLATIONThe government has been promising that it will roll out new relief measures if infl ation keeps rising. As to when and how these will be implemented, it is anyone’s guess. What the government says is that it will be done in a “timely manner.” For now, the focus has been on expanding import channels of food products to Macau.
As it is now, annualised infl ation stands at 5.57 percent. In November, prices were up 6.65 percent year-on-year. The good news is it was the fi rst time since the end of April that the price growth rate slowed down. The trend may eventu-ally continue, since infl ation is decreasing in the mainland, Macau’s number one supplier of goods.
PUBLIC HOUSINGThe government has pledged several times that it would build 19,000 public housing units between 2007 and the end of this year. The deadline is challenging, since less than 4,000 units were ready as of November, data from the Housing Bureau shows. In many cases, it will be close to impossible to have the buildings ready this year. The allocating process of peo-ple to the units is also facing delays.
During his 2012 policy address, chief executive Fernando Chui Sai On said there are plans for an additional 3,850 units on top of the 19,000.
POLITICAL REFORMThis issue is set to stand centre-stage in 2012, with amend-ments in the local electoral system widely expected.
Beijing has already said it would welcome proposals to see a change in the way the Macau chief executive and mem-bers of the Legislative Assembly are selected. This month, the government will be holding several public consultations on whether the methods to form the Legislative Assembly body in 2013 and the selection of the chief executive in 2014 should be revised, and if so, how.
The government is expected to submit a pre-proposal on the matter to the Standing Committee of the National Peo-ple’s Congress by early next month.
Politics26
27
JANUARY 2012
27
JANUARY 2012
TELECOM MARKET LIBERALISATIONTwo new telecommunication operators will join CTM in pro-viding landline phone services. The international tender will be opened in the fi rst half of the year. Last month, CTM said it remains “fully committed” to supporting the government’s telecom development strategy. The government has said it expects tariffs to go down as competition increases.
REGIONAL COOPERATIONWhere there is a will, there is a way. And the way to diversify the economy here seems to be to strength regional coopera-tion. At least according to Mr Chui, who said Macau has placed great hope in strengthening cooperation within the Pan Pearl River Delta in 2012. SAR secretaries have said they would like to see more regional co-operation on meet-ings and conventions as this would help drive Macau towards becoming an international tourism and leisure hub.
HUMAN RESOURCESThe unemployment rate is at an all-time low. Between Sep-tember and November the unemployment rate stood at 2.3 percent, down by 0.1 percentage point over the previous peri-od. In contrast, the number of non-local workers has reached a new three-year high. Figures show this number stands at over 92,000. While the total labour force is around 345,000 people, many small and medium-sized enterprises are feeling the strain because they can’t match the salaries offered by the large hotels and casinos, therefore making it harder to attract future employees. Casinos also complain about labour short-ages, both in quantity and quality.
HENGQIN ISLANDThe Hengqin Island campus of the University of Macau is scheduled to open by the end of the year. A new company has been created to coordinate the SAR’s investment in the future industrial park in Hengqin that will be developed jointly with Guangdong authorities. The land is also attracting interest from gaming operators. SJM Holdings and Galaxy Entertainment Group have both said they would like to invest in Hengqin, even though they haven’t announced any concrete plans yet.
LIGHT RAIL TRANSIT SYSTEMIf traffi c is already clogged and congested in many of Macau’s major arteries, then the start of the large-scale construction works for the fi rst phase of the light rail transit system will only make it worse. Managing people’s dissatis-faction while ensuring the system’s construction goes ahead without any further delays won’t be an easy task.
COTAIEveryone wants a piece of the Cotai. Sands Cotai Central will open this year and the government should also fi nally al-low some of the new casino resorts into the pipeline to break ground. For Sands China Ltd., the question remains: how will the gaming operator successfully open its new property when the government has implemented a cap on the number of gaming tables which is already close to being achieved? Will Sands China Ltd. have to shift tables from its other properties to the new one?
Just last month, SJM Holdings Ltd. said it received a letter from the government granting it a piece of Cotai too. And Wynn Macau Ltd. also announced it has accepted the terms and conditions for a land concession in Cotai. The government, however, has said both applications are not yet approved.
LAND GRANTS AND URBAN PLANNINGEver since the former secretary for public works and trans-port Ao Man Long was arrested in 2006, all eyes have been on Macau and the lack of transparency surrounding land grants. This has triggered authorities to look into coming up with a revised system, to be sent to the Legisla-tive Assembly by year-end for approval, after years in the making. The deadline for the city’s maiden urban planning law is the same. Field experts say that without one, the other won’t work.
ECONOMIC DIVERSIFICATIONAgain, Beijing has said it wants to see Macau accelerate the pace of economic diversifi cation. When Mr Chui met with premier Wen Jiabao and president Hu Jintao last month, the central government also urged that local authorities inten-sify their work to improve people’s livelihoods and carefully manage fi nancial matters. Mr Wen also reiterated that Macau can’t rely on gaming revenues alone.
MONEY, MONEY, MONEYMacau has done fairly well in weathering the global fi nan-cial crisis but many analysts are worried that the territory is over-reliant on the gaming industry. The city’s fast growth has in turn led to the widening of the wealth gap. To counter this and help those in need, the government has been imple-menting a wide array of social relief measures – the question is whether this is enough to ensure social stability. At the Legislative Assembly, secretary for administration and justice Florinda Chan said her offi ce would look into increasing the wages for public servants later this year.
28
JANUARY 2012
Another year has passed with another outstanding display of economic growth by Macau. Unemployment was virtually zero and fears of infl ation have abated somewhat.
We may be tempted to conclude that all is well in our SAR. Yet, one cannot avoid observing that most of the results achieved were driven by factors over which we have very little control. We caught, or were caught by, the crest of a wave that appears to have no end in sight.
Continuous growth in gross gambling revenue seems to make our economy insensitive to whatever happens abroad. But what fortune gives, fortune can take away. We must peer into the future and make timely decisions that allow us to better cope with challenges when times eventually change.
Still, one cannot avoid the feeling that those things over which we do have a degree of control are being allowed to drift. Decisions are either postponed or avoided, and objectives are poorly defi ned or imprecisely framed.
Drifting along subjects the fabric of society and the economy to erosion, making it less resilient when the tide changes or the currents slow.
Policy vacuumLet us look at the economy. The one sector upon which almost everything else depends is doing very well, thank you. The fl ow of visitors is steady. The fl ow of money seems infi nite. However, the taps to both are outside our jurisdiction and are themselves subject to forces, economic and political, upon which we have a weak infl uence.
That implies two main pillars should underpin economic policies: a clear understanding about the expected and desirable development of the gaming sector, and a coherent approach to developing a legal and policy framework that favours economic diversifi cation.
There are mounting worries on both fronts.Signifi cant decisions have been made on the future of the
gambling sector. Most notably the policy to limit the number of live gaming tables until next year to a maximum of 5,500 and to restrict their growth thereafter to 3 percent a year for the next decade. Aside from the abundance of adjectives used to describe these targets – adequate, sustainable, harmonious growth – no substantive explanation on how they were calculated was provided.
They seem arbitrary. We could easily imagine other fi gures and rates of growth that could also be described as “adequate” or “sustainable”. The table cap also seems totally out of sync with reality.
What are the assumptions behind these targets? What population, visitor and demand trends were taken into account to defi ne them? What considerations in terms of their impact on the labour market, transportation, housing needs, infrastructure development were used? One can only guess.
The same kind of uncertainty hangs over assigning land in Cotai for new casino resorts. By the way, are they all viable within the existing limits on development? The same question could be applied to the criteria that will eventually be used to share the available gaming tables between casino operators.
There is a sense of arbitrariness and vagueness in these policies that is the contrary to good governance and fostering economic confi dence.
Cushion erosionThe excessive and growing dependence on the gambling sector, no matter how well it may serve the public fi nances in the short term, can also become a curse if, for some unexpected or uncontrollable reason, the tide changes.
The argument for diversifi cation is often based solely on social or ethical considerations. In many regards, a society less heavily dependent on gaming might be a desirable goal in itself. That is another discussion.
From a longer-term economic perspective, a more diversifi ed economy is a worthy goal. That objective, continuously repeated by offi cials, seems increasingly hard to achieve. A lack of policies to guide timely housing and urban development led to skyrocketing real estate prices. Labour policies that were incoherent and unstable led to imbalances in the labour market. Both labour shortages and rental costs have exacted a toll on family-owned fi rms, and small- and medium-sized enterprises, and are serious obstacles for start-ups.
Even if those sizeable barriers could be overcome, there are too few people interested in engaging in these types of business. Anyone who knows a thing or two currently looks for a job in the gambling industry and expects a salary that is beyond most smaller companies.
Smaller fi rms impart a great deal of resilience to an economy and to a society. As the autonomy and initiative of the government has progressively declined, it seems that the social structures that could provide a buffer during diffi cult times are being weakened by the day.
Throwing money around is unlikely to solve the problem.It is also questionable whether the co-development of
Hengqin Island with Guangdong will solve the problem. As much as it seems to make sense from the perspective of offi cials in Zhuhai, in Macau, the project is trapped in vagueness by the “wait-and-see” approach favoured by our offi cials.
It appears that we believe money alone will always fi ll in the gaps. Sooner or later, fortune will test that belief.
Not all is gloomy. A new year is setting in and with it comes a renewal of hope.
Happy New Year!
Hopeful of changeJOSÉ I. DUARTE ECONOMIST, MACAU BUSINESS SENIOR ANALYST - [email protected]
THE CITY’S ECONOMY IS INCREASINGLY DEPENDENT ON GAMBLING DUE TO SHORT-SIGHTED POLITICS AND A LAISSEZ-FAIRE APPROACH
It appears that we believe money alone will always fi ll in the gaps. Sooner or later, fortune will test that belief
29
JANUARY 2012NOVEMBER 2011OCTOBER 2011SEPTEMBER 2011
GDP current (in MOP)
Consumption (in MOP)
Investment (in MOP)
Government (in MOP)
Trade balance: goods (in MOP)
Trade balance: services (in MOP)
GDP constant (2009) (in MOP)
217,324
17,496
27,727
17,496
- 42,676
164,086
207,194
34,721
243,247
130,677
237,627
104.25
0.50
75,396
15,706
9,715
4,982
-16,672
61,664
66,750
31.4
9.8
- 13.6
9.3
21.5
54.2
26.2
30.7
15.6
20.7
15.4
46.8
43.1
21.1
Output and expenditure2010 % var Latest % var
Notes
Notes
M1 (in MOP)
M2 (in MOP)
Credit (in MOP)
Deposits (in MOP)
IPC/Infl ation rate (*)
AMCM base rate
13.4
14.6
29.2
14.6
2.81
--
6.2
17.6
37.9
17.7
6.71
--
Money and prices % var Latest % var
September
September
September
September
October
November
Q3
Q3
Q3
Q3
Q3
Q3
Q3
Notes
Notes
Notes
Notes
Population
Labour force
Median wage rate (in MOP)
Unemployment
Started
Finished
Cement (Apparent consumption)
Transactions/Commercial (in MOP)
Transaction/Residential (in MOP)
Gross revenue (in MOP)
Casinos
Tables
Machines
Visitors
Average expenditure (in MOP)
Average stay
Hotel rooms
Occupation rate
Average hotel stay
522,300
330,900
9,000
3.0 %
1,835,174
1,271,509
214,166
6,580
45,939
189,588
33
4,791
14,050
24,965,000
1,812
0.90
20,091
79.8
1.54
2,377,000
1,633
1.00
22,407
79.70
1.52
26,956
34
5,379
15,900
-1.9
0.5
4.7
-0.1
- 19.8
- 9.6
- 22.6
117.0
113.0
57.0
2
0.4
2.2
15.0
0.3
- 0.2
4.3
8.43
0.04
13.6
6.8
--
12.9
5.56
-0.45
2.1
4.5
11.1
-0.5
191.2
--
88.0
4.1
-51.5
42.1
1
12.3
13.2
Population/Labour force
Construction
Gaming
Tourism
2010
2010
2010
2010
2010
% var
% var
% var
% var
Latest
Latest
Latest
Latest
% var
% var
% var
% var
Q3
Q3
Q3
Sep, var
October
October
October
October
October
October
Q3, var, ytd
Q3, ytd
Q3, ytd
October
Q3
Q3, var
September
Sep, var
Sep, var
560,100
344,300
10,000
2.4 %
75,473
48,535
34,485
684
1,661
So
urce
s: D
SE
C (S
tatis
tics
and
Cen
sus
Ser
vice
), A
MC
M (M
one
tary
Aut
hori
ty o
f Mac
au),
DIC
J (G
amin
g In
spec
tion
and
Co
ord
inat
ion
Bur
eau)
Ma
jor
sect
ors
Eco
nom
ic A
ctiv
ity
%var - % change on homologous period; var - absolute variation; ytd - % change, year-to-date; x - discontinuous series
million
million
million
million
million
million
million
million
million
million
million
base - 2008
%
million
million
million
million
base - 2008
%
million
million
million
million
million
million
million
36,254
278,639
165,161
272,371
112.12
0.50
m2
m2
tons
million
million
m2
m2
tons
million
million
million million
% nights
days
%nights
(*) Important note: The infl ation base period has changed ( New base: April 2008 to March 2009 = 100)
days
Economic Trends by José I. Duarte
30
JANUARY 2012
Unemployment and population
The relationship between demographics and the labour market is fraught with misunderstandings. Some pronouncements are diffi cult to contradict, no matter how much fact suggests they are incorrect.On the strength of some statements originating from both the government and private sectors, the uninformed spectator might conclude Macau suffered from high levels of unemployment, caused by an infl ux of imported workers.The reality, however, is that the unemployment rate is low by historical and international standards, and its absolute level suggests it is not a major issue for economists.
The fi rst graph reveals that the absolute number of unemployed workers has never been extreme, peaking at about 14,000 unemployed people in 2000 and 2001. For most of the past decade, the number of people without a job has hovered at about 10,000 people.Last year there was one person unemployed in every 60 people, which is hardly a statistic to be upset over.
In previous editions of Macau Business we have argued there is only limited competition between residents and foreigners for jobs.Unemployment and imported labour mostly vary in tandem, as they are both sensitive to similar political, social and economic forces. Even when they do change in opposite directions, indicating a possible inverse relationship, the comparative size of their variations does not appear to indicate a causal relationship.That neither statistic seems intimately linked to the other is clear from this graph. Moreover, that relationship does not appear to be affected by the inclusion of a newer category, “other people authorised to reside in Macau”.Note, however, that due to changes in data collection for the group of “other people authorised to reside in Macau” the series was incomplete in 2006. This indicator covers only a short span of time, limiting the ability to draw accurate conclusions.
What should be of greater concern to commentators are the trends in the population’s age structure. Demographics impact strongly on the labour market and the demand for imported labour.As this graph makes clear, the domestic workforce is shrinking. From 1999 until 2010, the population (including non-resident workers) grew by 28.6 percent but the supply of domestic labour is shrinking.Compared to overall population growth, the number of residents aged 15 or younger shrank signifi cantly, at 63 percentage points less than the average. At the other end of the age range, there has been substantial growth in the number of people aged 55 or older. This should be an issue to focus on.
GRAPH 1
GRAPH 2
GRAPH 3
Economic Trends by José I. Duarte
GRAPH 1 - Population growth and low unemployment levels
GRAPH 2 - Unemployment and imported labour
GRAPH 3 - Changes in selected age groups compared to the overall growth in population between 1999 and 2010
0
-20
100
500
25
400
20
15
10
5
-5
0
-10
-15
200
300
600
30
100
80
60
0
20
40
-20
-60
-40
-80
1999 2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
Population People unemployed Non-resident workers
People unemployed (net balance)Other people authorized to reside in Macau (net balance)Non-resident workers (net balance)
(Thousands)
(Thousands)
(%)
Below 15 years From 15 to 34 From 35 to 54 Above 55
31
JANUARY 2012
Income trends
Another issue in studying the workforce is the evolution of monthly earnings. As infl ation has increased over the past decade, the government introduced a series of handouts. The fi gures do not suggest, however, that most of the population has seen its real income diminish or that workers have become markedly poorer.
Median income shot up by more than 80 percent between 1999 and 2010. That represents an average growth of 5.6 percent a year, well above annual increases in the consumer price index during the same period.Omitting unskilled workers from the analysis, the greatest relative increases in income were among less qualifi ed workers. Median incomes for two blue-collar categories – craftsmen; and plant and machine operators, drivers and assemblers – more than doubled between 1999 and 2010. Salaries for the latter group almost tripled.
Analysing the spread of incomes for selected occupations, there are two stand-out categories of jobs.Graph Five plots the average of median incomes for all occupations in Macau and one standard deviation above and below it during the period from 1999 to 2010. It reveals that median incomes for the category that includes legislators, senior offi cials, company directors and managers increased substantially, while the median income of unskilled workers was more than one standard deviation less than the mean.That suggests a relative convergence in incomes for most job categories and an increasingly big gap between Macau’s highest paid and most poorly paid.
Excluding the relatively small number of skilled agricultural and fi shery workers from our analysis, the fi nal graph suggests that relative to other occupations, the incomes of professionals have increased the least between 1999 and 2010. Their median income rose by 17 percent.The fi nding suggests a version of the middle-class squeeze is playing out in Macau.
200
160
180
100
120
140
80
60
40
20
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
1999
Legislators, senior offi cials, directors and
managers of companies
Professionals Technicians and
associate professionals
Clerks Servicesand
sales workers
Skilledagricultural
and fi sheryworkers
Craftsmenand
similar workers
Plant and machine
operators, drivers and assemblers
Unskilledworkers
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GRAPH 5 - Changes to the average of median monthly earnings
GRAPH 6 - Growth in the average monthly earnings between 1999 and 2010 by occupation
GRAPH 4 - Median monthly earnings by occupation
GRAPH 4
GRAPH 5
GRAPH 6
22,500
25,000
20,000
17,500
12,500
15,000
7,500
10,000
5,000
2,500
0
Overall average
Legislators, senior offi cials, directors and mangers of companies
Overall average - standard deviation Overall average + standard deviation
Unskilled workers
Legislators, senior offi cials, directors and managers of companies
Overall Median
Clerks
Professionals
Services and sales workers
Technicians and associate professionals
Skilled agricultural and fi shery workers
Craftsmen and smiliar workers
Plant and machine operators, drivers and assemblers
Unskilled workers
(Patacas)
(Patacas)
(%)
32
JANUARY 2012
HAIL THE
33
JANUARY 2012
DRAGON
CHINESENE W YEAR
PHOTOS BY LUÍS ALMOSTER
35
JANUARY 2012
Lucky moneyWith residents and visitors spending heavily to celebrate the biggest festival of the lunar calendar, it is business
that most enjoys Chinese New Year
BY ALEXANDRA LAGES
Chinese New Year Special
owner Sunny Liu.The chain’s business usually jumps
by 50 percent during the Chinese New Year holidays. “People buy gifts and food like pork, ham, chicken, fi sh and beef because they like to gather with the family and have meals together,” he says. However, this year Mr Liu is expecting the jump in business to be a little lower because of increased competition.
Looking goodThe increase in consumption, plus the tide of mainland tourists, turns the holidays into a shopping spree. “Chinese New Year is a very important period for retail sales,” says a spokesperson for the Venetian Macao’s retail division. “The trend for the Chinese New Year period is strong, especially in the two weeks leading up to this period. More recently, Macau has seen a stronger growth in retail sales, as more mainland Chinese travel during this period.”
Cosmetics and perfumes, jewellery and watches, and bags and fashion accessories are the best sellers in the Venetian’s shopping mall during the holidays.
Hong Kong’s A.S. Watson Group is expecting to “achieve satisfactory sales” in Macau during the holidays, says Tiffany Yeung, a public relations offi cer for the group. However, she does not give any estimates.
“Chinese New Year is one of the most important festive times for Chinese people and also a peak season for retail,” she says. “With the custom of gift-giving to families and friends, gift items such as chocolates, cookies, nuts, noodles, mushrooms, abalone, health supplements, etcetera are the most popular products at this time of the year.”
A.S. Watson operates several businesses in Macau. It is the owner of
ParknShop supermarkets, the Watsons health and beauty retail chain, and electrical appliance retailer Fortress.
Rising ratesThe hotel industry’s revenues also rise during the holidays because of higher occupancy rates and much higher room rates. “On regular days, a four-star hotel room rate is around MOP800 but at Chinese New Year it can go up to MOP4,000,” says Lawrence Cheng, an account manager at travel agency EGL Tours Co. Ltd.
Data from the Macau Government Tourist Offi ce shows that the average room rate at hotels with three or more stars was MOP1,879 during Chinese New Year last year, 14.4 percent more than a year before. Even though rooms cost more, the daily average number of occupied rooms rose by 1.1 percent to almost 17,000.
The director of the International Tourism Research Centre at the Institute for Tourism Studies, Leonardo Dioko, expects occupancy levels to be even higher this year.
“Though there have been increases in hotel rooms, with the opening of several new hotel properties in 2011, that growth rate is far less than the growth in overnight-staying visitors. Dampening the estimate is, of course, competition and the option for visitors to cross over the border and spend the night there rather than in Macau because of higher hotel room rates,” Mr Dioko says.
It is also the time most revellers will try their luck, and the best place to do that is in a casino.
“It is an important week for the gaming industry, not only in Macau but also around the world,” says Desmond Lam Chee Shiong, an academic at the University of Macau, who researches the psychology of gambling. “Many Chinese make use of this special
The biggest celebration of the year is also the best time to do business. Chinese New Year, or
Spring Festival holidays are a profi t booster for retailers. The tourism and gaming industries also see their takings soar, owing to a peak in the number of visitors from the mainland, who have seven consecutive days off work – one of two Golden Weeks each year, the other spanning October 1 and celebrating National Day.
In Macau, the fi rst three days of Chinese New Year are statutory holidays.
Christina Chan plans to spend around MOP2,000 (US$250) on shopping for this year’s holidays, MOP500 more than last year. The teacher says the increase in spending is due to infl ation.
“Normally, I buy some new clothes, as it is a custom at Chinese New Year, and I choose something red, in particular. Besides, I will buy gifts for my parents, my in-laws and for some other senior members of the family. Usually they are gift sets sold in the supermarket,” she says.
Terry Ng is unsure how much he will spend on New Year items this year. “I have to shop and check the prices,” the engineer says. But Mr Ng and his wife are expecting to spend about MOP6,000 on food, lai sis (red packets with cash inside offered as gift) and presents.
Katie Leung’s budget is much higher. The administrative offi ce secretary will spend MOP10,000, of which MOP2,000 is for lai sis and the rest for food and new clothes.
Despite the surge in customers, supermarket chain Seng Cheong will close one of its three stores during the holidays. “We will close the Ocean Gardens one because it is more residential-targeted and keep the other two, located on main roads, open,” says
36
JANUARY 2012
occasion to visit casinos and enjoy a good time with friends and families. So this is a good revenue-generating period for the casino operators.”
Mr Lam says many Chinese see gambling for pleasure as a celebratory social activity. “Traditionally, it is alright for adults or youth alike to gamble during Chinese New Year celebrations. A small amount spent on gambling is seen as causing no harm during this period. So parents sometimes let their kids use their red-packet money for simple gambling fun.”
With a bangSuperstition and other cultural characteristics go with gambling at New Year. It is no coincidence that it is the only period when Macau’s civil servants are allowed to gamble at the casinos. “If one wins, they may feel that they will be lucky for the rest of the new year. It’s like lighting a fi recracker for celebration,” Mr Lam says.
Union Gaming Research Macau analyst Grant Govertsen expects the Chinese New Year Golden Week to give gross gaming revenue growth a
boost. “We continue to believe the VIP segment should remain strong through at least the early part of 2012, as our channel checks suggest VIP demand is growing, not shrinking, with junkets asking for additional tables at many properties,” he says.
Mr Govertsen expects gross gaming revenue in January to be 36 to 41 percent higher than last February, when Chinese New Year occurred last year. “This would, of course, represent an all-time monthly gross gaming revenue record for Macau,” he says.
Travel agencies and tour operators have mixed feelings about the holidays. Those that bring tourists in from the mainland see a gush of revenue. Many people in the mainland spend the fi rst days of the Golden Week visiting their families there and the rest of the time travelling for pleasure.
“Chinese New Year is a big season for Macau and Hong Kong. Hotels are fully booked and rates are higher,” says Isabel Marie Miguel, executive travel coordinator of Amigo Travel (Macau) Ltd. Ms Miguel says the number of package tours from the mainland is
Chinese New Year Special
50 percent higher during the holidays than at other times, and the number of coaches hired 10 percent higher.
In contrast, it is a low season for inbound tourists from other countries. “We work mainly with tours from Japan and the Southeast Asia and there is a decrease in this season, because room rates are higher and hotels are fully booked,” says Mr Cheng of EGL Tours.
During the corresponding Golden Week last year Macau took in 805,000 tourists, 8.4 percent more than the year before, of whom 477,000 were from the mainland, up by 14 percent.
Outbound tourism increases by about one-third during the New Year holidays, says Anthony U of Wing On Travel (Holdings) Ltd. Most Macau people go to Thailand, South Korea, Japan, Taiwan or the mainland.
Even so, Patrick S am of tourism company Huan Yu Group Holding Co. Ltd. believes summer is the best season for travel agencies that send locals abroad. “Many airlines’ seats are sold out during Chinese New Year due to the increase of tours,” he says.
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Long queues of tourists from the mainland and Hong Kong waiting to taste a traditional egg
tart are a common sight at Margaret’s Café e Nata, a bakery in the city centre. But during the fi rst three days of the Chinese New Year festival, expect to fi nd it closed.
“My staff are from overseas, so I let them go home and visit their families. This way, they will work better when they come back,” says the owner, known simply as Margaret.
The law entitles employees that work on the fi rst three days of the festival to be paid triple-time, as they are statutory holidays. Margaret says the increase in business would cover the extra labour costs but that she wants to give her employees a break.
The requirement to pay triple-time for working on statutory holidays puts food and beverage outlets in a dilemma. Many prefer not to open on holidays, while others add a surcharge to the bill that can be as much as 20 percent of the price of the meal.
Italian restaurant Café Toscana is a stone’s throw from Senado Square but it will also close for the fi rst three days of Chinese New Year. “I cannot afford to pay triple pay to my employees,” says the owner, Oseo Acconci. “I can raise prices of my menu but people would complain. I’ll lose business if I open.”
Mr Acconci believes it is better for his business to close on those days than to charge extra. “Locals will go out for vacation and the business won’t be too high. Tourists pay more attention to casinos,” he says.
Just across the street, the Ou Mun Café has a different tactic. “I will close for the fi rst day because it is a family day for Chinese and it is not worth it. We have lots of customers that are tourists from Hong Kong but we barely see any tourists around on that day,” says the owner, Fernando Marques.
Triple threatChinese New Year will bring more diners
to Macau’s restaurants but not all will be open during the fi rst three days of the festival
On the second and third days, business picks up, so Mr Marques will open the cafe. Still, his shop will be one of the few food and beverage outlets in the Leal Senado area doing business.
“I usually also give extra days of annual leave to my workers,” Mr Marques says. Business improves by 15 percent during the Chinese New Year holidays, he estimates.
“The people fl ow is non-stop. We have customers coming in from morning until evening. I guess that is because some Chinese restaurants are closed and tourists want to try something different,” Mr Marques says.
Late harvestFew of the city’s most popular restaurants, least of all those mentioned in tourist guides, close during the holidays, despite the increased labour costs.
On Hac Sa beach in Coloane, the queues to taste the celebrated roast chicken at Fernando’s restaurant are expected to be even longer than usual, manager Miguel Lança says. “We only close on May 1. We are always very busy but even busier on holidays.” During the Chinese New Year period the number of customers increases by 40 percent, he estimates.
The chairman of the United Association of Food and Beverage Merchants of Macau, Chan Chak Mo, says more restaurants will close this
year for the fi rst three days.“We have a lot of people during
the holidays but the triple pay issue and increases in salaries, rentals, raw materials and importation costs will [have an] impact,” Mr Chan says. “According to my experience, small restaurants that are not located in the tourist part of the city will probably not open. They cannot be profi table.”
Mr Chan says those restaurants that opened last year saw at least a 10 percent rise in their business in the fi rst three days of the Chinese New Year festival compared to a typical operating day. He expects they will do better business this year than in 2011. “There will be an increase because of the rising number of tourists and more restaurants being closed.”
Most restaurants in casinos have special holiday offers for the New Year festival.
“Traditionally Chinese New Year is one of the biggest holidays of the year and represents a big spike in visitor arrivals,” says a spokesperson for Wynn Macau Ltd. But the casino operator declined to say how much restaurant revenue increases, with the spokesperson only replying that they were looking “forward to another fruitful year”.
The Mandarin Oriental Macau is in a unique position. It is one of the few hotels that does not have gaming facilities on its premises. A spokeswoman for the fi ve-star hotel said it was expecting an increase in clientele but would not disclose its projections.
All is not lost for restaurants that close on the fi rst three days of the Chinese New Year festival. They usually catch up on the following days. Mainland visitors have a seven-day break during the New Year and visit Macau after spending the fi rst few days with their families, thus keeping the city’s food and beverage outlets busy.
BY ALEXANDRA LAGES
Chinese New Year Special
The chairman of the United Association of Food and Beverage Merchants says more restaurants will close this year for the Chinese New Year
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JANUARY 2012
40
JANUARY 2012
were 1.11 percent higher in February than the month before but 0.25 percent lower in March than in February.
Bonus bonanzaThe annual rate of infl ation is likely to have stayed above 5 percent last year. The government is hoping that infl ation will slow this month, because infl ation in the mainland, Macau’s biggest supplier of goods, has been slowing since last July.
Economists agree that this may be the case.
Mr Lei says infl ation in the mainland and the appreciation of the renminbi are “fi nally under control”. Mr So adds: “The infl ation rate in Macau is mainly affected by the mainland and some other countries, especially food, clothing and other retail items. Since the central government is eager to keep infl ation under control, and in fact it is achieving it, most likely the infl ation rate in Macau in January will remain steady.”
This year a new factor comes into play. New Year is just one month after Christmas. Typically it falls about two months later. This could tempt businesses to raise prices earlier and keep them high for longer. Mr So expects timing to have little effect, remarking that Christmas is more of a Western holiday.
But Mr Lei points out that civil servants receive double pay in December and private-sector employees collect
Annual inflationMany businesses increase their prices during the holidays
in what has become an unwelcome New Year tradition
Although infl ation was last year’s hot potato for the government, offi cials are expecting prices to
stabilise this year. But they must wait until the end of the Chinese New Year holidays, during which increases in prices for the most sought-after goods and services have become a tradition, as businesses take advantage of the seasonal surge in demand.
Economists do not expect these short-term price increases to diminish the value of the pataca in your pocket permanently. “During Chinese New Year, people tend to spend more on consumption goods, as well as durable goods. I guess it is because of tradition and culture. The long holidays also allow people to go shopping, dining and travelling. However, this is short-term and seasonal, and therefore will not have a long-term impact,” says the dean of the University of Macau’s Faculty of Business Administration, Jacky So Yuk Chow.
Mr So expects prices to be “a little bit up” during the holidays, but to return to normal afterwards.
Prices of food and goods associated with New Year may start to rise some days beforehand but consumers may get discounts on clothing because shops like to clear their shelves to make room for new stock, says Henry Lei Chun Kwok, assistant professor of business economics at the University of Macau. “The infl ation issue in the month of Chinese New Year may not be too signifi cant, taking into account the promotional activities conducted by some shops,” he says.
Last year, Chinese New Year fell on February 3. Data from the Statistics and Census Service show prices were 0.93 percent higher in January than the month before and 0.9 percent higher in February than in January. These were the two highest month-to-month increases last year. In March, prices continued to increase but at only half the rate.
It was similar in 2010, when the New Year fell on February 14. Prices
their year-end bonuses about the same time, temporarily giving them more purchasing power, which increases demand and so pushes up prices.
Hard to swallowMr Lei says it is culture, as expressed by the popular urge to buy things to celebrate the New Year, that fuels infl ation during the holidays, so there is little the government can do about it.
Moreover, people expect to pay more during big festivals and therefore do not complain too bitterly when they are asked to do so, he says.
That said, Mr Lei suggests special grants during the holidays for those with low incomes.
The Consumer Council says that what people complain about most is the higher cost of eating out, although even then, there are not that many complaints. “During Chinese New Year in 2011, there was only one case, while the number of cases in the past few years stood at around fi ve,” a spokesperson for the council says.
The Consumer Council has repeatedly called on all restaurants “to clearly indicate the detailed information of all charges and let consumers know about any changes in prices in advance,” the spokesperson says. “Therefore, the number of complaint cases has been gradually decreasing each year.”
The council also advises diners to check price lists and ask about other charges. “Such ‘awareness’ work has also proved effective,” the spokesperson says.
The chairman of the United Association of Food and Beverage Merchants of Macau, Chan Chak Mo, says restaurants usually impose a 20 percent surcharge during the New Year holidays. Mr Chan, who is also a member of the Legislative Assembly, argues that the surcharge is needed to offset the cost of paying employees triple-time for working on the fi rst three days of the festival, as required by law.
BY ALEXANDRA LAGES
Chinese New Year Special
“The infl ation issue in the month of Chinese New Year may not be too signifi cant,” says Henry Lei, assistant professor of business economics at the University of Macau
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42
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Chinese zodiacThis will be Year of the Dragon, according to the lunar calendar based on the 12-year cycle where each year is
represented by an animal. There are several tales about how the dozen animals were selected. In one, a Chinese emperor holds a swimming race to pick the animal who would be the fi rst in
the order of the zodiac. The cunning rat won after riding on the ox and leaping ahead at the fi nishing line.
FireworksMacau resounds to a cacophony of fi recrackers and fi reworks during the festival. The noise scares off evil
spirits. Firecrackers and fi reworks are allowed in temporary designated areas.
“Lai si”Parents and grandparents give red packets with cash to
children, called lai si to ward off bad luck. Married people also offer the packets to unmarried singles. It is considered bad
manners to open the envelopes in the presence of the givers.
FoodThere are lots of traditional foods eaten during the festival, most of them thought to be auspicious. For instance, fi sh is
common because it symbolises wealth and plenty.
Mandarin orangesMandarin orange trees are seen everywhere during Chinese
New Year as they symbolise good fortune, both for their shape and colour, but also because the Cantonese word for this fruit is
similar to the one used for “luck”.
Spring cleaningFamilies carry out a full house clean ahead of New Year to clear away the old and bad luck. Household chores such as
sweeping or dusting are not carried out during New Year’s Day, for fear of brushing away good luck.
New Year visitsThe fi rst and second days of the festival are spent visiting older and respected relatives and friends. The third day is avoided as
it is believed quarrels may take place.
TaboosChinese New Year is full of taboos.
Breaking them can mean a year full of bad luck. If one cries on New Year’s Day, he or she will cry for the rest of the year.
Washing your hair rinses away good luck.
Tradition packedMacau’s population welcomes Chinese New Year on January 23,
a period also known as Spring Festival or Lunar New Year and marked by a three-day holiday. Here are eight facts – the most auspicious number,
of course – about the biggest festival in town
Chinese New Year Special
44
JANUARY 2012
Chinese New Year Special
Dragon1916, 1928, 1940, 1952, 1964, 1976, 1988, 2000, 2012
This is your year and you will fi nd the courage to face all challenges and obstacles that may come your way. You will travel a fair bit and you can be prone to accidents and losing money, especially in gambling. Your income, however, will be stable and business will fl ourish. But the same can’t be said about your relationships. This is not a year for marriage. In health, get enough rest to keep your energy.
Snake1917, 1929, 1941, 1953, 1965, 1977,
1989, 2001
If you run a business, this could be your year. In fact, most of the year will be favourable for you. You will come across confl icts at work, likely involving gossip and intrigue, so remember to keep calm and remain neutral. Relationships will be smooth and you will appreciate time to yourself. Your health will also be at its best and travelling may just give you the energy you need.
The saying ‘healthy as a horse’ will prove to be true this year. You will be in the spotlight but for all the right reasons. Your good communications skills will help you see problems from different angles. Your money, however, will only be proportional to your mobility, so move around and use your people skills to watch that wealth grow. Romance will also be in the air for you this year; for all you single horses, love could just be right around the corner with the start of the year.
Lady luck is on your side this year. You seem to be connecting with the Dragon quite well on all fi elds and your investments, too, will work in your favour. Invest wisely so that you are not left penniless. You will see a lot of opportunities come your way, even in love. So if you are married be careful with extra-marital affairs. Keep your cool at work to avoid confl icts. While your health isn’t bad, be careful with your diet and watch what you eat because of your digestive system.
Horse1918, 1930, 1942, 1954, 1966, 1978,
1990, 2002
Sheep 1919, 1931, 1943, 1955, 1967, 1979,
1991, 2003
Coming of the dragon
Excitement, unpredictability, exhilaration and intensity. These are the four words that best describe
what the year of the Water Dragon is likely to bring. While the year of the Rabbit was calm, many say that going with the fl ow and taking it all in with the Dragon
might be an unwise move
45
JANUARY 2012
46
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47
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Chinese New Year Special
Monkey1920, 1932, 1944, 1956, 1968, 1980, 1992, 2004
It will be quite a smooth year for you. But don’t be too impatient, that way you will avoid running into accidents. Your connection with the Dragon will see you very much at ease and great affairs, whatever they may be, lie ahead for you. With so much going on, you won’t have much time for romance. But the opportunities that come around are positive and it is also a good time to start a family.
Rooster 1921, 1933, 1945, 1957, 1969, 1981, 1993, 2006
Just like last year, the Rooster will be full of strength and energy coming into the new year. You could see a promotion at work and now is the right time to think about the future and consider change. Concentrate on the bigger picture. While everything seems to be running smoothly, relationships won’t. This might be a good chance to make amends if you are in a relationship, or start fresh if you are single. Watch your health, especially when it comes to your lungs and kidneys.
Dog1922, 1934, 1946, 1958, 1970, 1982, 1994, 2006
You will only get out of this year as much as you put into it. The Dog is the least compatible with the Dragon, but that doesn’t necessarily mean you will have a bad year. Your ability to communicate and get along with others will ensure you success. But this is not a good year for fi nancial, gambling and speculative businesses. This might be a good year to reorganize your personal life because every Dog needs support and a reliable person next to them.
Pig1923, 1935, 1947, 1959, 1971, 1983, 1995, 2007
Two words that best describe this year for Pigs are: material prosperity. That’s not to say that only material things will prosper. This is set to be a good year for you. Try to make decisions early on in the year so that you don’t feel you need to rush when the time comes. Always move forwards. Be careful not to risk leaving things unfi nished. Don’t trust strangers and always seek the help of friends and family. It is also a good time to both start a new relationship or end one that has outlived itself.
Rat 1924, 1936, 1948, 1960, 1972, 1984, 1996, 2008
In all this seems to be your year. You will do well in business, mainly related to people and public relations. Money will not be an issue, as there will be a lot of fi nancial opportunities for you. But these only come with hard work. Your relationships and love life will also fl ourish and if you are single, this might be a good time to think of settling down. Health wise, you will be quite good, but prone to accidents.
Ox1925, 1937, 1949, 1961, 1973, 1985, 1997, 2009
Confl icts and arguments will mark this year. You may even face legal confl icts. This year will require careful planning on the part of the Ox, who should leave spontaneity out of decisions. Your investments and savings won’t change much from what they are now, so try staying away from gambling and speculation. And relationships will not be easy in the fi rst half of the year. This is mainly due to your changing mood, lack of restraint and ambition.
Tiger1926, 1938, 1950, 1962, 1974, 1986, 1998, 2010
Keep a good relationship with partners and colleagues because what lies ahead are challenges you cannot simply overcome on your own. In terms of money, the more you move around, the more money you can make. Sales and marketing are good businesses for Tigers this year. For those in relationships, remember to pay attention to your partner or spouse and develop the relationship.
Rabbit1927, 1939, 1951, 1963, 1975, 1987, 1999, 2011
Prepare yourself for this might be a very easy year for you. Compared to the other animals, you will not have many problems and will achieve success only if you want to. Although the Rabbit doesn’t match too well with the Dragon, you still have power and money management on your side. Your love life will not be without its ups and downs. You need to pay more attention to the feelings of your loved ones.
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JANUARY 2012
Property | Market Watch
were sold. The record was set in 2007, when home transactions peaked at 21,600.
The most recent data from the Sta-tistics and Census Service shows the number of residential transactions for the fi rst 10 months of last year stood at about 15,600.
While fewer homes were sold last year, their average value was higher. Ms Liu estimates the value of residen-tial transactions reached MOP60 bil-lion (US$7.5 billion) last year. That would set a new record and an increase of about 30 percent over 2010, when the all-time high was set. The value of home sales until last October stood at MOP54.3 billion.
More from lessThe value of residential real estate deals rose by one-third on a smaller volume of sales in what was a tumultuous year in real estate
Home prices have also risen in the past 12 months. Ms Liu estimates the average transaction price per square foot for residential units ended up at MOP3,822 a square foot (about MOP41,125 a square metre), a 23 per-cent increase over 2010.
In November, the average price of homes sold fell by 8 percent month-on-month to MOP38,271 a square metre, according to the latest fi gures from the Financial Services Bureau.
Tricky conditionsJones Lang LaSalle Macau’s head of residential property Jeff Wong says the market performed far better in the fi rst half than the second, when the
There is no doubt last year was an intense period for Macau’s real estate sector, especially after the
introduction of the special stamp duty on some residential transactions.
Preliminary estimates suggest it was one of the best years yet for the sector.
Ricacorp executive director Jane Liu estimates annual turnover for residential properties last year stood at about 17,000 transactions. Should that fi gure be confi rmed when the of-fi cial data is released later this year, it would represent a year-on-year decline of 5 percent but would be signifi cantly above the fi gures recorded in 2009 or 2008, when 11,300 and 13,700 homes
49
JANUARY 2012
Residential units sold as per record of stamp duty*
Number of Transactions1,2971,0841,5032,2021,6271,5431,204
9401,5051,3121,8181,9541,541
7882,2253,4852,4022,368
878645671606
MonthJanuary
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
Year 2010
2011
* Notes: 1. The data includes transactions of residential units exempted from stamp duty. 2. The data covers residential units with stamp duty paid during the reporting month.
Year 2010
2011
Value of residential units sold as per record of stamp duty*
Value (MOP million)
3,1401,9952,8066,1804,2813,3192,6421,8893,6873,4217,5695,0103,7901,9187,704
19,2447,9026,1142,3591,7441,8151,661
Month January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
October
Sou
rce:
DS
EC
Non-Residents26%
Residents74%
Proportion of buyers
Total value of residential transactions in the fi rst 10 months of 2011:
54.3 billion
13%Residents87%Non-Residents
Total number of buyers in residential transactions in the fi rst 10 months of 2011:
21,044Proportion of buyers
50
JANUARY 2012
Property | Market Watch
Sou
rce:
DS
EC
Sou
rce:
Fin
anci
al S
ervi
ces
Bur
eau
Value (MOP thousand)
Average transaction value of residential properties as per record of stamp duty
6,000
5,000
4,000
3,000
2,000
1,000
0
* Notes: 1. The data includes transactions of residential units exempted from stamp duty.2. The data covers residential units with stamp duty paid during the reporting month.
60,000
55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
Average transaction price of residential units per square metre
* Notes: 1. The data includes transactions of residential units exempted from stamp duty.2. The data covers residential units with stamp duty bill issued during the reporting month.3. Some residential units may not be included in the data made available by the Financial Services Bureau for privacy reasons.
MarJan Jan Feb Mar Apr Jul Aug Sep OctJunMayApr May Jun Aug Sep Oct Nov DecJulFeb2010 2011
MarJan Jan Feb Mar Apr Jul Sep NovOctAugJunMayApr May Jun Aug Sep Oct Nov DecJulFeb2010 2011
(MOP)
SKYLINE VOTED ONE OF THE WORLD’S BESTMacau’s skyline is among the best in the world, according
to Emporis, an online database of properties worldwide. The territory is positioned at number 20 on a list headed by Hong Kong and followed by New York at number two.
Emporis ranks cities by the visual impact of their sky-lines. The total points for each city are calculated based on the number of completed buildings with at least 12 fl oors reg-istered in the Emporis database. Each building is assigned points based on its fl oor count.
According to Emporis, Macau has 564 high-rise buildings.
The online database says there are 29 skyscrapers in the territory, which is to say buildings at least 100 metres high or with at least 40 fl oors, putting Macau in spot 56 worldwide.
Hong Kong is the leader in this category, with a total of 1,221 skyscrapers.
government introduced a special stamp duty on residential unit transactions to curb speculation.
This year, he is less certain of how the market will perform, predicting Macau will feel the impact of the eco-nomic crisis in Europe.
“There will be uncertainties,” Mr Wong says. But he sees a strong mar-ket and an increasing number of expats boosting property rentals.
The number of sales may, however, be on the low side. “Most buyers are end-users and not many people are con-fi dent in the outlook of the economy,” Mr Wong says.
But for Midland Macau chief ex-ecutive offi cer Ronald Cheong Yat Fai, next year the property market will be saturated. “Property prices will be stagnant,” he says, adding that if any-thing prices could drop slightly be-tween 10 percent and 15 percent in the fi rst half of this year. The second half, Mr Cheong says, will depend on the overall sentiment of the market.
Several developments are moving towards sale. These include Nova Park in Taipa, M Residencies on the penin-sula and the new phase of One Oasis Cotai South in Coloane, all of which are under construction.
Although the government had promised to introduce a bill to legislate the sale of unfi nished properties by the end of December, the Legislative As-sembly is yet to receive a draft proposal.
The government’s own data shows more than 3,300 residential units are under construction or have been given the go-ahead by the government.
51
JANUARY 2012
51
Source: Ricacorp & Midland
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$)Floor area (sq. ft) Unit
Source: Ricacorp & Midland
Note: L/F - Low fl oor; M/F - Middle fl oor; H/F - High fl oor
District Property Price per sq.ft. (HK$)Rent price (HK$)Floor area (sq. ft) Unit
Property | Market Watch
Notable residential property transactions - 16/11 to 15/12, 2011
Macau One Central Block 3, M/F, unit B 3,006 24,000,000 7,984
Macau Jardim da Penha M/F, unit 2,624 13,800,000 5,259
Macau Victory Plaza M/F, unit J 2,803 13,000,000 4,638
Macau One Central Block 7, H/F, unit B 1,272 8,260,000 6,494
Macau One Central Block 7. H/F, unit B 1,272 8,260,000 6,494
Macau One Central Block 7, M/F, unit A 1,269 8,250,000 6,501
Coloane One Oasis Cotai South Block 2, M/F, unit D 1,781 8,010,000 4,497
Taipa Prince Flower City H/F, unit A 1,665 7,720,000 4,636
Macau One Central Block 7, H/F, unit D 1,176 7,291,200 6,200
Taipa Nova City Block 7, H/F, unit C 1,974 7,200,000 3,647
Macau The Bayview Block 1, H/F, unit A 1,582 6,650,000 4,204
Macau Wan Yu Villas L/F, unit Q 1,810 6,330,000 3,497
Macau The Bayview Block 5, H/F, unit E 1,603 6,060,000 3,780
Taipa Nova City Block 15, L/F, unit D 1,556 5,900,000 3,792
Taipa Treasure Garden Block 3, M/F, unit K 1,726 5,380,000 3,117
Macau Dynasty Plaza M/F, unit Z 1,647 5,060,000 3,072
Macau Grandeur Heights M/F, unit F 1,372 4,980,000 3,630
Macau Dynasty Plaza Block B, M/F, unit Y 1,800 4,700,000 2,611
Macau The Riviera H/F, unit N 1,188 4,680,000 3,939
Taipa Nova City Block 14, M/F, unit F 1,340 4,560,000 3,403
Taipa The Pacifi ca Garden L/F, unit H 1,205 4,500,000 3,734
Taipa Nova City Block 4, M/F, unit E 1,318 4,500,000 3,414
Taipa Nova City Block 10, H/F, unit E 1,314 4,480,000 3,409
Taipa Nova City Block 8, H/F, unit E 1,314 4,200,000 3,196
Macau Edf. Kam Yuen M/F, unit A 1,700 4,180,000 2,459
Taipa Nova City Block 8, H/F, unit E 1,314 4,100,000 3,120
Macau The Praia Block 2, H/F, unit G 1,099 3,985,730 3,627
Macau The Praia Block 4, M/F, unit W 979 3,450,000 3,524
Macau Villa De Mer Block 2, M/F, unit F 821 3,420,000 4,166
Macau Luen San Square Block 2, M/F, unit Q 950 2,450,000 2,579
Taipa Edf. Chun Leong Block 1, L/F, unit F 768 2,280,000 2,969
Notable residential property rentals - 16/11 to 15/12, 2011
Macau One Central Block 4, H/F, unit B 2,585 39,000 15.09
Macau One Central Block 2, H/F, unit B 2,267 37,000 16.32
Taipa Kings Ville Block 1, M/F, unit B 1,801 18,000 9.99
Macau Wan Yu Villas M/F, unit L 1,290 17,000 13.18
Macau Edf. Walorly M/F, unit AB 1,750 15,000 8.57
Macau The Riviera M/F, unit I 1,086 14,000 12.89
Macau The Praia Block 1, H/F, unit C 1,558 13,500 8.66
Taipa Kings Ville Block 2, M/F, unit E 1,901 13,000 6.84
Taipa Nova Taipa Garden Block 23, H/F, unit E 2,500 13,000 5.20
Macau La Baie Du Noble Block 3, H/F, unit M 2,095 12,500 5.97
Taipa Nova Taipa Garden Block 21, M/F, unit A 2,167 12,000 5.54
Taipa Nova City Block 12, L/F, unit E 1,318 11,000 8.35
Taipa Nova City Block 10, M/F, unit D 1,045 10,500 10.05
Macau La Cité Block 3, L/F, unit C 1,524 10,000 6.56
Taipa The Greenville Block 1, L/F, unit B 1,400 9,800 7.00
Taipa Nova City Block 12, H/F, unit C 1,318 9,500 7.21
Macau Edf. Kam Yuen M/F, unit I 1,270 9,000 7.09
Taipa Jardim Dragão Precioso H/F, unit G 1,200 8,000 6.67
Taipa Edf. Kinglight Garden H/F, unit E 1,238 7,800 6.30
Macau Classic Bay M/F, unit E 1,591 7,800 4.90
Macau The Riviera H/F, unit C 880 7,600 8.64
Taipa Edf. Nam San Block 3, M/F, unit H 1,600 7,500 4.69
Taipa Edf. Lei Man M/F, unit S 450 5,900 13.11
Taipa Edf. Lei Man M/F, unit F 550 5,200 9.45
52
JANUARY 2012
EXCLUSIVE CEO INTERVIEW
“I keep saying that concentrating only on who has the higher market share is the wrong approach. I see the market growing so rapidly that we can barely catch up. What we need is good products that continue driving additional business into Macau”
53
JANUARY 2012
BY PAULO A. AZEVEDO
PHOTOS CARMO CORREIA
A
re you worried that with the opening of Sands Cotai Central later this year, business will shift to Cotai’s main road, where City of Dreams, Four Seasons and the Venetian Macao are, leaving Galaxy Macau less able
to take advantage of any potential spillover of customers?Francis Lui Yiu Tung - No. We are 550,000 square metres and growing. We already have the critical mass to be very successful.
We have designed Galaxy Macau to be a complete experience. You don’t have to step out of the building and go across the road to eat. Everything you want – entertainment, food and beverage, shopping – we have it all here. I don’t need to be concerned.
The whole of Cotai will be the entertainment cen-tre in the future. If you want to talk about where the centre of gravity is going to be, I feel we are growing, we have only used one third of our land. Wynn Macau Ltd. will be on the other far side; SJM Holdings Ltd. will be there too. Cotai will be expanding and I don’t feel there will be a problem.
We are actually the fi rst property you see when you come from the Sai Van bridge, be it by car or by the upcoming light rail transit system.
Galaxy Entertainment Group Ltd. has no fear the opening of Sands Cotai Central will hurt performance at Galaxy Macau. In an exclusive interview with Macau Business, Galaxy vice-chairman Francis Lui Yiu Tung says the government cap on live gaming tables is needed but wants an even spread of tables across the city’s six gaming operators. Mr Lui also confi rms the gaming operator will offer three-star accommodation to attract more middle-class mainland visitors and look to expand into new Asian markets. In between, he accuses some competitors of wanting “to milk every dollar” from Macau
“TABLES SHOULD BE MORE EQUALLY SPREAD”
53
“We have never spiked credit liquidity to get market share. If you take a look at our margins, actually they have been going up. We don’t need to get into a desperate scheme. What’s the point?”
55
JANUARY 2012
EXCLUSIVE CEO INTERVIEW
Sands Cotai Central represents no threat at all?I don’t see any major threats. I don’t mind growth. When
you see an explosive market growth rate of 40 percent-plus for 2011, why should we be afraid?
I have never been concerned about gross gaming revenue market share. We are more after profi t volume.
I keep saying that concentrating only on who has the higher market share is the wrong approach. I see the market growing so rapidly that we can barely catch up. What we need is good products that continue driving additional business into Macau.
Take a look at Galaxy Macau. We actually moved the nee-dle. Since we opened, nobody has been doing less than before. We have a good property and of course we are growing faster than the others. I’m sure if somebody comes up with a good product they will grow just as fast or even faster. As long as nobody cannibalises the market, it’s all right. The market is too big.
By 2010-end, Galaxy Entertainment had a 10 percent gross gaming revenue market share. Now you have double that percentage, closing in on market leader SJM Holdings Ltd. Are you aiming to become the number one?
Market share has never been on the top of our list. This is only a way of measuring how good you are doing. Every prop-erty has a different business model. Another way of measuring is to see who has the biggest earnings before interest, taxes, depreciation and amortisation or who has the best offer, how many visitors a day.
There are many ways of measuring the success of a com-pany. Market share is not the only way, although it’s a very measurable and highly sensitive indicator. Ten percent or 20 percent, of course it means a lot to us but at the same time, as long as business is profi table and we are not cannibalising any other people’s market, nor spiking up commissions to get the 20 percent, that’s the most important thing.
We have never spiked credit liquidity to get market share. If you take a look at our margins, actually they have been go-ing up. We don’t need to get into a desperate scheme. What’s the point?
Not only that. If you are getting those market share num-bers by spiking commissions, what do you think competitors might do? They would do exactly the same.
The challenge is making sure that everyone tries to provide more diversity and better products. Then, everybody will do well.
MASS MARKET GROWTHNot long ago, you predicted mass-market gaming would grow to represent a bigger share of the pie, while VIP gaming would lose part of its overwhelming influence in Macau’s casino industry. We are still not there, are we? What is missing?
Again, we are falling into a trap by actually talking about percentages. VIP turnover in Macau is very high, a very big base for comparison. No matter what you do in the mass mar-ket or with non-gaming revenue, it is not going to move the needle that much.
Another way of looking at it would be just measuring how fast the mass market is growing year-on-year, how fast the non-gaming and hotel revenue are growing year-on-year. That is probably a good indication to see if we are doing the right thing or not.
It’s going to take some time for the mass market to catch up because we all know that the VIP market is such a big, big part of the total market. You are correct by saying that, in terms of the relative percentage, the mass market and the VIP market co-relationship is being kept at the same levels. But a lot of people are putting more emphasis into non-gaming and the mass market.
Recently, there were media reports about your company being interested in pushing ahead three-star accommodation targeting mainland, middle-class visitors. Can you confirm those plans?
Most of the new products coming into the market are aiming at the high-end of it. I believe that those middle-class mainland Chinese would have more opportunities to travel and visit Macau once they are taken care of and provided with suitable and comfortable accommodations. Three to four-star hotels are something that will defi nitely have to be provided. We have a big area of land and sometime in the future we will look into that.
SECOND PHASEYou still have two thirds of your land plot in Cotai to develop. What are you planning for there?
Galaxy Macau has been in operation for only six months. Soon, we will probably have a good perspective of what does and doesn’t work for us and how we can do better.
We have never stopped working on the master layout plan. I have never looked at Galaxy Macau as an isolated plan but as part of the bigger picture. Of course I have a pretty good idea of what we have to do in phase two. I come from an engineer-ing background, so all these visions and ideas that I have, I still want them to be reconfi rmed on a piece of paper fi rst to be sure that I am doing the right thing.
I don’t even know how big the hotel rooms should be nor how many. Soon we will look at the numbers and check, for instance, whether people could afford a longer stay at each one of the hotels at Galaxy Macau. Or which hotels’ guests gamble more and less. Or whether they are actu-ally non-players. All these questions must have an answer before I can come up with a plan that will suit our batch of customers.
Are you planning to add more VIP rooms to Galaxy Macau?
We can have more VIP rooms but that very much depends on the market. We, of course, have the space. We always have space.
If you are asking me if we are going to have more gam-ing products at Galaxy Macau, the answer is ‘yes’, both in the mass market and in the VIP market, but it very much depends on the customers and on the market.
“It’s going to take some time for the mass market to catch up because we all know that the VIP market is such a big, big part of the total market”
56
DECEMBER 2011
EXCLUSIVE CEO INTERVIEW
Do you have any plan for the future of Galaxy Entertainment’s so-called City Clubs, namely Waldo, Rio, President and Grand Waldo, which are third-party managed casinos?
That’s a sensitive question because we all know that the fully integrated resorts actually have taken up much of the market share. I believe this is what the future is going to be, integrated resorts.
The smaller casino hotel facilities have to work a little bit harder to be able to compete in the future. They have to personalise services and make an effort in connecting with customers.
In a large property like Galaxy Macau, we need to take care of 50,000 customers a day, whereas in smaller properties a more personal relationship with customers could work won-ders. If they do it right, they can still be very profi table.
Take a look at the City Clubs in the peninsula area. Not all are doing poorly. Some are actually growing too. As long as there is commitment and as long as these guys are thoughtful, they can be competitive.
The gaming business in Macau has always had high mar-gins. If you didn’t manage your operations as tightly as you should, you still earned a lot of money. Nowadays, when you are competing in the big league, the high-margin business ca-sinos enjoyed before, is not there anymore.
This has now become a tight-margin business where you have to look into every detail so that you can drive revenue and at the same time save costs. Smaller casinos can survive and they can be profi table too but these guys need to know that this is not a high-margin business anymore. They have to work hard.
MILKING CASH COWSWhat is your view on the government’s decision to impose a 3-percent annual growth cap on the number of live gaming tables starting next year? Sands China Ltd. chairman, Sheldon Adelson, has criticised it.
Gaming is part of the entertainment offering but it’s not everything. For Macau to grow, to actually go up in the food chain, we have to realise that the city is a fi rst-class entertain-ment destination. It’s not just a casino hop anymore.
The city has high ambitions. Our citizens have asked for more. Ten or 20 years ago, people would have loved to have had just gaming because they could get a job. Nowadays, so much has been invested, so much has been done that Macau’s ambition is to become a fi rst-class entertainment centre.
Some people might not want to work in a gaming envi-ronment any more. They might want to pursue other careers. Somehow there should be a certain degree of control on how gaming should be allowed. We have to use gaming as a cata-lyst but gaming is not everything.
I could ask Mr Adelson: ‘Look, why don’t we just open 6,000 tables at your home, where all your relatives will have only one career path, which is gaming. Would you like it?’
We are free people and the citizens of Macau have the choice to say ‘no’ and choose a healthier environment and society.
We have just 30 square kilometres of land and half a million people. What can we do? We have to fi nd a way to make use of the gaming business to make sure that we grow as a whole.
Everybody is entitled to his or her own view. I see gaming as a catalyst for a better society where Macau citizens will be happier in the future. Others just want to milk every dollar. I think growth should be moderate.
Another thing is the number of tables should be more equally spread between the six gaming operators. That way we can compete on a more equal ground. There are some his-torical reasons regarding the issue of who should have more or less tables. I respect that but the numbers can’t be as far apart as they are today. The difference between the operator with the most tables and that with less is enormous.
Just last month, Galaxy Macau opened its new cinema complex. How much revenue can it generate?
This is a facility that has taken too long to come to the market. Ten years have passed since the last cinema house was built in Macau. During these 10 years, a lot has happened in terms of new technology and innovations in the cinema in-dustry. We are the fi rst ones to bring world-class international standards to Macau.
The cinema complex will be able to do a couple of things for us. The fi rst one is to provide our customers more choice. When people come here for the weekend, hopefully they will stay longer with us because they can bring families as well. Second, I’ve been told that Macau people had to make a ferry trip to Hong Kong to watch the latest blockbusters. Not any-more, because we will be showing them here as well.
We are also happy to have created a beautiful movie thea-tre where we will have a lot of movie premieres, a lot of red carpet events to showcase Macau and Galaxy, of course.
HIGHER AMBITIONSWhen do you hope to recoup the investment made in Galaxy Macau?
We are very happy with our performance over the last six months, which actually exceeded our initial expectations. Can we do better? Absolutely. We should be able to do a lot bet-ter. The fi rst quarter results gave us a reasonable perspective for return on our investment. We have all the reasons to be optimistic.
Galaxy Macau still has areas under construction like the sky casino. When will everything be ready?
I don’t know how to answer that question because we keep on changing and improving. Even now, after just six months, we are already improving some of the facilities. I would ex-pect such a big property like this to continue to evolve. How-ever, most of our products will be ready by early 2012.
What has been the most successful bet on this property?Well, the fact that my vision for Galaxy Macau as a des-
tination resort is running like a clock. Before us, nobody would give the destination resort concept a chance in Macau.
“Three to four-star hotels are something that will defi nitely have to be provided. We have a big land and sometime in the future we will look into that”
57
DECEMBER 2011
“I have never looked at Galaxy Macau as an isolated plan but as part of the bigger picture. Of course I have a pretty good idea of what we have to do in phase two”
JANUARY 2012
Some people would say Macau is too densely populated, the sky is not blue enough, there is no white-sand beach but the fact is we have created a destination resort setting at Galaxy Macau. We did it and we did it with success.
Take a look at our resort, at our architecture, at the land-scaping we put around the property. I think no one would argue that this is a destination resort, a successful one too. I take pleasure saying that we did it. We were the fi rst ones to entitle Macau with a destination resort. That gives me a lot of satisfaction.
What would you select as the elements that still need fine-tuning at Galaxy Macau?
I constantly see things in need of improvement. Right now, I have to say service. We have been open for only six short months, it’s a big property and we have now 10,000 workers [in Macau]. So, service, human resources, talent, leadership, good people, are still a challenge, a big challenge. We ought to do better if we want to serve customers better but it takes time.
Initially there were fears that Galaxy Macau could cannibalise StarWorld’s revenue but that has proven not to be the case. Are you relieved?
The more I walk around Galaxy Macau, the clearer Starworld’s competitiveness is. StarWorld has a great location, no question about it. It is a compact property where every-thing is so convenient; everywhere you go is just at a push of a button away.
When we designed Galaxy Macau, we ideally wanted to avoid people having to walk great distances. We have been successful and praised for that. Nevertheless, StarWorld has the charm of you just having to go up and down the escalators.
StarWorld is going to continue to be very successful. The target customers for Galaxy Macau are different from those that go to StarWorld. The customers that come to Galaxy Macau are people who want to stay a little bit longer and enjoy the integrated resort sensation, whereas the people that go to StarWorld are more attracted by its easy accessibility.
BUILDING A FUTUREA topic that has been hotly debated recently is the potential relocation of Macau’s main ferry terminal from the Outer Harbour on the peninsula to Pac On in Taipa, and much closer to Cotai. What is your preference?
We have properties on both sides, so it’s indifferent. Either way works for us. What needs to be taken into account is that the ferry is not only serving casinos but also the local people. So, the question must be asked to Macau citizens.
There’s another question, which is what will be the role of the ferry terminal in the scope of the coming bridge connect-ing Hong Kong to Macau. Does it make that much of a differ-ence the location of the terminal? By the time the bridge is in operation, buses will take a lot of pressure from ferries. At the end of the day, the question is how you serve people better.
If the light rail transit system is taking so long, maybe the bridge could take another decade at least – hopefully not.
The bridge has already been waiting for 10 years. It’s not that we dream of this idea today. We are talking of 25 million visitors [to Macau in 2010], 15 million more than 10 years ago. It needs to be built.
“I see gaming as a catalyst for a better society where Macau citizens will be happier in the future. Others just want to milk every dollar. I think growth should be moderate”
EXCLUSIVE CEO INTERVIEW
58
59
JANUARY 2012
You just mentioned one of the several changes Macau has undergone over the last decade. What about your expectations regarding the gaming industry? How different are they today from a couple of years ago?
Not much. In our annual report, we always state on page one that we have a vision to be one of the leading entertainment and gaming operators in Asia. That has always been our aspi-ration and an ambition since the day we started this company. You asked me if I have changed my expectations. No. I’m doing just what needs to be done towards achieving that vision.
United States-based gaming operators are all now eyeing expansion into Asia. What about Galaxy Entertainment Group, are you looking to enter other Asian markets?
A major part of our strategy would still be in Macau, no
question about it. If you asked me that question some years ago, I would have said we wanted to concentrate 100 percent in Macau because we needed to establish a base and be success-ful. Now, I can say we have a good base, we have been work-ing together as a team for eight years, we have a loyal, strong and very capable management team. If the right opportunity comes along, we would look at it on a case-by-case basis.
Much closer to Cotai, how important can Hengqin Island be to Macau and your company?
Take a look at Shenzhen and what it has done for Hong Kong and expect that same kind of impact in Macau. If Macau really aspires to be a world-class tourism destination, Hengqin is going to play a major role. Hopefully we will be a key player in this process.
60
JANUARY 2012
Gaming | Billions Race
Gaming Results: Gross Revenue In Million MOP (1HKD:1.03MOP)
Mar 2011 Apr 2011 May 2011 Jun 2011 Aug 2011 Sep 2011 Oct 2011 Dec 2011Nov 2011Jul 2011Dec 2010 Jan 2011 Feb 2011
28,000
26,000
24,000
22,000
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
18,883 18,571 19,863 20,087 20,507
24,306
20,792
24,21224,769
21,244
26,851
23,058 23,608
The champagne corks fl ew as December ended. The casinos were toasting a year to remember
after setting a new gross gaming rev-enue record.
Last month’s numbers also confi rm that a slowdown in growth is underway that is likely to last throughout the year. To those celebrating, that should not come as a surprise. Analysts and gam-ing executives had already warned it was coming.
Macau’s gaming industry ended last year with MOP267.9 billion (US$33.5
Shifting gearThe outlook for growth at Macau’s casinos over the next 12 months is less bright despite record revenues in 2011
billion) in casino gross gaming revenue, according to data from the Gaming Inspection and Coordination Bureau. The previous record had been set just a year before, when Macau’s casinos took MOP188.3 billion.
In December alone, the casinos posted MOP23.6 billion in gross gam-ing revenue – a 25 percent increase year-on-year. The number itself is healthy but it also represents the slowest year-on-year growth rate since August 2009 and it highlights a slowdown that be-gan in November. Last year’s rate of
growth of 42.2 percent year-on-year is a signifi cant decrease from 2010, when the city’s gaming market expanded by 57.8 percent.
For the next 12 months the indus-try consensus for gross gaming revenue growth stands at about 15 percent. “Our base-case forecast for the Macau gaming market is growth in gross gaming rev-enue of 10 percent to 15 percent in 2012,” Standard & Poor’s Ratings Services cred-it analyst Joe Poon wrote last month.
While growth in Macau will de-cline, Singapore is forecast to be hit
61
JANUARY 2012
SJM
Sands China
Galaxy
Wynn
MPEL
MGM
TOTAL
Feb
31%
18%
9%
15%
15%
12%
100%
Mar
34%
16%
11%
14%
14%
11%
100%
Apr
30%
17%
9%
17%
17%
11%
100%
May
32%
16%
13%
13%
14%
11%
100%
Jun
29%
16%
15%
15%
14%
11%
100%
Jul
28%
15%
19%
15%
16%
8%
100%
Aug
27%
14%
20%
13%
15%
11%
100%
Oct
26%
14%
21%
13%
15%
11%
100%
Nov
27%
16%
20%
13%
13%
11%
100%
Dec
27%
16%
20%
14%
14%
9%
100%
Sep
29%
14%
20%
12%
16%
10%
100%
Dec
30%
17%
10%
17%
15%
12%
100%
Jan
31%
18%
11%
14%
15%
11%
100%
2010 2011
Gaming Results: Market Share Per Operator
*
SJM Sands China Galaxy Wynn MPEL MGM
Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011 Aug 2011 Sep 2011 Oct 2011 Dec 2011Nov 2011Dec 2010 Jan 2011 Feb 2011
40
30
20
10
0
(Figures are rounded to the nearest unit, therefore they may not add exactly to the rounded total) * estimated
*
harder by global economic uncertainty. The same report sees net gaming rev-enue in Singapore to grow by “5 percent to 10 percent” this year.
What will grow at a clip is regional competition, with Singapore and Macau facing off against each other, as well as casinos in new markets, which are likely to accelerate their plans to develop li-censed integrated casino resorts to spur growth, the report said.
King’s crownCitigroup says Macau will further con-solidate its position as the world’s big-gest gaming market this year and fore-casts MOP321 billion in gross gaming revenue. The bank revised its forecast for annual growth upwards to 20 percent from 15 percent previously.
In the Lion City, the bank expects a 13 percent year-on-year increase in ca-sino revenue to US$6.9 billion.
PriceWaterhouseCoopers presents the most bullish of the analysts’ predic-tions. Its latest estimates see Macau’s casino gross gaming revenue growing at close to 30 percent this year and at a compound annual rate of 21.5 percent between 2011 and 2015, when annual revenues collected by the casinos will top US$62.17 billion.
There was little movement in the market shares of the Macau-based play-ers last month. SJM Holdings Ltd. leads the market with a 27-percent market share, followed by Galaxy Entertain-ment Group Ltd. with its 20-percent share. Sands China Ltd. held onto third position, with a 16-percent market share, now followed by Melco Crown Enter-tainment Ltd. with a 14 percent. Wynn Macau Ltd. has dropped to fi fth, with a share bellow 14 percent. MGM China Holdings Ltd. has a 9-percent share.
In the increasingly important mass-
market segment, Sands China retains its lead with a weighted market share of 34.3 percent, according to the most recent data from Union Gaming Research for Octo-ber and November. Even so, the gaming operator was down 110 basis points in comparison with data from August and September. SJM was second at 30.8 per-cent, followed by Galaxy with 19.4 per-cent. Wynn came in at a distant fourth with a mass-market share of 6 percent, ahead of MGM China with 5.6 percent and Melco Crown with 4 percent.
Union Gaming said those shares were broadly inline with previous stand-ings. In comparison with the company’s August-September survey, the biggest net winner was Galaxy, which improved by 210 basis points.
By property, the top three were un-changed, with the Venetian Macao hold-ing a 20.3-percent share, followed by SJM’s Grand Lisboa and Lisboa with 16.1 percent, and Sands Macao with a 13.9-percent share.
Union Gaming estimates each op-erator’s and casino’s mass market share by counting casino shuttle bus passen-gers at the Outer Harbour Ferry Termi-nal and Macau Border Gate. Combined, they accounted for 78 percent of all tour-ist traffi c in 2010.
PriceWaterhouseCoopers has the most bullish of the analysts’ predictions. Its latest estimates see Macau’s casino gross gaming revenue will grow at close to 30 percent this year
62
JANUARY 2012
Gaming | Stock Watch
A weakening international outlook and tighter economic conditions in the mainland are shaping
up to be the key obstacles to Macau’s booming gaming industry this year. In-dustry executives say gross gaming rev-enue is likely to slow to about 15 to 20 percent annual growth this year from last year’s 40 percent plus growth. That is destined to impact on valuations.
Citigroup says there is still “ap-preciable upside” for gaming stocks. A recent report noted that the Macau casino stocks are trading at 8.7 times the bank’s target Enterprise Value/EBITDA this year, signifi cantly less than the 10.3-times historical average and refl ecting concerns around growth this year.
One segment that may see growth is gaming operators waiting for land grants in Cotai. SJM Holdings Ltd. (0880.HK) and Wynn Macau Ltd. (1128.HK) appear closest to fi nalising
BY RAY CHAN
Future shockGaming stocks will take some knocks this year but investment houses forecast some brighter news as Cotai continues to grow
land deals. Expect to see a boost in share prices if the government gives the go-ahead.
Last month, SJM announced it had received a letter from the government saying it would be granted a land par-cel in Cotai. Offi cials were quick to comment that no fi nal decision had yet been made.
“We got a letter saying that it [the government] will grant the land to us but we haven’t been given any further notice about, for example, the premium payment,” SJM Holdings Ltd.’s chief executive Ambrose So Shu Fai told TDM. Mr So expects the grant proc-ess to be completed this year, with SJM ready to invest up to MOP16 billion (US$2 billion).
Back in September, Wynn an-nounced it had formally accepted the government’s terms and conditions for control of a 20-hectare plot of land in Cotai. In a fi ling to the Hong Kong
exchange, the company said it would pay a land premium of MOP1.55 billion for an initial term of 25 years. Again, the government replied the application was still being reviewed and that no fi -nal decision had been made yet.
Central storyIt is a similar story for Macau Studio City, the stalled development that Mel-co Crown Entertainment Ltd. (6883.HK, MPEL.US) bought a majority stake in last year.
Secretary for economy and fi nance Francis Tam Pak Yuen said the gov-ernment had not yet received an ap-plication from Melco Crown to include gambling at the revamped project. Mr Tam said if an application was fi led, the Gaming Inspection and Coordination Bureau would consider it according to the relevant legislation.
What is confi rmed to take place this year is the opening by Sands China Ltd.
62
63
JANUARY 2012
NameTicker Share price performance (HK$/US$)
Change (%)
52-week high 31/12/201152-week low 2011 return
SJM Holdings Ltd.
Galaxy Entertainment Group
Wynn Macau Ltd.
Sands China Ltd.
Melco International Develop.
Melco Crown Entertainment Ltd.
Melco Crown Entertainment
MGM China Holdings Ltd.
Hang Seng Index
Las Vegas Sands Corp.
MGM Resorts International
Wynn Resorts Ltd.
Penn National Gaming Inc.
Dow Jones Indus. Avg.
S&P 500 Index
21.00
22.45
27.48
26.60
10.76
26.40
16.15
18.20
24,468.60
51.05
16.94
165.49
44.29
12,928.50
1,370.58
10.22
8.69
14.81
14.90
4.30
22.40
6.46
8.05
16,170.30
36.05
7.40
101.02
31.68
10,362.30
1,074.77
12.68
14.24
19.50
21.95
5.77
24.50
9.62
10.16
18,434.39
42.73
10.43
110.49
38.07
12,217.56
1,257.60
5.04
61.82
18.09
28.51
29.96
-
51.26
-
-19.97
-7.01
-29.76
12.29
8.31
5.53
0.00
0880.HK
0027.HK
1128.HK
1928.HK
0200.HK
6883.HK
MPEL.US
2282.HK
HSI.IND
LVS.US
MGM.US
WYNN.US
PENN.US
INDU.IND
SPX.IND
(1928.HK) of its Sands Cotai Central complex. It will be the last signifi cant property to open its doors anywhere in Macau before 2015, analysts say.
The project’s fi rst phase is set to open in March and will include a 9,850 square-metre casino with VIP gaming areas. The company expects to open a second casino by the third quarter. When work is complete, there will be more than 5,800 hotel rooms on the site.
Sands China’s stock price rose about 28.5 percent last year, the third best performance by Macau gaming stocks listed in Hong Kong. In compar-ison, the benchmark Hang Seng Index gave up close to 20 percent.
Citigroup favours stocks with exposure to Cotai. The investment bank estimates that 51 percent of the EBITDA from the city’s casino in-dustry will come from properties lo-cated in that area as early as next year. The bank deems Sands China “could
Ph
oto
: Car
mo
Co
rre
ia
63
64
JANUARY 2012
Gaming | Stock Watch
easily support a healthy dividend in 2012/2013” which could comfortably reach HK$0.55 a share.
To the moviesGalaxy Entertainment Group Ltd. (0027.HK) was the strongest casino stock in 2011, gaining 61.8 percent. Last month, its Galaxy Macau prop-erty offi cially inaugurated a 3-D cin-ema com plex, UA Galaxy Cinemas, with an area of about 16,000 square metres and a 1,000-seat capacity.
The opening of its China Rouge hybrid private membership club, per-formance theatre, bar and restaurant is expected to take place this year but no schedule has been announced yet. Galaxy Entertainment chairman Lui Che Woo has forecast the company would continue “to provide attrac-tions and facilities that have never been available in Macau before”.
Wynn Macau Ltd. saw its shares rise 18.1 percent last year, while SJM Holdings Ltd. posted a more moder-ate growth of 5 percent.
In early December, Melco Crown Entertainment Ltd. was listed on the Hong Kong exchange by induction – in other words, by listing shares al-ready issued instead of issuing new ones. Melco Crown Entertainment was the fi rst company ever to hit the gong at its own listing ceremony in Hong Kong’s fi nancial history.
This was an “important mile-stone” for the gaming operator, co-chairman and chief executive offi cer Lawrence Ho said. “A dual listing in Hong Kong broadens Melco Crown Entertainment’s investor base and creates an added growth driver for the company.” The company’s shares continue to also be traded on the Nasdaq.
The share price of Melco Crown Entertainment Ltd. in Hong Kong eventually fell bellow its listing price of HK$26.40 a piece to HK$24.50 by the end of the year but Melco Crown International Development Ltd. (0200.HK), which owns about one third of the company, saw its share price soar by 30 percent last year.
MGM China Holdings Ltd. (2282.HK) commenced trading in Hong Kong last June after pushing ahead with an initial public offering. Its shares ended the year at HK$10.16 each, well bellow the offer price of HK$15.34.As of December 23, 2011
Galaxy Entertainment Group Ltd.Melco Crown Entertainment
Wynn Macau Ltd.SJM Holdings Ltd. Sands China Ltd.Melco International Development MGM China Holdings Ltd.
Hang Seng Index
Wynn Resorts Ltd. MGM Resorts InternationalLas Vegas Sands Corp.Penn National Gaming Inc. Melco Crown Entertainment-ADR S&P 500 Index
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65
JANUARY 2012
SJM ANNOUNCES SALARY INCREASE
APPT ADDS SEOUL TO SCHEDULEThe PokerStars.net Asia Pacifi c Poker Tour (APPT) announced the addition of Seoul, Korea to its Season 5 schedule from March 7 to 11. The Seoul leg will be hosted by the Paradise Walkerhill Casino. The fi ve-day, fi ve-event poker festival will feature a 3 million won (MOP$20,000) buy-in main event. This marks the return of the tour to Korea after a four-year break.
GOVT INKS NEW CONTRACT WITH NEWPAGEGaming consultant company Newpage Consultadoria Ltda will continue to provide consultancy services to the government in 2012. A contract is expected to be signed soon, according to the offi cial gazette. The amount to be paid to Newpage was not made public. Newpage Consultadoria Ltda was formed in June 2010 and is headed by David Green. The company was fi rst awarded a contract for gaming consultancy services in August 2010 and a new deal valid for 2011 was signed in February 2011. Mr Green has provided consultancy services to the Macau government in the gaming area since 2000, fi rst as a representative of accounting fi rm Arthur Andersen and then as PriceWaterhouseCoopers’ Macau director of gaming practice. Mr Green is also a regular contributor of Macau Business.
MGM SUES HIGH-ROLLERMGM Grand Paradise, a subsidiary of MGM China Holdings Ltd., is suing VIP junket agent and North Korean tour operator Wong Sing-wa, according to a report from the South China Morning Post. The Hong Kong newspaper reported that Mr Wong failed to repay part of a HK$10 million (US$1.29 million) debt. Mr Wong allegedly drew down HK$10 million on a credit line and eventually lost it while gambling in September 2008. The court case has been fi led in Hong Kong. Mr Wong has reportedly been involved in the operations of Sociedade de Turismo e Diversões de Macau’s Pyongyang casino.
Gaming operator also to pay bonus and improve welfare system
After several workers’ protests, SJM Holdings Ltd. has announced a pay rise for 2012 of 5 to 10 percent. The percentage of the increase is based on salaries, with employees with lower wages getting higher raises. All SJM workers are entitled to the salary increase.
All employees will also receive a bonus for the year of 2011. Those
with a monthly salary of MOP10,000 or below will receive 150 percent of a month’s salary. Other employees will receive a bonus of one month salary which will not be less than MOP15,000.
Other welfare optimization measures and a new rewards system will also be implemented starting this month. These include an increase in annual leave entitlement, meal allowance and
rewarding employees that don’t take any sick leave.
“With the implementation of the salary increase, bonus payout, welfare optimization and new rewarding system, we express our gratitude towards our employees and enhance the team spirit and loyalty,” said Louis Ng, SJM’s director and chief operating offi cer.
66
JANUARY 2012
Outer limits
NEVER MIND THE GAPSecretary for economy and fi nance Francis Tam Pak Yuen says
the remaining number of live gaming table licenses available under the 5,500-table cap should be enough for Sands Cotai Cen-tral to operate successfully.
Mr Tam said last month there were about 5,300 licensed live gaming tables.
The fi rst phase of Sands China Ltd.’s Sands Cotai Central de-velopment is set to open in March and will include a 9,850 square-metre casino and VIP gaming areas. The company expects to open a second casino there by the third quarter.
Sands China offi cials allegedly told Royal Bank of Scotland representatives the property would have 540 gaming tables, although some were considered “temporary”, according to a report by GamingCompliance.
The comments were included in a RBS report dated December 12 written by analysts Philip Tulk and Frank Hung, following an RBS investor conference with Sands China Ltd. offi cials on December 9.
Sands China said it would receive a total of “400 new tables from the government”, with “the balance shifted from other
The Venetian Macao is launching its refurbished high-limit gam-ing area this month, ahead of
Chinese New Year.The resort’s management says the
MOP120-million investment (US$15 million) will better serve an increasingly important segment of players. Andrew Billany, senior vice president of Paiza and Plaza operations for the Venetian, says the remodelled area, with its focus on luxury, “will cater to our premium
Sands China is updating the high-limit gaming area at the Venetian Macao to boost play
mass gaming guests and will set a new standard for a high-limit gaming experi-ence in Macau”.
It is part of the process the Vene-tian hopes will create a competitive ad-vantage led by innovation in products, design, style and personal amenities. “A baccarat table is just a baccarat ta-ble. It is all the periphery services that come into play ... that is what makes a really good experience,” Mr Billany told Macau Business.
[Sands China Ltd] properties”.“Management maintained that ‘temporary’ or loaned tables
would allow one to reconcile the government’s table commitments to Sands at [Cotal Central] and its 5,500 table cap.”
To meet those commitments, Sands China Ltd. would need to manage tables not included in the 5,500 cap. Government sources contacted by Macau Business said they were unaware of any agreement that would allow Sands China to breech the table cap.
The revamped high-limit gam-ing area includes a main gaming hall, improved levels of privacy, a slots area and lounge. Both the number of gaming tables and slot machines have been in-creased, with the venue holding 66 ta-bles and 156 slot machines.
Mr Billany says the Venetian moved to renovate the high-limits area because of Macau’s competitive gaming land-scape, the age of the previous fi t-out and as a response to customer needs. “Obvi-
Gaming
67
JANUARY 2012
HONG KONG DROPS SANDS INQUIRYThe Securities and Futures Commission of Hong Kong has concluded
its investigation of Sands China Ltd., the gaming operator announced last month. The regulator has decided not to take any measures against the company.
Sands China was being investigated for alleged breaches of regula-tions of the Securities and Futures Commission but neither the company nor the regulator disclosed further details on the nature of the investiga-tion.
Sands China is also being investigated by the Nevada Gaming Con-trol Board, the United States Securities and Exchange Commission, the Department of Justice and the FBI regarding alleged improper practices by the company and its parent, Las Vegas Sands Corp., in Macau, fol-lowing a court case fi led by Sands China’s former chief executive Steve Jacobs.
In the lawsuit fi led in a Nevada court, Mr Jacobs alleged he was wrong-fully fi red. In the court fi lings, he accused Sands China and Las Vegas Sands of using improper leverage against Macau government offi cials.
BRIDGES CROSS COTAI DIVIDEThe government has approved the construction of the
fi rst pedestrian fl yover connecting two casino resorts in Cotai. A source from the Lands, Public Works and Transport Bureau told Macau Business the license to build a pedestrian fl yover connecting Sands Cotai Cen-tral and the Venetian Macao was approved in October.
Sands China Ltd., which owns both properties, sub-mitted the project for approval in 2008, a source within the company told Macau Business.
The fl yover will be equipped with lifts, regular stairs, escalators and air-conditioning. The fl yover will also have direct access to the street on both sides.
The construction of a second fl yover has also been already agreed upon between Sands China and Melco Crown Entertainment Ltd., to connect the Venetian and City of Dreams. The project has been submitted to the government and is awaiting approval.
ously changes in the market place drive the thinking but also listening to our customers, what do they want the most and how can we respond successfully to their changing needs,” he says.
Attractive playThe high-limit market is a growing seg-ment, with higher profi t margins for ca-sino operators than VIP play, since there are no junket operators involved. Over-all betting volumes are much lower.
Mr Billany says the defi nition of a high-limit player is related to table lim-its where they typically gamble. “It is usually the [higher] table limits. It can be HK$3,000, HK$5,000, HK$10,000 limit tables. Once they get to about HK$20,000, they may turn to go to the premium programmes that exist.”
High-limit players represent rough-ly the top 10 percent of the mass mar-ket, according to some estimates. “It is a sizeable number, that is very profi table and extremely loyal. That is why they are extremely important to our business. They stay longer, they play longer,” Mr Billany says.
“We have to build a better business model to target that segment. They are much more sophisticated, both the play-ers and their demands.”
Sands China began targeting high-limit players in a more systematic man-ner at the Plaza casino at the Four Sea-sons. “It had great success,” Mr Billany says, adding revenue for this segment there has been growing ahead of the overall market.
He is not expecting the revamped
high-limit area at the Venetian to can-nibalise business at the Plaza, since they have different customer bases. Most high-limit players at the Venetian are from the mainland. At the Plaza, close to two-thirds are from Hong Kong.
“I know it is going drive growth,” Mr Billany says. “It is going to better yield the square footage that we have in terms of asset utilisation and it is going to drive loyalty and share of wallet.”
The new high-limit gaming area is not the only recent innovation from Sands China. Last month, it introduced a HK$50-million payday it is calling “Asia’s biggest jackpot” to launch a new series of MegaBucks slot machines. About 140 new machines will be in op-eration at the Venetian Macao, Sands Macao and Plaza casinos.
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JANUARY 2012
BY MUHAMMAD COHEN IN SINGAPORE
Resort reality checkNo matter what features a casino resort development brings to the table, gaming dominates in Asia
Gaming
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JANUARY 2012
Resorts World Sentosa is an apt prototype for the 21st century Asian casino resort, combining
gaming with an array of lodging, din-ing and entertainment options, minutes from downtown Singapore.
The S$6.59 billion (MOP40.5 bil-lion) complex features the only Universal Studios theme park in Southeast Asia. A ride creator from the park teamed with a renowned New York designer to craft a one-of-a-kind maritime museum. Resi-dent stage spectacle “Voyage de la Vie” headlines an entertainment menu that runs from classical concerts to mixed martial arts. The four hotels – two more will open this year along with a destina-tion spa and the world’s largest ocean-arium – range from the global Hard Rock brand to unique, boutique Hotel Michael showcasing the mad genius of artist Michael Graves.
Convention space in the 49-hectare complex can accommodate up to 12,000 delegates and includes Asia’s largest column-free ballroom. Dining options span from French celebrated chef Joel Robuchon and Japan’s Michelin starred culinary maestro Kunio Tokouka to in-ternational and regional chains. There are more than 45 retail outlets, from leading international brands to conven-ience shops.
These bountiful choices are avail-able in part because the Singapore gov-ernment’s bidding process for gambling licenses challenged applicants to pro-vide world-class, non-gaming facilities and amenities. The rules limit casino space to 15,000 square metres, aiming to compel the operators to fi nd other ways to draw crowds and make money.
The Singapore government wanted at least half of their casino resorts’ rev-enue to come from non-gaming activi-ties, and even planned to enforce that with tax penalties on gaming revenue in excess of 50 percent. Resorts World Sen-tosa and its rival Marina Bay Sands have won acclaim as true resorts that branch beyond gaming, in contrast to Macau’s casino-centric resorts.
Numbers countResorts World Sentosa revenues totalled S$788.7 million last quarter. With all of its investment and effort beyond the casino fl oor, non-gaming revenue rep-resented 16.3 percent of total revenue, 2.4 percentage points below the Vene-tian Macao’s 18.7 percent non-gaming revenue.SkyPark - Marina Bay Sands
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JANUARY 2012
Talk about resorts in Asia tends to focus on iconic architecture, vast con-vention and retail spaces, and entertain-ment spectacles. In reality, Asia’s casino resorts rely on gaming for their survival, a situation that is unlikely to change in the foreseeable future. That’s the con-sensus of industry executives and other experts interviewed by Macau Business.
It is also what the numbers say. On the Las Vegas Strip, casinos get more than 60 percent of their revenue from non-gaming sources. In Macau, non-gaming revenue represents 11 percent of total revenue, according to operators’ latest fi nancial reports, ranging from less than 1 percent for gaming market leader SJM Holdings Ltd. to 14.2 per-cent for Sands China Ltd. In Singapore, even with gaming revenue restricted by the government’s refusal to license jun-ket operators, non-gaming registers 22.4 percent of the total.
“Gaming is what drives integrated resorts in Asia fi nancially but not opera-tionally,” former Marina Bay Sands chief executive offi cer Thomas Arasi says. Marina Bay Sands with its 120,000-
the right model, particularly for Macau. SJM Holdings Ltd. remains sceptical. While Las Vegas has become a major-ity non-gaming market, “Macau hasn’t changed,” SJM director of operations development Niall Murray says.
“We’re not going to spend millions on entertainment, for example. Energy on the gaming fl oor has to be free. We don’t want to drag players off the fl oor for 90 minutes,” he says.
Integrating a resort represents a ma-jor challenge for operators, particularly aligning the non-gaming components to support the casino. “Non-gaming attrac-tions create the premium envelope for the gaming activities to fi t into,” Melco Crown Entertainment Ltd. co-chief op-erating offi cer for operations Nicholas Naples says. “This is the real differentia-tor between casino resorts since most of the games within the casinos are simi-lar.”
“Keep in mind that even if only 20 percent of revenue [at Marina Bay Sands] is from non-gaming, that’s still S$772 million,” says Mr Arasi, now president and chief executive of United States-
plus square metre of convention space, 300-store shopping mall, resident and touring shows, six celebrity chef restau-rants, and more than 2,500 hotel rooms, derives 24.4 percent of its revenue from non-gaming sources.
Attractive arithmeticGiven the skewed revenue numbers, it is worth asking whether casino resorts are
Gaming
Talk about resorts in Asia tends to focus on iconic architecture, vast convention and retail spaces, and entertainment spectacles. In reality, Asia’s casino resorts rely on gaming for their survival
Club Cubic nightclub - City of Dreams
CotaiArena - Venetian Macau
71
JANUARY 2012
CREATING A GLOBAL DESTINATIONAfter arriving from Las Vegas, Melco
Crown Entertainment Ltd. vice-pres-ident for customer relationship manage-ment, loyalty and profi t optimisation Steven Pinchuk thought of the legendary Land of Oz when he saw the non-gaming numbers in Macau. “We’re not in Kansas anymore,” Mr Pinchuk realised.
City of Dreams, home to the US$250 million (MOP2 billion) House of Danc-ing Water show, three hotels, nightspot Club Cubic, and an array of events and meetings and incentives, clocks in with 8 percent non-gaming revenue.
Mr Pinchuk believes he knows why. “An integrated resort needs to be in a major international destination market to succeed,” he says.
Tourist numbers due later this month will likely show Macau set a record with more than 27 million visitors last year but tourists are still overwhelmingly from Greater China, with the concentration growing as mainland arrivals surge. The city remains a regional rather than an international destination.
A major global travel destination offers a diverse visitor base to patronise the range of attractions casino resorts offer, plus the infrastructure to support large scale conferences and exhibitions, a key to boosting non-gaming revenues, according to experts.
Singapore’s resorts record non-gaming revenues of 22 percent, compared with 11 percent for all Macau operators, according to the latest fi nan-cial reports. Singapore’s higher number is the product of government policies to promote non-gaming revenue multi-plied by its longstanding status as an
international travel hub, even though it registered about 13 million visitor arriv-als last year, less than half of Macau’s total.
“The resorts are part of a larger tourism eco-system supported by a vibrant and pro-business environment and reliable infrastructure,” Singapore Tourism Board executive director for resorts Carrie Kwik tells Macau Busi-ness. “Other upcoming projects such as the international cruise terminal, Gardens by the Bay, the world’s fi rst river safari, and the National Art Gallery, will complement the integrated resorts by further expanding our repertoire of offerings, deepening our value propo-sition and attracting new and repeat visitors to Singapore,” she says.
Despite those advantages, plus a local market that is ten times the size of Macau, Singapore’s percentage of non-gaming revenue is still far from the 60 percent-plus of Las Vegas.
Melco Crown co-chief operating offi cer for operations Nicholas Naples acknowledges a “resort is much more likely to succeed in a destination that is already known as a major international travel destination”. His job is to make City of Dreams – and in the future a second casino resort at Macau Studio City – succeed in Cotai.
“In the case of Cotai, we will require other infrastructure before it can com-pete with other established interna-tional destination resorts,” Mr Naples says. “Rome was not built in a day, even Las Vegas and Atlantic City had to go through this process to get to where they are today.”
based Harbinger Advisers. “On its own, that’s a multimillion dollar company.”
Mr Arasi cautions against integrat-ing resorts too deeply. “Some people don’t want to be part of some environ-ments,” he says. “The gaming elements are ring-fenced in Singapore.” In con-trast, the Venetian Macao follows Las Vegas custom, so it is almost impossible to avoid walking through the casino to get around the resort.
Non-gaming attractions also broad-en the appeal of a casino resort. “The high roller might not go to Universal Studios but his wife and kids might,” Resorts World Sentosa central zone op-erations director Jason Horkin says, not-ing that the theme park hosts VIP visits daily. “If I’m a high roller, I want to be left alone to gamble. If you have more offerings for my family, maybe I play longer. Maybe I come more frequently.”
Bottom line, not headlinesThe attention won by components in resorts is not necessarily indicative of their importance to profi tability. It is not theme parks and big ticket shows but
“Voyage de la Vie” resident show - Resorts World Sentosa
72
JANUARY 2012
MICE (meetings, incentives, conven-tions and exhibitions) and hotels that contribute most to non-gaming revenue, experts say. Retail and food and bever-age can help under certain circumstanc-es but nothing else moves the needle signifi cantly.
Part of Macau’s failure to diver-sify its revenue is the limited impact of MICE, with the number of events held dropping last year. “The numbers were supposed to come from Hong Kong or China,” SJM’s Mr Murray says.
Last year, Macau and Beijing au-thorities agreed on the creation of a list of MICE events taking place in Macau for which visa application processing will be made easier for mainland trade visitors.
MICE supports hotel occupancy, usually the highest profi t margin item per dollar spent on the resort menu. But rooms need to be held in reserve for gamblers, creating potential operational confl icts.
“Rooms have to be seen as strategic assets,” Melco Crown vice-president for customer relationship management, loy-alty and profi t optimisation Steven Pin-
chuk says. “The difference in demand is dramatic between weekends and week-days.”
Weekends are the most popular time for leisure travellers, as well as gamblers. Operators have to make tough choices, choices that become easier if the resort has a massive inventory of rooms, best supported by MICE during non-peak periods, which leads to the Las Vegas model.
Tempting menu“Integrated resorts won’t be the same in every market,” Mr Pinchuk says. “If you have the wrong elements, you’re trying to shift demand. Instead, put the product where demand is.”
Galaxy Entertainment Group Ltd.’s Galaxy Macau has enjoyed outstanding early success with limited MICE and retail components. The resort features Asian hotel brands, Japan’s Okura and Southeast Asia’s Banyan Tree, not pre-viously found in Macau or Hong Kong, consistent with the property’s focus on Asia travellers. Galaxy’s signature non-gaming attraction, the sky top wave pool and beach, arose from research showing
tropical Hainan island was the top tour-ist destination for mainland Chinese and that they paid premium prices to stay there.
Last month, Galaxy Macau opened a cineplex, appealing to mainland tour-ists who have a limited selection of imported fi lms at home, as well as the Macau market. Profi ts may be slim, but IGamiX Management and Consulting managing partner Ben Lee notes that the movies, plus retail and dining options geared to the mass market, create traffi c, giving Galaxy Macau the buzz Chinese gamblers like at a property.
“Build with fl exibility to turn to-ward what the market wants,” Mr Mur-ray says. But as with ships, the bigger the resort, the harder it can be to turn.
About this report: This article grew out of a panel discussion on casino resorts at the recent Asian Casino and Gaming Congress in Singapore. Panellists were Mr Arasi, Mr Murray and Mr Pinchuk. Macau Business special correspond-ent Muhammad Cohen moderated the panel and supplemented the article with additional reporting.
Gaming
Casino - Galaxy Macau
73
JANUARY 2012
BETTING ON ‘CASH-SUCKING BLACK HOLES’Before Singapore opened its casino
resorts, restaurant and catering group Menu managing director Devin Kimble worried they could become “black holes”, sucking in consumer dollars. As the re-sorts approach their second anniversaries, Mr Kimble says his fear has come true. “My hope is eventually that will change,” he adds.
He also echoes a complaint heard in Macau: along with spending, the casino resorts suck in labour, making the situa-tion more diffi cult for other employers. Mr Kimble says Menu closed two outlets of its Brewerkz microbrewery chain due to insuf-fi cient manpower.
Entertainment complex Saint James Power Station chief executive offi cer Den-nis Foo campaigned for legal casinos for more than decade to boost Singapore’s tourism. Since the resorts opened last year, visitor arrivals have risen an estimat-ed 40 percent while visitor spending is up more than 70 percent.
But Mr Foo admits he should have been more careful about what he wished for. For the most recent fi scal year, Saint James reported a loss of S$1 million (MOP6.1 million). In a statement, the Singapore-listed company blamed the
residents need to pay S$100 (MOP615) to enter, “the rest is very popular with residents.”
“To me, the litmus test of it all is this: is the home market proud?” Marina Bay Sands’ fi rst CEO Thomas Arasi says. From the Singaporeans guiding visitors around the resort, the answer appears to be a resounding “yes”.
resorts, “as many of the target audience in the nightclub industry have found casinos an alternative form of entertainment”.
“The integrated resorts have come up with different schemes to encourage you to come in,” Singapore International Chamber of Commerce chief executive Phillip Overmyer says. Aside from casinos, where Singapore citizens and permanent
74
JANUARY 2012
Gaming
The mainland has the world’s big-gest online community at 485 million strong and expanding,
creating tremendous opportunities for local casinos keen on digital market-ing. “Growth now is ridiculous,” says Macau-based digital marketer Chris Wieners.
Mainland net users’ interest in tourism presents huge opportunities for Macau’s gaming operators. Two-thirds of outbound tourists use the Internet, and 79 percent of that segment reserve their hotel room online, says Mr Wien-ers, the vice-president of operations for Hogo Digital, a boutique marketing fi rm
Digital bettingBY MUHAMMAD COHEN
Casinos are missing a chance to engage savvy online consumers in the mainland with digital marketing techniques, expert says
that targets high net worth consumers. Hogo was launched last year in Hong Kong by Faye Ho, a granddaughter of SJM Holdings Ltd. founder Stanley Ho Hung Sun. The company has offi ces in Macau, Guangzhou and Shanghai.
While advertising for gaming is banned in the mainland, there are ways to reach consumers online, but gaming operators are missing the connection. “There’s a mismatch between what us-ers want and what most companies are delivering,” Mr Wieners says, speaking to Macau Business following a presen-tation at the recent Asian Casino and Gaming Conference in Singapore.
“The audience is there but the ca-sino industry [in Macau] is not. In the U.S., the level of opportunity is no-where near where it is in Asia, but the U.S. is far more developed.”
He argues that as long as there is no specifi c mention of gaming, there is room to manoeuvre. “It’s especially easy if the property includes hotel, food and beverage, and other amenities. You just stress the non-gaming benefi ts. Everybody knows there’s a casino, you just don’t say it.”
Leading followersMr Wieners is the former director of digital marketing at Sands China Ltd. He began his career in hotel operations in 2001 but his marketing experience has been almost exclusively in the dig-ital area.
Digital marketing “is a baseline marketing tool that should be looked at separately from the traditional mar-keting channels. While it’s vital that these departments do have active, open communication between them, it’s im-portant to distinguish that the digital channels are unique in both the way or-ganisations send and receive, and there-fore respond to and with their custom-ers,” he says.
Mr Wieners advocates integrating social networking directly into web-sites, each localised for mainland users. “If you give people a reason to follow you on social networks, they will,” he adds, which means going beyond sim-ply copying the website to a new plat-form. “You need to give them unique content or special offers.”
The challenge is for casino opera-tors to provide users with incentives to join their networks. Tweet-ups, short-notice invitations to special events, are one inducement that is popular in the United States.
If casinos can get customers to join their social networks, they create a communication channel, gaining ac-cess to the surprisingly large volume of information people are prepared to share online.
Follower-only pages can also at-tract and keep certain types of custom-ers, such as wine connoisseurs. But creating content and communicating regularly means committing manpower to the job, Mr Wieners says.
“I haven’t seen anybody [in Macau] use Facebook effectively,” Las Vegas-based Gaming Market Advisors chief
75
JANUARY 2012
SOCIAL MEDIA HOPE FOR LOYALTY BOOSTOne dilemma for casino marketers in Macau remains the reluc-
tance of players to sign up for loyalty marketing programmes. These reward schemes are the backbone of casino marketing in the United States, enabling casinos to identify and target their best customers by tracking player behaviour and other spend-ing habits. The payoff for customers is that tracking lets casinos personalise services and offers to their individual preferences.
In the U.S., loyalty programme participation reaches as high as 85 percent of players for Caesars Entertainment, the owner of Caesars Golf in Macau, according to Gaming Market Advisors chief executive Andrew Klebanow. In Macau, the estimated card penetration ranges from 10 to 40 percent, with Mr Klebanow sug-gesting 25 percent is a realistic fi gure. At Singapore’s two casino resorts, card penetration is estimated at 20 to 30 percent. So-called “uncarded play” leaves a big hole in marketing plans and fi nancial projections.
Social networking and mobile apps could help bridge the chasm, according to Hogo Digital vice-president for operations Chris Wieners. Mainland Internet users are keen social network-ers and mobile Internet use is growing explosively.
To reach mobile users more effectively, Mr Wieners suggests applications such as way-fi nding and game-fi nding for exploring property features. Those activities could be integrated with loy-
executive offi cer Andrew Klebanow says. “I haven’t seen it work. All I’ve seen it do is give employment to people who sit on the web all day.”
Relevant and localThe fi rst step to reaching the mainland market is localisation. “You can’t just translate your online material from English,” Mr Wieners says. Beyond language, changes range from hav-ing the Chinese page served as a stan-dalone site, separate from other pages, to accepting mainland design and usage patterns, and further localising content to take into account geography and de-mography.
“Western-branded casinos are at the forefront of digital marketing [in Macau], specifi cally because they have large teams in the U.S. that are able to help build strategy and learn from past mistakes,” Mr Wieners says.
“Sometimes, though, what these organisations don’t take into account is the importance of a unique message when speaking to Chinese consumers. I look at the work Galaxy Macau did prior to its opening, including the dig-ital postcards and animated mascots that were shown across Chinese media. These gained huge traction across the Hong Kong and mainland audiences.”
Mainland netizens have bypassed some Western patterns of use, such as
the use of portals, in favour of social media. Mainland users prefer content rich pages where they can fi nd infor-mation located in one place, although leading portal Sohu is moving towards a more graphic style.
Mainland users also prefer to click more, but type and search less. Click-through rates for online advertising run as high as 2.3 percent, Mr Wieners says, in a fi eld where 1.2 percent is con-
sidered very strong. The click-through metric is the number of clicks on an ad in relation to the number of times it is seen.
Full spectrumReaching the mainland market also means understanding the unique equiv-alents of key social networks. The equivalents to Facebook are Kaixin001 and RenRen, YouTube is Youku, and Twitter is Sina Weibo.
Mr Wieners says social network-ing is heavily segmented with many narrowly targeted networks. Market-ers fi nd P1.cn the most intriguing niche community because of its restricted membership of individuals with a monthly income of at least RMB8,000 (MOP10,055).
“Go mobile,” Mr Wieners encour-ages casino marketers. “I believe this will be the way forward in China and much of Asia.”
Of the mainland’s 485 million In-ternet users, 318 million accessed the Internet from a mobile device, while the number of home computer netizens stood at 390 million as of June last year, according to the latest survey from the China Internet Network Information Centre. Some experts believe that mo-bile Internet use via smart phones and tablets will overtake access via compu-ter before the end of next year.
alty programmes to enable people to check and even earn points by smart phone or get special promotions while on the property.
Tracking technologies could help properties identify which followers are on-site, where they are, and where they spend most of their time, information companies seek via their loyalty programmes.
“It’s a natural,” Mr Wieners declares. “The reason it’s not be-ing done, no operator is taking the lead.”
If casinos can get customers to join their social networks, they create a communication channel, gaining access to the surprisingly large volume of information people are prepared to share online
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This month’s ICE Totally Gaming will be the largest ever, accord-ing to fi gures released by show
organisers Clarion Events. The event will be held from January 24 to 26 in London.
The news comes following confi r-mation that over 22,000 square metres of stand space have been contracted to gaming exhibitors, a record high for an edition of ICE. Over 400 exhibitors, from more than 50 countries, have al-ready confi rmed their presence.
“Not only is ICE Totally Gaming the only exhibition to bring together the online and offl ine worlds, it is also the only event to boast so many represented countries on the show fl oor,” says Mat-thew Appleby, marketing communica-tions manager at Clarion Events.
“Unlike other events our exhibitors are not drawn from one narrow gaming sector and they’re not from one region. Instead they embrace every gaming dis-cipline and platform and are drawn from every corner of the globe.”
At this year’s show, International Game Technology (IGT) will present an array of new titles such as ‘Elvis The King’ multi-level progressives, ‘Break-fast at Tiffany’s’, ‘Sex And The City Fabulous’ and ‘Ghostbusters Who Ya Gonna Call’.
The biggest everICE Totally Gaming 2012 to welcome over 400 exhibitors
“Visitors will also see IGT Cloud, a breakthrough casino management serv-ice solution that empowers operators to optimise their operations and fl oors us-ing cloud computing technology,” IGT’s Craig Churchill, senior vice president of international sales, says.
Novomatic will be showcasing two new cabinets – one for the existing Novo Line platform and another catering to all AGI gaming platforms. The com-pany will also be unveiling new games within its Novo Line category, a variety of new jackpot themes and a new auto-mated single player roulette game, Tiger Roulette.
World premieresMaking their world premiere at ICE Totally Gaming are two new solutions from JCM Global, the iPro and iPro-RC bill validators. iPro combines advanced SMLED sensors with anti-fi shing tech-nology while iPro-RC has an added recycling feature to reduce operational costs.
ICE will also mark the premiere of JCM’s new BlueWave Deluxe software uploading tool that enables casinos to upload software upgrades at a faster speed.
As for Aristocrat Technologies, they will be showing their largest number of
games in recent years at the forthcom-ing ICE show. Aristocrat brought for-ward European release schedules for several games after they received a good response when previewed at G2E Las Vegas in October.
William Wilsnagh, managing direc-tor for Europe and Africa, said Aristo-crat had listened to the European opera-tors who attended the Las Vegas show. “So many of the new games on show at G2E created such an impression with European operators, we’ve made their advanced roll out in Europe a priority,” he said.
An example is Reel Tube, one of two new standalone gaming categories being showcased at ICE. Offering bi-directional rotation of the reels, it allows for unique bonusing features. Reel Tube will roll out in Europe with two dis-tinctly different fl avours; the chemically charged 100 line game ‘Mad Professor’ and the ancient Egypt-inspired ‘Phar-aoh’s Prize’.
Spielo International too is featuring a comprehensive portfolio of content, products and systems solutions at the 2012 ICE Totally Gaming show. Spielo International is the new name of former sister companies Atronic and Spielo. This will be its fi rst appearance at ICE as a fully integrated entity.
Gaming
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Champs and chumps
As 2011 has just come to a close, this is the perfect moment to assess where Macau stands in the ranks of hospitality service, and which hotels and resorts can be
regarded as winners.With the opening of Galaxy Macau, the city now has 26
fi ve-star hotels, many managed by international hospitality groups. Guests are entitled to expect all to give excellent service, matching the level offered by their sister-hotels abroad. Unfortunately, my experience as a hospitality consultant shows me that this standard has yet to be reached in Macau.
Most of the fi ve-star hotels here offer great rooms – some are lavish - so service is even more important to set a hotel apart from the competition.
In this regard the Hotel Okura Macau and the Banyan Tree Macau, both opened last year, stand out. The quality of their staff is ahead of the pack and they make guests feel quite welcome.
Even so, both hotels have shortcomings, notably in the way they check guests in and out. It is disappointing for arriving guests to be kept waiting, sometimes for hours, for their rooms to be made ready. It is quite the opposite when it is time to check out, with the staff betraying an urgent need to have room keys back. This “please leave” attitude is unacceptable and makes customers feel uncomfortable. Hoteliers should be more sensitive to this problem.
As an industry professional, I understand that hotels here are short of manpower and that this makes the process of getting rooms ready for arriving guests all the slower. I also know that hotels are often fully booked and so need departing guests to check out as soon as possible to vacate their rooms for arriving guests. But these are not a guest’s problems and should not detract from their stay.
Shows and no-showsThe standards of room cleaning at both the Hotel Okura and the Banyan Tree Macau are higher than elsewhere in Macau. Even so, I strongly advise their housekeeping departments to give more attention to detail.
When it comes to free in-house entertainment, the city has three clear winners and one big loser. Galaxy Macau and StarWorld offer the best free in-house live entertainment shows. The resorts, both managed by Galaxy Entertainment Group Ltd., have done excellent work in selecting outstanding performers from around the world to offer their guests non-stop shows. It is remarkable how many different live performances they present each day.
But Galaxy Macau has tremendous room for improvement in other areas, even allowing for its massive dimensions. The resort is full of restaurants but has very little else for tourists to do apart from watch shows. The recent opening of its cinemas is good news.
The Venetian Macao is the other winner in the fi eld of free in-house entertainment. Besides offering the breath-taking spectacle of its interior, the Venetian shows that its marketing department understands how to entice the masses with special events and live acts.
Across the street, City of Dreams also amazes me, but for all the wrong reasons. I fi nd it a monotonous place, with barely any free live entertainment – at least on the scale one would expect from such a big resort. I would love to meet the management of City of Dreams to ask them what they were dreaming of. The resort is the big loser in this fi eld.
Year zeroTurning to casinos, and food and drink, the variety on offer is huge. It is hard to pick a clear winner and probably unfair to do so. All hotels have at least one extraordinary restaurant and most gaming areas give customers what they are looking for: a range of games to play and chips to play with.
That said, Wynn Macau sets itself apart from the rest. Inside its casino, one can fi nd the best customer service in Macau, at least on a gaming fl oor. There is still work to be done on employee attitude but without a doubt Wynn Macau’s staff are the best trained in town.
Is there a point to listing the winners and losers in this industry? Yes, there is: to set standards for all hotels and resorts to match or surpass. With a new year, a new opportunity arises for hoteliers to think again about how they do things and improve the quality of their service.
Will 2012 be the year when, fi nally, we will see the revolution in service that Macau is crying out for? Will this be the year when, fi nally, all involved in the tourist industry come to realise the need to start building a better workforce? Will this be the year when employees start performing responsibly, with a view to excelling in the performance of their duties?
I still have high hopes for the future. The evolution of the industry depends simply on a change of attitude among those that work in it – a change that would eventually allow Macau to call itself an “international tourist destination” without a hint of irony or trace of wishful thinking.
GUSTAVO CAVALIERE HOSPITALITY INDUSTRY EXPERT - [email protected]
THE QUALITY OF MACAU’S HOTELS AND RESORTS IS VARIABLE AND THE OFFERINGS DIVERSE, WITH SOME PROPERTIES STANDING OUT, EITHER FOR ALL THE GOOD OR FOR ALL THE WRONG REASONS
Is there a point to listing the winners and losers in this industry? Yes, there is: to set standards for all hotels and resorts to match or surpass. With a new year, a new opportunity arises for hoteliers to think again about how they do things
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LESS MICHELIN-STARRED RESTAURANTSMichelin last month launched the fourth edition of the bilingual “Michelin Guide Hong Kong Macau”. The latest guide includes 51 establishments in Macau (35 restaurants and 16 hotels). Robuchon a Galera remains the only three-Michelin star restaurant in the territory. The city has overall seven restaurants with stars, two less than a year ago. Aurora at Altira, Il Teatro at Wynn Macau, and Jade Garden at StarWorld, are no longer on the list. The only new entrant is Golden Flower, at Wynn Macau, with one star. The Michelin guide Hong Kong Macau 2012 costs HK$188.
NEW RECORD FOR
HOTEL ROOM RATES ONLINEThe Macau Government Tourist Offi ce last month started to publish the room rates of local hotels and guesthouses on its website on a permanent basis. The body said that for guests who reserve rooms directly with the hotels, the price cannot exceed the limit of the rates published. If bookings are done through any other channels, the room rates published on the website can only be taken as a reference, as prices offered are likely to also include commissions. Currently, all hotels and guesthouses need to inform the Tourist Offi ce of any revised room rates. During the May 1 Labour Day holiday last year, the Tourist Offi ce published the room rates of hotels and guesthouses online for the fi rst time. This measure was also implemented during the National Day holiday and the Macau Grand Prix.
PROMOTING INDIAN TASTESThe Institute for Tourism Studies and the Macau Government Tourist Offi ce last month co-organised a Muslim cuisine seminar and cooking demonstration workshop. The goal was to
help hospitality and food and beverage professionals understand Muslim cuisine and identify non-Halal ingredients that are forbidden in Muslim-friendly menus. According to a press release from the organisers, “the increase in visitors from India and Muslim countries is obvious”. The Tourism Offi ce says this has translated into increasing demand for halal gastronomy, but adds there are currently only a few chefs in Macau who are able to provide food that complies with Muslim food regulations.
TOURIST ARRIVALSData up to November shows Macau has already surpassed the previous all-time high set in 2010
Macau will post a new yearly record in tourist arrivals in 2011. In the fi rst 11 months of the year, Macau has already surpassed the previous record, set in 2010, when the city welcomed 24.97 million visitors.
Tourist numbers due later this month will likely show Macau set a record with more than 27 million visitors last year.
From January to November, Macau welcomed 25.46 million visitors.Information from the Statistics and Census Service indicates that the
total visitor arrivals for November increased by 20.1 percent year-on-year to 2.42 million.
Hospitality
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There is no offi cial estimate what-soever on the economic impact the ban will have on businesses, on government revenue from the tobacco tax or the sav-ings to the public’s purse from reduced health costs.
The Health Bureau has created the Tobacco Control Offi ce, staffed by 40 full-time inspectors and 80 paid volun-teers, to enforce the smoking ban and promote anti-smoking campaigns.
Over the fi rst 19 hours of the ban, more than 350 venues were inspected, with nine people issued fi nes. Penal-ties range from MOP400 (US$50) to MOP600 but offenders receive a 50-percent discount if they settle the fi ne within 15 days, aping the system in place for payment of driving fi nes. Fines under the ban are smaller than the penalties imposed in Hong Kong where the single, fi xed fi ne for anyone who lights up in non-smoking areas is HK$1,500.
The director-general of the Smok-ing Abstention and Good Health Association, Johnny Au, believes most smokers are concerned about being banned from smoking inside restau-rants. He applauds the government promotion campaigns leading up to the ban’s launch, saying the population was aware of it. “It was advertised and post-ers were put up in most places,” he says.
Message misfi ringThe approval of the tobacco control bill last April created plenty of time to pre-pare for the smoking ban. The tobacco control law took more than three years
to prepare, plus another 15 months for its passage through the Legislative As-sembly.
Mr Au admits the thousands of tourists that enter Macau daily may not be fully aware of the tobacco ban. Of the nine people issued fi nes on the fi rst day of the new law, four were tourists.
“If we talk about travellers, I’m concerned,” he says. “The new law should be well promoted and cross over to every sectors of the community.” Promotion should be reinforced in tour-ist entry points in Macau, he says.
The Health Bureau admitted in a press release “diffi culties and challeng-es are to be expected” while enforcing the smoke ban. The body adds however it is confi dent its team of inspectors will be up to the task.
While the smoking ban is con-
SMOKING BANmbreport
sidered a big step for Macau, Mr Au believes there is room for improvement once complementary legislation is enacted. He mentions graphic anti-smoking images on cigarette packets depicting the effects of smoking. “It’s a very effective way to alert people not to smoke.”
Mr Au is also in favour of higher taxes on tobacco, although they were raised last month, ahead of the ban. He says data shows those who consume cigarettes the most are people on low wages, which could be more sensitive to a big increase in price. If you add a more effective health-warning model to a tax raise, it will lead to a drop in tobacco consumption, Mr Au says.
Overall he is satisfi ed with the new tobacco control law and believes it will improve the community’s health. “In Macau, it is very signifi cant for social harmony. We are very close to each other. We have to take breakfast or eat outside every day,” Mr Au says. “If we are exposed to second-hand smoke, it may cause serious harm to our health.”
Enforcement bluesThe director-general of the Smoking and Health Life Association, Samuel Chan, believes enforcement of the smoking ban will be diffi cult, consid-ering lax tobacco enforcement in the mainland. “The enforcement of a simi-lar law there is really bad,” he says.
A nationwide ban on smoking was introduced there last May, making smoking in some public indoor venues illegal, including hotels, restaurants, bars and public transport waiting rooms. Offi ces and factories were excluded.
Mr Chan is disappointed by the promotion of the law by the Macau government. He says there are a lot of people – smokers included – who are still not fully aware of the new rules.
There is also a concern that smok-ers will not take the new law seriously. “Smoking a cigarette takes just a few minutes. By the time the inspectors arrive at the facility, the cigarette has already been smoked,” Mr Chan says.
He is not confi dent that restaurant owners will uphold the ban should a customer light up indoors. “Owners be-lieve not allowing customers to smoke will hurt business,” he says.
There are potential positives in the law for the hospitality industry. Mr Chan can see more customers moving
A DYING BREEDSmoking rates for Macau residents older than 14 years increased by about 1
percent from 2009 to last year to reach 16.9 percent of the city’s population. The results were included in a report by the Statistics and Census Service that was released ahead of the new ban’s introduction.
More males light up than women, with about one in three males smoking com-pared to less than 4 percent of females. Tobacco is especially popular among men aged from 35 to 44 years old, where a staggering 41 percent were regular smokers.
The report concluded that more than one quarter of the city’s smokers have tried unsuccessfully to quit. The report also highlighted a high rate of exposure to second-hand smoke of 93 percent at Macau restaurants and 53.6 percent at work.
Smoking among minors is also a grave concern. A 2010 survey by the Health Bureau concluded that one out of every 10 children aged less than 15 years smoked.
The government has sponsored tobacco cessation counselling. The fi rst service was established in Areia Preta in 2006. The Health Bureau says about 1,300 people have attended counselling, with a success rate of 36 percent.
Some unique solutions have also been introduced with the government organis-ing a competition for quitting the habit in 2008. Smokers who were able to quit stood to win a prize of MOP50,000 (US$6,250). About 350 people took part.
Over the fi rst 19 hours of the ban, more than 350 venues were inspected, with nine people issued fi nes. Penalties range from MOP400 (US$50) to MOP600 but offenders receive a 50-percent discount if they settle the fi ne within 15 days
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OTHER RESTRICTED VENUES- PARKS AND GARDENS (1)- BEACHES (1)- BUS STOPS AND TERMINALS- LIFTS- FOOTBRIDGES- PEDESTRIAN TUNNELS- BUSES- TAXIS- FERRIES- CABLE CARS- AMBULANCES
(1) SMOKING IS ALLOWED OUTDOORS, IN DESIGNATED AREAS(2) SMOKING IS ALLOWED IN HOTEL ROOMS(3) SMOKING IS ALLOWED INDOORS IN DESIGNATED ROOMS(4) THE SMOKING BAN COMES INTO FORCE ON JANUARY 1, 2015(5) THE SMOKING BAN WILL BE ENFORCED FROM JANUARY 1, NEXT YEAR AND THEY MAY CREATE SMOKING AREAS COVERING UP TO HALF OF THE GAMING FLOOR
LIGHTS OUT: VENUES WERE SMOKING IS FORBIDDENBANNED INDOORS AND OUTDOORS- HEALTH CARE FACILITIES- DRUGSTORES- NURSERIES- KINDERGARTENS- SCHOOLS- YOUTH CENTRES- UNIVERSITIES (1)- CONTINUOUS LEARNING CENTRES (1)- SHOPS THAT SELL INFLAMMABLE PRODUCTS- SERVICE STATIONS- SPORTS VENUES- PUBLIC SWIMMING POOLS
BANNED INDOORS- WORKPLACES- LEGISLATIVE ASSEMBLY- COURTS- GOVERNMENT BUILDINGS- CANTEENS- ELDERLY CARE FACILITIES- CARE CENTRES FOR DISABLED PEOPLE- COMMUNITY CENTRES- HOTELS (2)- RESTAURANTS- BANKS AND ATMS- SUPERMARKETS- RETAIL STORES- SHOPPING MALLS- AIRPORT (3)- FERRY TERMINALS- CINEMAS AND THEATRES- MUSEUMS AND LIBRARIES- GYMS- HAIRDRESSERS AND BARBERSHOPS- BEAUTY SALONS- CYBERCAFÉS- ELECTRONIC GAMES ROOMS- BOWLING ROOMS- INDOOR PARKING LOTS- BARS AND NIGHTCLUBS (4)- SAUNAS AND MASSAGE PARLOURS (4)- CASINOS (5)
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EXPENSIVE ADDICTION
SMOKING BANmbreport
through restaurants more quickly. Fam-ilies will be more willing to bring their children when they dine out, boosting sales, and smokers who may have been prone to remain seated at a table while lighting up, will move on more quickly, freeing up tables.
The issue for restaurant owners is what to do if a customer refuses to stop smoking if they are asked to. The Health Bureau says restaurant own-ers should call the Tobacco Control Offi ce or the police. The offi ce says it will schedule more frequent checks on restaurants that have had more than fi ve smoking complaints.
Signifi cant exceptionsThe tobacco control law includes some signifi cant exceptions. Most frequently highlighted is an exception for casinos. They are the only businesses in town allowed to set-up smoking areas that occupy up to half of their gaming fl oor. What is more, they will be exempt from the ban for 12 months.
Bars, nightclubs, saunas and mas-sage parlours will enjoy an even longer exemption period – three years. By the end of 2014, they too will have to comply with a full smoking ban without the luxury of designated smoking areas which casinos can install.
Lawyer Leonel Alves, an indirectly elected legislator who represents the professional services sector, supports the smoking ban, saying it promotes the overall health and well-being of the population.
Mr Alves, who is also a legal adviser for gaming operator Sands China Ltd., says the casino exception is a response to Macau’s own unique char-acteristics. “I hope these exemptions are transitory,” he says.
Government-appointed legisla-tor Tommy Lau Veng Seng believes the smoking ban can assure a “clean environment” for the general public. Adjustment might be hard at fi rst but, overall, he says it is a change that “is going to do a lot of good to public health and is a way to respect non-smokers”.
Mr Lau admits the ban will be diffi cult to enforce, especially given the number of Chinese tourists coming to Macau every day. “For those who have come here before, they could smoke everywhere. And now? They have to adjust to the new system and may not be happy with it,” he says.
Smokers’ luck has run out. They face a widespread smoking ban and
increased prices for tobacco products, with a tax increase approved by the Legislative Assembly last month and already in force.
The tax on a packet of 20 cigarettes has increased 150 percent to MOP10 (US$1.25) from MOP4 before. The tax increase in cigars was more than 400 percent.
The last increase in the tobacco tax took place in 2009.
The tax increase was approved unanimously but some lawmakers expected a bigger hike. Directly-elected lawmaker Lee Chong Cheng ques-tioned the government’s commitment to reducing tobacco consumption among youths. Mr Lee, a member of the Macau Federation of Trade Unions, asked for “more substantial” tax increases.
Other legislators are concerned with tobacco smuggling but secretary of economy and fi nance Francis Tam Pak Yuen pledged to reinforce border controls. In 2010, more than 650 cases of tobacco smuggling were detected.
Mr Henry Lei Chun Kwok, an assist-ant professor of business economics at the University of Macau, says the tax increase is steep enough. He wants the
tax matched by tighter regulation on duty free tobacco products to prevent smokers going across the border to supply themselves with cheaper ciga-rettes.
“An increase in the tobacco tax together with a signifi cant cut on duty-free cigarette quotas is believed to be more effective than the current arrangement,” Mr Lei says.
That is the model adopted by Hong Kong. Besides charging a tobacco tax of HK$35 on each pack, duties must be paid by anyone entering the city with more than a full packet of cigarettes.
The director-general of the Smok-ing and Health Life Association, Samuel Chan says a tobacco tax increase in Macau should be more signifi cant to have a real impact on the number of smokers. “According to World Health Organisation recommendations, the tax should be at least 75 percent of the retail price,” he says.
The Health Bureau said “there are several steps to encourage smokers to quit” and increasing the tobacco tax was one method. The bureau high-lights other new measures included in the tobacco control bill such as a ban on tobacco vending machines and tobacco-sponsored public events.
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Handled with careAllowing casinos to convert up to half of their gaming fl oors into smoking areas is divisive, either for being too strict or because the ban is not tough enough
indoor smoking areas, up to half of the gaming fl oor.
In comparison, restaurants or cafes are not permitted to have smoking ar-eas, nor will bars, nightclubs, saunas or massage parlours be exempt, once their ban begins in three years.
The exemption for casinos was borne from the fear that full prohibition would have drastic, negative economic effects.
Raymond Yap, senior vice-presi-dent for international premium market-ing development at Galaxy Entertain-ment Group Ltd., admits “it is hard to say” what impact the partial smoking ban might have on casino operations. “We must be pragmatic on this issue, because a [full] smoking ban could adversely impact the industry’s busi-nesses and, therefore, local employment opportunities,” he says.
Galaxy is waiting for the govern-ment to release technical rules on the establishment of smoking areas inside casinos. “We are closely monitoring the related regulations which are to be released by the government so that we can refer to its standards when we make plans about the smoking and non-smoking zones in our properties,” Mr Yap says.
Chief executive of MGM China Holdings Ltd., Grant Bowie, told Macau Business the tobacco control law cre-ated “a fair environment where smokers have the freedom to smoke and for non-smokers to be away from the second-hand smoke”.
In the MGM Macau non-gaming areas already covered by the smoking ban, such as restaurants or the hotel, non-smoking signage is in place. In other areas, including the property’s
BY LUCIANA LEITÃO
The special treatment offered to the gaming industry is the most controversial part of the new ban
on smoking.Casinos have another year before
complying with the new rules. Their tobacco ban starts on January 1, next year. They will be able to offer huge
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three bars, the tobacco ban comes into play in 2015.
“With the presence of anti-smoking signs and enforcement of non-smoking protocols, MGM Macau aims to provide a clear and consistent message about the smoking regulation and the smok-ing ban,” Mr Bowie says.
Clashing researchA spokesperson for Wynn Macau said the gaming operator supports all gov-ernment initiatives aimed at turning Macau into an international destination. It added the company would be intro-ducing a detailed information campaign to better inform patrons about the new rules.
Judy Patterson, senior vice-president and executive director of the American Gaming Association, says smoking bans in United States casi-nos have negatively impacted gaming revenue.
The assistant professor of the University of Macau’s Institute for the Study of Commercial Gaming, Davis Fong Ka Chio, says casino revenues may drop immediately after the prohi-bition is implemented but revenue even-tually returns. The introduction of full
TRUMP CARDMorton’s The Steakhouse has claimed a special place in the hearts of meat-eating
smokers. It has an expansive forecourt where smokers can enjoy a cigarette – the Venetian Macao casino.
It is a competitive advantage not enjoyed by most food and beverage outlets located inside a resort or shopping mall, which typically do not have an outdoors sitting where people can smoke.
Since Morton’s is adjacent to the casino, where smoking is allowed and will be partially permitted after this year, that will make customers’ life much easier, says David Martin, regional director of operations at Morton’s. “It will be very easy for our patrons to go outside, have a cigarette and come back in as well.”
The restaurant also has outdoor tables, where smoking is permitted.For Morton’s, implementing a smoking ban is nothing new. The chain has previously
experienced similar bans in the United States. “It’s just the way the world is going, it’s something we’ve seen before,” Mr Martin says.
A potential decline in business is not a concern.“In the United States, we didn’t have any impact in revenues but what we do feel is
people leave earlier from the tables. People tend not to stay so long.”
The issue of allowing smoking in casinos has particular relevance to Macau. The majority of players are from the mainland. The country’s population of smokers now numbers 300 million people, according to the central government
SMOKING BANmbreport
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smoking bans in other gaming jurisdic-tions has led to an average 20-percent decrease in gross gaming revenues in the fi rst year, he says.
In Macau’s case, where a partial ban is in place, with the establishment of sizeable gaming areas for smokers, Mr Fong does not forecast a signifi cant drop in revenue in the fi rst year.
“For the other years to come, gross gaming revenue will recover, increasing above the numbers of the year before the ban,” he says, mentioning the cases of some gaming jurisdictions in the U.S. and Australia.
Mr Chio says the ban will create a new segment of players, the non-smokers, who can eventually make an important contribution to gaming revenue. In Singapore, the Marina Bay Sands “underestimated new gamblers, particularly non-smoker gamblers,” he says, adding the property is changing its layout to better cater for demand.
Ms Patterson is pessimistic. “When you implement a ban, partial or full, you do see a decrease on revenues,” she says.
Comparing Macau to the experi-ence of casinos in Atlantic City, Ms Patterson estimates there will be a drop in revenue, even with a partial ban. “They [Atlantic City] had a partial ban, the economy then went into recession and they delayed the implementation of the full ban as a result. Which again is a recognition that it will impact revenues.”
Recent news reports mention the weak enforcement of the partial ban at Atlantic City’s casinos.
In the U.S., the scope of smoking bans varies signifi cantly between ju-risdictions. Only four of 14 states with commercial gaming industries have banned smoking entirely. Eight of the 14 states have no smoking restrictions on the casino fl oor.
Second-hand smokeThe issue of allowing smoking in casi-nos has particular relevance to Macau. The majority of players are from the mainland. The country’s population of smokers now numbers 300 million peo-ple, according to the central government – roughly the population of the United States.
The president of the outspoken New Macau Association, Jason Chao Teng Hei says his group will continue the fi ght to ban smoking completely
inside casinos. Mr Chao explains that he is satisfi ed with the strength of the current measures but highlights the health dangers casino workers face from second-hand smoke.
More than 47,000 people work in Macau’s casino industry, making it the city’s biggest employer. About 21,000 work as dealers.
It is unclear what will happen if a worker refuses to work in a smoking zone.
Legislator José Pereira Coutinho agrees with the concerns regarding the health of dealers. Smoking areas “will continue to be polluted and a lot of people, given the working relation-
ship, have to work there and are forced to inhale second-hand smoke, which is clearly unfair,” he says.
“I don’t believe the separation [of the smoking and non-smoking areas] will be enough.”
Government-appointed legislator Tommy Lau Veng Seng says allowing for both smoking and non-smoking areas in casinos is a compromise solu-tion. He notes that even a partial ban as planned will not be easy to apply.
“It will take an effort to enforce the law in casinos. There are a lot of tourists from the mainland and most of them are smokers,” he says.
A full smoking ban in casinos has
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Some Hong Kong club owners and restaurateurs still wish for a time before the ban, when premises had both smoking and non-smoking areas
not been ruled out in the long term. The tobacco control law states the Health Bureau has to issue a report every three years evaluating on the enforcement of the new rules and its impact on casinos. Changes can be proposed.
Workers alignedThe director-general of Smok-ing and Health Life Association, Samuel Chan, says the solution that satisfi es the casino operators’ interests is unsatisfactory for their staff. He also doubts whether the ventilation systems in most casi-nos will be able to successfully ex-tract the smoke generated in smok-ing areas.
Pessimistic about the ex-emption enjoyed by casinos, Mr Chan’s association plans to carry out a survey among gamblers to get their views.
The president of Macau Gam-ing Industry Employees Associa-tion João Bosco Cheang Hong Lok agrees with the compromise ban.
“I agree, because most of the customers, especially big ones, have smoking habits,” says Mr
RESIGNED TO CHANGEBars, nightclubs, saunas and massage parlours need only worry about
implementing the smoking ban in three years’ time. Even so, industry players are hoping for changes before 2015.
Paolo Cheng owns Mugs Talk bar in the Praia Grande area. He accepts the ban with resignation, believing it will have a negative effect on revenue. “My personal opinion is that it will be diffi cult to follow these instructions,” he says.
Mr Cheng will for now wait and see what happens over the next three years. “Now, in Mugs, people can still smoke. I have a bit more time to ar-range everything, I will have to adjust,” he says.
Looking ahead, to 2015, Mr Cheng admits he will eventually have to ask clients to smoke outside. He is afraid that may displease some cus-tomers – a signifi cant part of his clientele smokes. “I think about the pos-sibility of arranging outside areas for ashtrays. Maybe they can sit outside just for the cigarettes.”
Francisco Coelho, owner of nightclubs D2, D3, Playmate and the Jai Alai Show Palace, is concerned about the impact the smoking ban will have on clubs and discos. He would much rather set up indoor smoking areas, just as the casinos will be permitted to do.
Mr Coelho says his venues will be ready to comply with the law by 2015. The full ban is likely to hurt his business in the beginning but business will normalise within two years, he says.
Sky 21 Bar & Restaurant, at AIA Tower, offi cially re-opened last month and is ready to comply with the new tobacco control law. Spokesperson Joe Saree Xongmixay explains all indoor areas are non-smoking. “We will not en-courage or advise customers to smoke and if they smoke within our premises we will ask them not to,” he says. “We want to promote a [healthy] lifestyle.”
An alternative might be to light up on the Sky 21 terrace.
Cheang, the head of the terri-tory’s biggest casino workers union.
He believes most casino employees also agree with the partial ban but hope for a full prohibition in the future.
A 2009 research report backs his claim. It concluded that most casino workers support a hybrid ban that establishes smoking and non-smoking areas.
The study, by Penny Wan, from the University of Macau and Paul Pilkington, from the University of the West of Eng-land, interviewed 377 workers face-to-face and the major-ity – 54 percent – favoured a mixture of smoking and non-smoking customer areas.
The study also found that 42 percent and 40 percent of the casino workers reported being “nearly always ex-posed” and “often exposed” to second-hand smoke at work, respectively. Also, 49 percent rated the intensity of their exposure as “heavy”.
SMOKING BANmbreport
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Hong Kong’s tobacco control policy is at a crossroads. Since becom-ing one of the fi rst cities in Asia to
ban smoking in most public places in 2009, Hong Kongers are used to eating, drinking and shopping without smokers lighting up. But some club owners and restaurateurs still wish for a time before the ban, when premises had both smoking and non-smok-ing areas.
Floor manager of Infusion bar and restaurant, Olivia Luk, says more people prefer to sit on the tables in the outside area where they can smoke.
“Actually more people prefer smoking areas. Basically every night inside will not have that many guests. Inside it’s not fun because if you sit outside you can check out people walking around and they can smoke. Indoors they are not allowed to smoke,’’ she says.
Ms Luk however says “the smoking ban has not affected our business that much because guests can walk outside and smoke”.
Kat, the manager of Hong Kong Brew House, says the smoking ban was “a big dis-aster” for the pub. “So many customers like to drink and smoke but right now they can only drink here, unlike before. So they fi nd a place where they can smoke and drink.”
Restaurants with outdoor areas enjoy better business than those establishments without such amenities, she says. “We are affected by the ban,” Kat adds, admitting it is hard to say how many customers the venue has lost.
“Now it’s better because people are used to it. But still it has affected us a lot. It’s not as good as before.”
“It’s not helpful for the people’s health. If they don’t smoke here they can still smoke outside. So people won’t stop smoking if there is a ban. I don’t think it’s a good policy.”
She says her customers were happier with a combination of smoking and non-
Three-decade struggle
BY MARY ANN BENITEZ IN HONG KONG
Hong Kong took 30 years to kick the habit and ban smoking in public but some hospitality
businesses want the situation reversed
smoking zones in use before 2009. “If the government wants, they can ask restaurants to have a non-smoking area rather than the whole area as a non-smoking area.”
Revenue neutralThe manager of El Rincon restaurant in Hong Kong’s night-time party zone Lan Kwai Fong says the ban has not helped much. “Usually people in Hong Kong, es-pecially Chinese, smoke a lot. So they will fi nd places outdoors, but in Lan Kwai Fong we are not allowed to bring tables out,” says the manager, who gave his name as Roger.
“If you say ‘Don’t smoke’, they will leave.”
He believes the government should not have banned smoking from bars.
Restaurant receipts have not been affected by the ban. The business sector-friendly Liberal Party said in 2007 that any ban would lead to drastic fi nancial losses and unemployment, recalls James Middleton, chairman of Clear the Air, a charity organisation committed to improv-ing Hong Kong’s air quality.
Statistics from the Census and Sta-tistics Department show that restaurant receipts have increased steadily from HK$61.9 billion (US$8 billion) in 2006 before the expanded smoking ban was enforced to HK$83.957 billion in 2010, a year after the full ban. The value of bar receipts increased from HK$1.3 billion in 2008 to HK$1.4 billion in 2010, according to the Department of Health.
In the fi rst three quarters of last year, restaurant receipts were HK$65.69 billion and were projected to reach HK$87.59 bil-lion this year.
“So, in 2011 the fi rst three quarters of the year, receipts were HK$3.79 billion more than the whole of pre-smoking legis-lation 2006. On year 2006 to projected year 2011 comparison, 2011 will be 41.5 percent higher in restaurant receipts than pre smok-ing ban 2006,” Mr Middleton says.
Long struggleIt took 30 years for Hong Kong to create a smoke-free city, with the Department of Health taking a progressive and multi-pronged approach to implementation.
The government fi rst enforced smok-ing bans in 1982 and by 1997 the ban was extended to cover lifts, public transport, cinemas, concert halls, airport terminal and escalators. By July 1998, the ban was expanded to include shopping centres, department stores, supermarkets, banks and game arcades.
The 1998 legislation required
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SMOKING BANmbreport
restaurants with more than 200 seats to designate at least one third of the seats as a “no smoking area”. Proposals to restrict smoking in restaurants were op-posed by the tobacco industry and many restaurant owners who said smoke-free policies would hurt business.
In June 2001, proposals were cre-ated for smoke-free restaurants and bars. They became law in 2006 and enforcement began on July 1, 2007.
The tobacco ban was extended to bars, nightclubs, clubs, massage par-lours, bathhouses and mahjong venues on July 1, 2009.
To reduce the impact of second-hand smoke and safeguard public health, the government’s approach has been to combine education, legislation, enforcement, taxation and promoting smoking cessation.
Since September 2009, anyone who smokes or carries a lit cigarette, cigar or pipe in any designated no-smoking area is liable to a fi xed penalty of HK$1,500. Those issued notices must pay within 21 days or face a heavier penalty.
By the end of last October, more
than 31,000 summons and fi xed pen-alty notices had been issued by Hong Kong’s Tobacco Control Offi ce.
Mr Middleton would like to see more government action. The Tobacco Control Offi ce has about 90 offi cers to police a population of 7.2 million people and another 36 million tourists that arrive every year. “This means they cannot patrol, only target written and phone-in complaints,’’ he says, adding smoking in banned establishments is “rampant”.
Prevention, cureAs the primary enforcing unit of anti-tobacco laws, the control offi ce started with a staff of 30 inspectors in 2007. With the extension of non-smoking ar-eas, the number of inspectors has grown.
Mr Middleton says the law must change to put the onus on liquor license holders to enforce the law or lose permission to serve alcohol, as is the practice in other countries. The law currently targets individual smokers, not the managers or owners of the premises.
The Department of Health says there is no need to change.
“The venue managers of non-smoking areas are empowered under the Smoking (Public Health) Ordinance to request a smoker to extinguish his lighted cigarette and, if the smoker refuses, to request him to provide his name, address and proof of identity, or to leave,” the bureau says.
“Moreover, according to the exist-ing mechanism in approving licence renewal, the Liquor Licensing Board would take into account of previous smoking offences in the premises when renewing liquor licence.”
In the short-term, Director of Health Lam Ping Yan said the prior-ity was to introduce more smoking cessation clinics and redouble efforts at clinics already in operation. The department currently runs six clinics on its own or jointly with other agencies.
Plain-wrapped cigarette packets are also being looked at in Hong Kong. The department said it would observe and monitor the introduction of plain pack-aging in Australia and elsewhere.
To reduce the impact of second-hand smoke and safeguard public health, the government’s approach has been to combine education, legislation, enforcement, taxation and promoting smoking cessation
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Should we ban cigarettes?U.S. President Barack Obama’s doctor confi rmed last year
that the president no longer smokes. At the urging of his wife, Michelle Obama, the president fi rst resolved to stop
smoking in 2006, and has used nicotine replacement therapy to help him. If it took Mr Obama, a man strong-willed enough to aspire to and achieve the U.S. presidency, fi ve years to kick the habit, it is not surprising that hundreds of millions of smokers fi nd themselves unable to quit.
Although smoking has fallen sharply in the U.S., from about 40 percent of the population in 1970 to only 20 percent today, the proportion of smokers stopped dropping around 2004. There are still 46 million American adult smokers, and smoking kills about 443,000 Americans each year. Worldwide, the number of cigarettes sold – six trillion a year, enough to reach the sun and back – is at an all-time high. Six million people die each year from smoking – more than from AIDS, malaria and traffi c accidents combined. Of the 1.3 billion Chinese, more than one in ten will die from smoking.
Last year, the U.S. Food and Drug Administration announced that it would spend US$600 million (MOP4.8 billion) over fi ve years to educate the public about the dangers of tobacco use. But Robert Proctor, a historian of science at Stanford University and the author of “Golden Holocaust: Origins of the Cigarette Catastrophe and the Case for Abolition”, argues that to use education as one’s only weapon against a highly addictive and often lethal drug is unpardonably insuffi cient.
“Tobacco control policy,” Mr Proctor says, “too often centres on educating the public, when it should be focused on fi xing or eliminating the product.” He points out that we don’t just educate parents to keep toys painted with lead-based paints away from their children’s mouths; we ban the use of lead-based paint. Similarly, when thalidomide was found to cause major birth defects, we did not just educate women to avoid using the drug when pregnant.
Limit nicotineProctor calls on the U.S. Food and Drug Administration to use its new powers to regulate the contents of cigarette smoke to do two things. First, because cigarettes are designed to create and maintain addiction, the regulator should limit the amount of nicotine that they contain to a level at which they would cease to be addictive. Smokers who want to quit would then fi nd it easier to do so.
Second, the U.S. Food and Drug Administration should bear history in mind. The fi rst smokers did not inhale tobacco smoke; that became possible only in the 19th century, when a new way of curing tobacco made the smoke less alkaline. That tragic discovery is already responsible for about 150 million deaths, with many times that toll still to come, unless something drastic is done. The regulator should therefore require that cigarette
smoke be more alkaline, which would make it less easily inhaled, and so make it harder for cigarette smoke to reach the lungs.
Much of Mr Proctor’s book is based on a vast archive of tobacco-industry documents, released during litigation. More than 70 million pages of industry documents are now available online.
The documents show that, as early as the 1940s, the industry had evidence suggesting that smoking causes cancer. In 1953, however, a meeting of the chief executives of major American tobacco companies took a joint decision to deny that cigarettes are harmful. Moreover, once the scientifi c evidence that smoking causes cancer became public, the industry tried to create the impression that the science was inconclusive, in much the same way that those who deny that human activities are causing climate change deliberately distort the science today.
Deadlier than gunsAs Mr Proctor says, cigarettes, not guns or bombs, are the deadliest artefacts in the history of civilization. If we want to save lives and improve health, nothing else that is readily achievable would be as effective as an international ban on the sale of cigarettes. (Eliminating extreme poverty worldwide is about the only strategy that might save more lives, but it would be far more diffi cult to accomplish.)
For those who recognize the state’s right to ban recreational drugs like marijuana and ecstasy, a ban on cigarettes should be easy to accept. Tobacco kills far more people than these drugs.
Some argue that as long as a drug harms only those who choose to use it, the state should let individuals make their own decisions, limiting its role to ensuring that users are informed of the risks that they are running. But tobacco is not such a drug, given the dangers posed by second-hand smoke, especially when adults smoke in a home with young children.
Even setting aside the harm that smokers infl ict on non-smokers, the free-to-choose argument is unconvincing with a drug as highly addictive as tobacco, and it becomes even more dubious when we consider that most smokers take up the habit as teenagers and later want to quit. Reducing the amount of nicotine in cigarette smoke to a level that was not addictive might meet this objection.
The other argument for the status quo is that a ban on tobacco might result in the same kind of fi asco as occurred during Prohibition in the United States. That is, like the effort to ban alcohol, prohibiting the sale of tobacco would funnel billions of dollars into organised crime and fuel corruption in law-enforcement agencies, while doing little to reduce smoking.
But that may well be a false comparison. After all, many smokers would actually like to see cigarettes banned because, like Obama, they want to quit.
PETER SINGER PROFESSOR OF BIOETHICS, PRINCETON UNIVERSITY
CIGARETTES, NOT GUNS OR BOMBS, ARE THE DEADLIEST ARTEFACTS IN THE HISTORY OF CIVILIZATION
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Big data” analytics, security and cloud computing will be three of the main drivers of techno-
logical change worldwide this year, according to international IT research fi rm Ovum, based in London. It also predicts that social networking will have a growing infl uence on collabora-tion within enterprises.
The independent technology ana-lyst expects the role of chief information offi cers to continue evolving this year. CIOs will face strong pressure to devel-op operational and investment models that embrace technology-led innovation.
Big tech trendsConsumerisation and the growing infl uence of social media are the leading themes in IT for business this year
“The adoption of new smart devices and sophisticated web services in the consumer market is accelerating, ex-tending the gap between user [employee] expectations and the services being de-livered by corporate IT,” says Tim Jen-nings, Ovum’s chief analyst for enter-prise IT. “To minimise this disconnect the CIO will need to act as an enabler of innovation for the business, and this creates the opportunity to play a central role in both operational and commercial strategy.”
With an increase in the number of employee-owned devices used in
the workplace, data security will re-main a top concern for businesses in 2012, Ovum predicts. Companies will need to protect and secure corporate information, while also giving access to corporate data on privately owned devices.
“We expect these overarching themes to be pivotal to the success of business strategy next year. Only busi-nesses considering the opportunities that each trend presents, and the challenges that may exist, will ensure that they re-main at the forefront of their respective industries,” says Mr Jennings.
Technology
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OVUM’S MAIN PREDICTIONS FOR 2012CLOUD COMPUTING: THE YEAR OF PLATFORM-AS-A-SERVICEThe approach of organisations to cloud computing will shift away from just low-level infrastructure-as-a-service, in which cloud computing is seen as a way to cut costs by outsourcing the IT equipment used to support operations. Increasingly, companies will opt for higher-level use of cloud computing, either as platform-as-a-service, renting hardware, operating systems, storage and network capacity over the Internet, or software-as-a-service, with applications hosted by a service provider and made available to customers over the Internet.
“BIG DATA” AND ANALYTICS: SOCIAL MEDIA AS NEW DATA SOURCESApplying analytics to social media and other sources of unstructured and semi-structured data in huge quantities (so-called “big data”), will create new business opportunities and drive new investment in business intelligence and data warehousing infrastructure. However, only organisations using big data and analytics in a transformational way will reap big benefi ts, Ovum warns. More organisations are expected to engage directly with their markets through social media and will look to measure the effectiveness of their investments in this channel.
IT CONSUMERISATION: A SOURCE OF CONTENTION IN THE WORKPLACEThe consumerisation of corporate IT is a growing trend, as employees increasingly use their own gadgets for work and use social media to communicate and collaborate with their networks and customers. This is likely to create contention within the workplace as corporate IT is probably not fl exible enough to support this trend. Meanwhile, the personal compu-ter will start giving way to the “personal cloud” as employees consume more mobile and web applications, making “bring your own software” more common.
SOCIAL MEDIA: RAPID GROWTH IN SOCIAL ENTERPRISE PLATFORMSThe social networking market will mainly keep growing as it has done so far, Ovum predicts. Facebook will continue to drive the evolution of employee communications as compa-nies look to enterprise social networking software. However, the independent technology analyst predicts there will be more focus on company-specifi c social platforms that also allow for online collaboration.
SECURITY: MOBILITY INCREASES THE LIKELIHOOD OF LEAKSOrganisations should plan and act as though they have already had their security breached, Ovum says. The use of employee-owned devices also will continue to increase the likelihood of enterprises leaking data.
MOBILITY: TABLETS DEPLOYED AS AN ENTERPRISE TOOLMobile applications in both the commercial and public sectors will mature to become a catalyst for change and innovation. The tablet computer will continue to be deployed by compa-nies for specifi c roles, particularly with staff that come face to face with customers in service industries.
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A crisis of creativityCreativity in the workplace in Macau is ... well, there is very little creativity in the workplace in Macau. Blame a glut of job openings and a rigid education systemBY LUCIANA LEITÃO
Creativity is increasingly being put at the heart of company per-formance by international man-
agement gurus. Allied to innovation, it is now recognised as central to organi-sational well-being. A lack of new ideas leads to stagnation and leaves a compa-ny unable to perform or handle change.
In Macau, however, creativity is the subject of little academic research, and human resources experts say much has to be done to promote it in the workplace.
Alex Lu, branch manager of job
website MacauHR, says the degree of creativity in the workplace is still “not competitive enough” in Macau in com-parison to Hong Kong or Singapore, al-though he adds: “It has been improving over the past fi ve years, after many in-ternational companies and hotel-casinos set up business in Macau.”
Mr Lu has wide professional experi-ence in Hong Kong and the mainland. He notices differences in how creativity in the workplace is viewed in each place.
“In Hong Kong, people generally have more creativity and more interna-
Human Resources94
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by scrapping old teaching methods based solely on rote learning.
In a written reply to Macau Busi-ness, the Education and Youth Affairs Bureau denied local teaching methods are out of date. The bureau says it is promoting creative thinking in schools through curriculum reform, teacher training and vocational programmes.
Rui Martins, vice-rector for research at the University of Macau, rejects the idea that institutions of higher education fail to promote creativity enough.
“When I arrived at the university, 20 years ago, students were used to memo-rising the book. I introduced different bibliographic references to prevent them from memorising. They will not memo-rise four or fi ve books,” he says.
“Since we have a diversifi ed teach-ing body, from different parts of the world, what is usually taught is, in our case, pretty diversifi ed,” Mr Martins says. Also, several student exchange pro-grammes bring students to Macau from as far away as Europe and Africa, and send local students abroad. Diversity, he says, stimulates creative thinking.
The director of the Gaming Teach-ing and Research Centre at the Macau Polytechnic Institute, Hester Cheang Mio Han, also believes institutions of tertiary education promote creativ-ity. She says the Polytechnic Institute not only includes a variety of subjects in its programmes but also asks stu-dents to complete an original thesis or project before graduating. “Students are required to develop their critical think-ing,” she says.
Unexpected expectedMs Cheang accuses employers of fail-ing to stimulate employees. “Maybe the whole working environment is not offering enough challenges to young people to push their creativity,” she says. “Whether they are allowed to exercise their creativity, depends on the compa-ny. Sometimes they are creative and the work does not require them to be crea-tive.”
Employers in the hospitality sector, at least, insist that they treasure and en-courage creativity in their employees.
Trevor Martin, the senior vice-president for human resources of Gal-axy Entertainment Group Ltd., believes creativity is a crucial requirement in the industry. “We want people to generally feel warmly welcomed. We want them to feel that their needs were anticipated,
tional exposure. It may be because of the economic and business environment,” he says. Bosses in Hong Kong promote creativity and expect employees to come up with new ideas to boost business, Mr Lu states. “There is never a bad idea. Any idea is very valuable for the em-ployer, especially when they are consid-ering who to promote.”
In the mainland, it is different. “Workers are clever: they are very crea-tive but apply creativity in copying other people’s things. Many brands, when starting, always copy designs and func-
tions of other good companies,” Mr Lu says. He attributes this to political con-siderations that inhibit thinking outside of the box.
Mr Lu points to the education sys-tem as one of the constraints on creative thinking in Macau. He calls for teach-ers to give students more projects and to encourage them to be creative instead of always resorting to book learning. “Then, when they start working, they can automatically provide new ideas to the employer,” he says.
Attitude problemMr Lu also stresses that local companies do not demand creativity in the work-place that much. “Employers usually expect more senior staff to possess such a quality,” he says. If companies are re-ally looking for creative types, they are likely to look for them abroad.
The Asian Development Bank notes: “Creativity fl ourishes in organi-sations that support open ideas: these organizations create environments that inspire personnel and maintain innova-tive workplaces.”
Macau’s low unemployment rate, coupled with thousands of job open-ings, adds to the city’s low levels of cre-ativity, Mr Lu says. Workers do not feel the need to prove they can add value. “If they are unhappy in a company, it’s easy to have good options and move,” he says.
Queenie Zhu, managing director of MyJobs Macau, a human resources com-pany, has a brighter view. “It’s diffi cult to label local workers as non-competi-tive when compared to overseas work-ers,” she says.
Ms Zhu believes that in an economy where hospitality in particular and the service sector in general is dominant, creativity is already an important part of work. “To serve a customer better, we have to think of ways to satisfy him or her,” she says.
Ms Zhu links creativity to a good at-titude. She says the diffi culty in fi nding employees with a good attitude is one of the main complaints of employers in Macau. Bosses say workers are not eager to show how much they are worth since they can easily change jobs.
Chapter and verse“Creativity will come, if you are sincere about solving the problem,” Ms Zhu says. She says high schools need to do more to encourage creativity in students,
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and that their needs were addressed in a good way.”
Mr Martin is happy with his staff’s performance in this respect. He says his company has also been investing heavily in training, and that this promotes crea-tivity because it teaches employees how to deal with unexpected situations.
Mr Martin gives a diplomatic an-swer when asked whether Macau work-ers are less creative than their counter-parts elsewhere. “Some people feel more naturally comfortable in a service envi-ronment, some people more comfortable working in teams. Everybody needs to adjust. That’s why we provide the train-ing,” he says.
Wendy Yu, the vice-president of human resources of MGM Macau, says creativity is important for developing a competitive edge in a cosmopolitan city. Asked if workers here are creative enough, she says: “People can be crea-tive when they need to be, and all people have their creative side.”
Ms Yu stresses the role of the em-ployer in stimulating creativity. She says open internal communication is impor-tant.
The vice-president for human re-sources of Wynn Macau, Zuleika Mok, would not be drawn on whether workers here lack creativity. She prefers to point out that in view of the need to acceler-ate the development of talent, in 2008 her company established an academy to nurture employees with leadership po-tential.
Employers do not grumble about a lack of creative workers – at least, not offi cially. In a written reply to Macau Business, the Labour Affairs Bureau says most of the complaints it gets from employers are about manpower shortages.
THINK SMALLCreativity in the workplace is often regarded as something that only big corporations
need to think about. Experts say this view is wrong, and that small and medium en-terprises actually have the most to gain from having creative and innovative employees.
One example in Macau is SmallWorld. The company was established in 2007, pioneering the marketing of thrilling experiences such as driving a Formula One car or diving with Great White sharks. The idea was unsuccessful, so the company was sold and began concentrating on corporate event planning. However, creativity remained part of its ethos.
“We are always trying to create new packages,” says general manager Adriana Cabral. “In an event planning company, you have to convince the customer through the price and creativity. That is what distinguishes you from the competition.”
The company’s biggest obstacle is bureaucracy, she says, especially for outdoor events. “We have to ask permission with at least two months in advance. We’ve already given up ideas because they involved a lot of bureaucracy,” Ms Cabral says.
She adds that it is diffi cult to get suppliers to understand new concepts. They are quite effi cient as long as orders are very specifi c, but an invitation to suppliers to come up with suggestions can easily lead to misunderstandings, Ms Cabral says.
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BY SARA SILVA MOREIRA
Playing for keepsWhile attractive wages are essential for companies to fi nd employees, good leadership and non-fi nancial incentives are essential if they want to keep them
Human Resources
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JANUARY 2012
challenges and shows empathy and offers support whenever necessary,” says Bau-douin Neirynck, an assistant professor at the Institute for Tourism Studies and a specialist in hotel operations.
Employees across the border seem to think the same way. The Mercer study found that in the mainland the quality of leadership in an organisation was the most important infl uence on employee motivation and engagement at work, al-though basic pay was not far behind.
Providing feedback on performance, giving recognition and praise when de-served, and taking the time to train em-ployees and develop their skills are all part of what a leader must do to establish a good relationship with a subordinate, says Jiji Tu, the managing director of hu-man resources company MSS Recruit-ment and job portal hello-jobs.com. A leader must also have good communica-tion skills and know the names of his or her employees, their likes and dislikes, their families and so on, she adds.
An employee that feels respected and nurtured is less likely to leave, even for a job with better pay, says Mr Udani. “Employees quit a boss, not necessarily a company.”
Three agesAkin to quality of leadership is the qual-ity of colleagues. Working in a good en-vironment and making friendships in the workplace increase attachment to a com-pany, experts say.
These non-fi nancial incentives can come into play even in the recruitment process, when a job candidate is given an idea of the corporate culture. But they can work properly only once an employee has accepted a position and is a member of a team. Until that happens, the fi rst things a job is judged on are the remuneration and the company’s reputation in the market-place, say Ms Tu and Mr Neirynck.
“Most employers in Macau are aware of the value of non-monetary factors that bind people to their jobs but they are not exerting as much conscious effort to tap them as means to enhance employee commitment,” says Mr Udani.
Ms Tu says that to attract, retain and motivate employees, companies need to be aware of their expectations. Expecta-tions, she says, typically depend on an employee’s age.
Those in their 20s to 30s, or recent graduates, value learning opportunities and fi nancial incentives. Those in their 30s to 40s value career advancement
Human resources are the big-gest headache for businesses in Macau today. With Sands Cotai
Central scheduled to open later this year, employers are again worrying about a new dearth of labour.
The question remains: is pay their only way to lure and retain talent? Ex-perts tell Macau Business pay is impor-tant during the recruitment stage but that non-fi nancial incentives matter a lot more in the long run.
The recent “What’s Working” global survey by United States human resources consultancy Mercer polled nearly 30,000 employees in 17 markets between the fourth quarter of 2010 and last year’s sec-ond quarter. The fi ndings show employee loyalty is declining worldwide. At the same time, non-fi nancial incentives are increasingly important to ensure employ-ees stay motivated and committed.
That said, the fi ndings highlight Asia-Pacifi c as the region where workers value money the most – with Hong Kong being the only place in the world where employees say basic pay is what most mo-tivates them and keeps them engaged in their work.
The Mercer survey does not cover Macau but the latest data indicates atti-tudes are similar to those in Hong Kong. The results of a Statistics and Census Service survey show that more than half of employees that changed jobs in 2008 did so for better pay. The results show that changing jobs increased their medi-an monthly pay packet from MOP6,000 (US$750) to MOP8,000.
The Statistics and Census Service has not repeated the survey since then but an-ecdotal evidence suggests the combination of a growing job market and a small pool of available labour has enabled people to shop around for better employment.
Yearning for a leaderAccording to a case study published in 2008 by Zenon Udani, an academic spe-cialising in human resources manage-ment at the University of Macau, and MBA student Au Ieong Un Nam, a major determinant of loyalty is the quality of leadership. Employees are largely infl u-enced by the boss and his or her attitude toward them. They are more likely to be motivated and stay with the same com-pany if they have an engaged, concerned and competent leader.
“The best motivator remains in the hands of the direct supervisor, who sees the staff every day, understands his or her
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opportunities and fi nancial incentives. Those in their 50s or older prefer a secure and stable position.
Your own parking slotIn their 2008 case study, Mr Udani and Mr Au Ieong analysed a non-gaming mul-tinational company established in Macau and found that most employees described workers there as committed and loyal to their employer. Although some hoped for better remuneration, more training and improvements in the workplace, they treasured working for a fi rm with a record
of having made few layoffs and of having rarely been late with the pay – which also instilled team spirit.
The study found most employees thought job stability and a good working environment were important considera-tions in their preference to remain in the company.
In Macau’s highly competitive tour-ism and hospitality industries, remuner-ation and benefi ts are likely to remain costly in the short run, as employers strive to attract the most talented candi-dates from a limited pool of labour, says
Mr Neirynck. Jobs in these industries are usually intense and done in shifts (often long and late-night shifts) and in a competitive atmosphere, making non-fi -nancial incentives even more important for day-to-day motivation, he says.
Hotel and casino companies have been improving their non-fi nancial in-centives, offering a wide range of career planning and progression initiatives, team-building activities and good work-ing conditions.
Wynn Macau Ltd. is an example. The casino operator offers incentives such as employee recognition and award programmes, sports and social activities to build team spirit and strike a work-life balance, and a dining area, parking and an in-house clinic for employees. The company also offers learning and devel-opment opportunities.
“When employees know that they are part of a company that fosters talent, they naturally want to remain and grow with the company,” says Zuleika Mok, Wynn Macau’s vice-president for human resources.
Love equals moneyAware that training increases employee satisfaction and motivation, the casino industry has been steadily building up its capabilities. In a study published in 2009 of the relationship between job satisfac-tion and performance in Macau casino-hotels, Ricardo Siu, associate professor of business economics at the University of Macau, and Zheng Gu of the University of Nevada, Las Vegas, found that most casino employees were short of training and wished for more of it.
Mr Siu says the situation has greatly improved since, not only because of the training offered by gaming operators but also because of their support for and as-sistance with education. Casino opera-tors are also giving employees opportu-nities to try out different jobs so they can fi nd the one that suits them best, he says.
Experts say that greater employee loyalty and commitment benefi t a com-pany’s bottom line. They usually boost productivity while reducing staffi ng costs, so increasing profi tability.
There are also intangible benefi ts. Satisfi ed employees tend to recommend their company to others, improving its reputation in the labour market and eventually helping it to attract the best people.
Sometimes it is not just about the money.
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IT’S A WONDERFUL TOURISM CONCEPT TO PROMOTE MACAU AS THE PERFECT PLACE FOR A HEAVENLY BREAK BUT IF WE TOLD TOURISTS THE WHOLE TRUTH ABOUT THE CITY, WOULD IT BE ECONOMIC SUICIDE?
Many of us, for whatever reason, can be “economical with the truth” by withholding material facts. In a court of law, witnesses swear to tell “the truth, the whole truth and
nothing but the truth”. In the more mundane world of tourism, is telling the whole truth such a good thing?
Should Macau make its millions of tourists more aware of its negative features, rather than presenting only its best side, so they can gain a better idea of what to expect when they visit or try to understand Macau?
The city enjoys brand-good shopping malls, gift shops, gaming to satisfy any preference, heritage sights and centres, entertainment, upmarket hotels, international cuisine, jewellery and fashion shops to suit all tastes, grand prix races, and the bright and soft lights that add romance to the brochures.
Macau has an enviably wide range of museums, from fi re engines and military equipment to wine and racing cars. It has a plethora of churches and a clutch of old-style Portuguese-era buildings.
The city is not without its drawbacks. There are serious air quality problems caused by pollution, downtown fl ooding almost every year, environmental degradation, roads dug up, shoulder-to-shoulder crowds everywhere, high-rise buildings that dwarf the slums all around them, narrow sunless streets, desperate poverty, human traffi cking, petty crime, pick-pocketing, loan sharking, in-your-face prostitution, gambling addiction and grave social problems.
To cap it all, the monthly tourist population outnumbers residents by a factor of three, so a tourist is actually rather unlikely to see Macau as much as just other tourists.
Full-colour fantasyThe breezy, open spaces in tourism brochures, the calm sea or the crest of a wave, belie the reality of massive overcrowding, a concrete jungle, inescapable noise and luminosity everywhere. If you do not visit during a few days in June, you are unlikely to see the bright blue sky and white fl uffy clouds plastered on the publicity posters.
Tourists could be forgiven for thinking that Macau has endless empty beaches. In reality, there are only a couple, and they are often nightmarishly packed and noisy. The sea is brown and scientifi c reports indicate that the Pearl River estuary is a marine “dead zone”.
The brochures will not tell tourists about the high-decibel restaurants, the appalling taxi drivers – if they can fi nd a taxi at all – or the stinking streets, the screaming hordes at the ferry terminal, the thronging thousands at St Paul’s ruins, or the casinos at every turn. They fail to let them know about the clogged traffi c system or the choking, burning exhaust fumes in the city streets.
Most tourists will fi nd that out for themselves, when it hits them in the face.
But wait. Tourists are keen to relax, to have a fl utter at the
casinos. They want to take a break “away from it all” and leave their troubles behind.
Why would we tell or show them about Macau’s shadowy side, the side of the city that nobody likes? Why spoil their holiday? The city’s downside is for social researchers, politicians and journalists to ponder.
Important questionsAll cities have a dark side, right? If you publicise what is wrong with Macau, it would be economic suicide, reputation self-destruction and political inanity all in one. Why should a city condemn itself? What exactly is in the public interest here? Actually, who is the “public” in the “public interest”?
Indeed, if you accentuate the seamy, salacious side of Macau, will that not attract the very people you do not want to visit; the sex tourists and others keen to turn a quick trick from exploitation and pandering to more base human drives?
And what if – as actually happens – something goes wrong? For example, if tourists are ripped off, left without guides, transport or accommodation, or forced to buy goods from shady shops? Does not Macau suffer when such stories leak out? Is Macau culpable for not having warned tourists in advance?
Macau is a wonderful example of the Chinese concern for “face”, with different faces being turned to different groups.
Should one put on a bright face that conceals Macau’s dark underside? Should one simply stay silent and allow tourists to enjoy their escapism into Macau’s tacky materialism? Small wonder, perhaps, that Chinese culture is rich in masks.
Is it really acceptable to say nothing about the downside of Macau? Is such silence ethical or does it breach the responsibility for telling the truth, the whole truth and nothing but the truth?
Trouble in paradiseKEITH MORRISON AUTHOR AND EDUCATIONIST - [email protected]
Should one put on a bright face that conceals Macau’s dark underside?
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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”.
TBA : To be advised | : A Macau Business partner event
Date: 29th - 31st Event: 2012 Macao International Environmental Co-operation Exhibition and Forum (MIECF)Venue: The Venetian Macao-Resort-HotelOrganiser: Macao Trade and Investment Promotion Institute (IPIM)Address: World Trade Centre Building, 1st & 4th Floors,918, Avenida da Amizade, MacaoTel: (853) 2871 0300Fax: (853) 2859 0309Website: www.ipim.gov.moE-mail: [email protected]
April
Date: 19th - 20th Event: Mobile Payments & NFC World Summit 2012Venue: Eaton Smart Hong KongOrganiser: Symphony Global Pte LtdAddress: 10 Anson Road, #26-04 International Plaza, Singapore 079903Tel: (65) 6474 1471Fax: (65) 6725 8438Website: www.symphonyglobal.comE-mail: [email protected]
May
Date: 1st - 3rd
Event: UAE Ministry of Foreign Trade Annual Investment MeetingVenue: Dubai International Convention & Exhibition Centre (UAE)Organiser: Annual Investment Meeting Organizing CommitteeAddress: P.O.Box 10161 Dubai, UAETel: (971) 4 39 23232Fax: (971) 4 39 23332Website: www.aimcongress.comE-mail: [email protected]
Date: 10th - 12th Event: GTI Asia Taipei ExpoVenue: Taipei World Trade Center, TaiwanOrganiser: Haw Ji Co., LtdAddress: 2F, No. 17, PaoChing St., SongShan Dist., Taipei City 10585, Taiwan Tel: (886) 2 27607407Fax: (886) 2 27 42 0522Website: www.gtiexpo.com.twE-mail: [email protected]
Date: 22nd - 24th
Event: G2E AsiaVenue: The Venetian Macao-Resort-Hotel Organiser: Reed ExpoAddress: 39/F Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong KongTel: (852) 2824 0330Website: www.g2easia.comE-mail: [email protected]
January
Date: 23rd
Event: International Gaming AwardsVenue: Sheraton Park Lane, LondonOrganiser: Clever Duck MediaAddress: Suite 105 Park Plaza, Point South, Hayes Way, Cannock, WS12 2DB, UKTel: (44) 0 1543 57 86 89Website: www.gaming-awards.comE-mail: [email protected]
Date: 24th - 26th
Event: ICE Totally GamingVenue: Earls Court Exhibition CentreOrganiser: Clarion EventsAddress: Warwick Road, London, SW5 9TA, UKTel: (44) 20 7370 8200Fax: (44) 20 7370 8344Website: www.icetotallygaming.comE-mail: [email protected]
February
Date: 14th - 17th
Event: 5th Anti-Corruption Asia CongressVenue: Renaissance Harbour View HotelOrganiser: Beacon EventsAddress: 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong KongTel: (852) 2531 6107Fax: (852) 2586 1999Website: www.beaconevents.comE-mail: [email protected]
Date: 21st - 23rd Event: Gaming Executive Summit LatAmVenue: Panama City, PanamaOrganiser: TerrapinnAddress: 96 Spring Street, 4th Floor, New York, NY 10012Tel: (1) 212 379 6322Fax: (1) 212 379 6319Website: www.terrapinn.comE-mail: [email protected]
March
Date: 6th - 8th
Event: iGaming Asia Congress | Macau Venue: Grand Hyatt, City of Dreams, MacauOrganiser: Beacon EventsAddress: 20/F Siu On Ctr, 188 Lockhart Rd, Wanchai, Hong KongTel: (852) 2531 6107Fax: (852) 2586 1999Website: www.beaconevents.comE-mail: [email protected]
Date: 16th - 19th
Event: ENADA SpringVenue: Rimini Expo CentreOrganiser: Rimini FieraAddress: Via Emilia, 155, 47921 Rimini - ItalyTel: (39) 0541 744 214Fax: (39) 0541 744 454Website: en.enadaprimavera.itE-mail: g.zoni@riminifi era.it
JANUARY 2012
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Capitalism for a causeBY LUCIANA LEITÃO
More than three years after the term “social enterprise” fi rst entered the government’s vocabulary, the concept is far from widespread
Macau has just added one more social enterprise to its inven-tory. Two months ago the
Fuhong Society of Macau opened a laundry that is intended to be staffed by mentally handicapped people.
The number of social enterprises in the city is unclear but anecdotal evidence suggests there are very few. Macau Business sought details from the Social Welfare Bureau but had not received a response by the time this edi-tion went to press.
Nurturing social enterprises was part of chief executive Edmund Ho Hau Wah’s plan to counter the effects of the 2008 international fi nancial crisis. But they have yet to take off in a big way.
“A social enterprise is an organisa-tion whose social mission fulfi ls a social need and operates with entrepreneurial strategies to be self-sustaining,” is how the Hong Kong General Chamber of So-cial Enterprises defi nes the term. This means a social enterprise cannot be supported by government grants. Any profi t is usually either reinvested in the company or used for the benefi t of the community.
Mr Ho announced his plan in No-vember 2008. He expected social en-terprises to give jobs to those laid off because of the international fi nancial crisis.
At least one enterprise was estab-lished as a direct consequence of Mr
Ho’s announcement. A group of 30 peo-ple in the building industry set up Macau Social Enterprise Co. Ltd. in August 2009 to provide employment referrals and vocational training for construction workers.
As time passed and fear of a spike in unemployment proved unfounded, the urge to promote the establishment of social enterprises to fi ght unemploy-ment faded. Instead, social enterprises became a way to create jobs for handi-capped people.
Clean breakTo this end, the Social Welfare Bureau began a special programme in 2010, of-fering associations a lump sum of up to
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MOP2 million (US$250,000) to help with the establishment of social enter-prises intending to employ handicapped people. The programme was far from successful. It received three applica-tions, of which only one was approved – from the Fuhong Society of Macau.
The Fuhong Society is a charity serving mentally handicapped people. The government gave its laundry a MOP1.8 million subsidy to start up but it must now stand on its own two feet.
Director Jennifer Chau says the association sees the laundry as a way to give mentally handicapped people greater independence and to integrate them in society. They are trained at the Fuhong’s Pou Choi centre.
“After training, they can transfer to our social enterprise to continue their laundry work,” Ms Chau says. “If they are very stable, we will help them fi nd a job.” The employees are not required to do a full day’s work. “They need a job that is not eight hours because they are in a rehabilitation process,” she explains.
The laundry has three mentally handicapped employees and two other employees at present. More can be re-cruited when business picks up.
Keeping the laundry’s fi nances healthy is one of Ms Chau’s main con-cerns. “We need to have enough orders as soon as possible to balance [costs and revenue],” she says. The society estimates that the laundry can break even within three years. It may employ up to 11 mentally handicapped people by 2016.
Ms Chau says Macau still largely ignores social enterprises. If the laun-dry is successful, the Fuhong Society will consider setting up a second social enterprise.
Tradition of charityIn an article published in 2009, the pro-fessor of public administration at the Polytechnic Institute of Macau, Lou Shenghua, argued that Macau would be a good nursery for social enterprises.
Mr Lou wrote that the city had a long tradition of associations provid-ing social services. Such associations include among others the General Un-ion of Neighbourhood Associations of Macau, commonly known by its Can-tonese name, Kai Fong, and the Macau Federation of Trade Unions. He added Macau’s economy was dominated by the services sector, the perfect environment for social enterprises.
But Mr Lou said obstacles to the establishment of social enterprises were a shortage of manpower, a lack of clear rules and a need for preferential treatment.
In 2002, the Macau Special Olym-pics created Sociedade de Ngai Chun Se Ltda, a social enterprise that employs mentally handicapped people to clean offi ces and wash cars. It continues to operate today, with no support from the government whatsoever.
The company was a pioneer of so-cial enterprises in Macau. Special Ol-ympics director Hetzer Siu Yu Hong says the purpose was to give employ-ment to handicapped people.
“We were training people with in-tellectual disabilities to get skills and fi nd a job, but there were no job oppor-tunities,” he recalls. At the same time, a change in the rules meant government bureaus could outsource cleaning serv-ices only to the private sector. Both fac-
tors eventually triggered the establish-ment of the company.
Red tapeSociedade de Ngai Chun Se broke even after four years. It now has a workforce of almost 50, more than half of the work-force is mentally handicapped.
“Our goal is not to achieve profi t. When we do have profi t, we share it with the staff,” says Mr Siu. He adds the company also serves to rehabilitate mentally handicapped people, many of whom cannot work eight-hour shifts and so fi nd it hard to get ordinary jobs.
“Social enterprise is a more fl ex-ible way to give handicapped people a chance,” Mr Siu says. “And we pay them more.”
Mr Siu says the Macau Special Ol-ympics considered creating a second social enterprise a couple of years ago and applied to the Social Welfare Bu-reau for a grant. But the red tape was so
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excessive that they gave up.Casa de Petisco Sam Meng Chi is
a sandwich shop run by the Macau As-sociation for the Mentally Handicapped that has been training mentally handi-capped people for the food and beverage industry for the past nine years.
Social worker Grace Lau, who is in charge of the project, says it is not a so-cial enterprise. “The government spon-sors 50 percent of our needs and we get the other 50 percent operating the store,” she says.
The workers receive an allowance of MOP600 per month and a MOP500 bonus, depending on their perform-ance, attitude, cooperation and attend-ance. “During these nine years, we have trained 46 people. Twenty-nine of them we helped get a job outside,” Ms Lau says.
Asked why the project has not evolved into a social enterprise, Ms Lau is candid: “We don’t have enough rev-
enue to cover the expenses and we can’t fi gure out a way to do it.” She says men-tally handicapped workers need special assistance, which makes the project’s costs higher than the cost of running a typical business.
Exemplary neighbourCecilia Ho Wing Yin, a lecturer for the social work programme at the Polytech-nic Institute of Macau, believes the pau-city of social enterprises in Macau is due to the novelty of the idea, which leads to misconceptions; and to the amount of money the public and private sec-tors give associations to provide social services, which is a disincentive to the establishment of social enterprises that could provide similar services yet would have to survive in a more competitive environment.
Ms Ho says the government should do more to promote social enterprises, since they are particularly helpful to
disadvantaged people. She suggests that the government set up a committee to research and support the development of such enterprises. It should provide start-up funds to encourage individuals, charities and businesses to start their own social enterprises.
In Hong Kong, the establishment in 2006 of a start-up fund has helped create 1,800 jobs by fi nancing more than 100 projects. However, some estimates indi-cate that only one in three of the social enterprises created currently thrives. A survey in 2010 by the Hong Kong General Chamber of Social Enterprises found that government-funded social en-terprises are the least profi table.
Carlos Siu Lam, an associate profes-sor at the Polytechnic Institute of Macau, says it is diffi cult for social enterprises to generate enough revenue to survive. “Such organisations are ‘doing char-ity by doing trade’, rather than ‘doing charity while doing trade’,” he says.
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Demystifying the Chinese economyChina had an advanced and prosperous civilization for
millennia until the 18th century, but then degenerated into a very poor country for 150 years. Now it has resurged to
become the world’s most dynamic economy since launching its transition to a market economy in 1979. What drove these fateful changes?
In my recent book “Demystifying the Chinese Economy”, I argue that, for any country at any time, the foundation for sustained growth is technological innovation. Prior to the Industrial Revolution, craftsmen and farmers were the main source of innovation. With the largest population in the world, China was a leader in technological innovation and economic development throughout most of its history because it had a large pool of craftsmen and farmers.
The Industrial Revolution accelerated the pace of Western progress by replacing experience-based technological innovation with controlled experiments conducted by scientists and engineers in laboratories. This paradigm shift marked the coming of modern economic growth, and contributed to the global economy’s “Great Divergence.”
China failed to undergo a similar shift, owing primarily to its civil-service examination system, which emphasized the memorisation of Confucian classics and provided little incentive for elites to learn mathematics and science.
The Great Divergence had a silver lining: developing countries could use technology transfers from advanced countries to achieve a faster rate of economic growth than the countries that were at the industrial vanguard. But China failed to exploit this benefi t of backwardness until the transition from a command economy began in earnest.
Dual-track approachIn the wake of the communist takeover in 1949, Mao Zedong and other political leaders hoped to reverse China’s backwardness quickly, adopting a big push to build advanced capital-intensive industries. This strategy enabled China to test nuclear bombs in the 1960s and launch satellites in the 1970s.
But China was still a poor, agrarian economy; it held no comparative advantage in capital-intensive industries. Firms in those industries were not viable in an open, competitive market. Their survival required government protection, subsidies and administrative directives. These measures helped China establish modern, advanced industries, but resources were misallocated and incentives distorted. Economic performance was poor. Haste made waste.
When China’s market transition started in 1979, Deng Xiaoping adopted a pragmatic, dual-track approach, rather than the “Washington Consensus” formula of rapid privatization and trade liberalization. On the one hand, the government continued to provide transitory protection to fi rms in priority sectors; on the other, it liberalized the entry of private enterprises and foreign direct investment into the labour-intensive sectors that were consistent with China’s comparative advantage but were repressed in the past.
This approach enabled China to achieve stability and
dynamic growth simultaneously. Indeed, the benefi ts of backwardness have been breath-taking: 9.9 percent average annual gross domestic product growth and 16.3 percent annual trade growth over the past 32 years – a stellar achievement that holds valuable lessons for other developing countries. Now China is the world’s largest exporter and its second largest economy, and more than 600 million people were pulled out of poverty.
Dynamic growthYet China’s success has not come without cost. Income disparities have widened, owing in part to the continuation of distortionary policies in various sectors, including the domination of China’s four large state-owned banks, the near-zero royalty on mining, and monopolies in major industries, including telecommunications, power and fi nancial services. Because such distortions (a legacy of the dual-track transition) result in income disparities, they ultimately repress domestic consumption and contribute to China’s trade imbalance. Those imbalances will remain until China completes its market transition.
I am confi dent that, notwithstanding the headwinds blowing from the eurozone crisis and the slump in demand worldwide, China can continue its dynamic growth. In 2008, China’s per capita income stood at 21 percent of the U.S. level (measured in purchasing power parity), and was similar to Japan’s per capita income in 1951, South Korea’s in 1977, and Taiwan’s in 1975. Annual GDP growth averaged 9.2 percent in Japan from 1951 to 1971, 7.6 percent in South Korea from 1977 to 1997, and 8.3 percent in Taiwan from 1975 to 1995. Given the similarities between these economies’ experience and China’s post-1979 development strategy, it is likely that China can maintain 8 percent growth in the coming two decades.
Some may think that the performance of a country as unique as China, with more than 1.3 billion people, cannot be replicated. I disagree. Every developing country can have similar opportunities to sustain rapid growth for several decades and reduce poverty dramatically if it exploits the benefi ts of backwardness, imports technology from advanced countries, and upgrades its industries. Simply put, there is no substitute for understanding comparative advantage.
JUSTIN YIFU LIN CHIEF ECONOMIST AND SENIOR VICE PRESIDENT FOR DEVELOPMENT ECONOMICS, WORLD BANK
IT IS LIKELY THAT CHINA CAN MAINTAIN 8 PERCENT GROWTH IN THE COMING TWO DECADES
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SIMPLY THE BESTA selection of award winning advertising campaigns recognised by Effi e China 2011, were showcased last month at an exhibition at One Central. The event, organized by the China Advertising Association and Effi e China, sponsored by the Cultural Affairs Bureau and produced by Conde Group, also included an effective advertising seminar at Grand Lapa Hotel.
The Effi e awards are presented yearly and honour the most effective marketing communication ideas. Today there are over 40 national and regional Effi e programmes worldwide.
Projects from Watson’s, Coca Cola and Taobao were among the Effi e China 2011 award winners exhibited in Macau.
Raymond So, chairman of the advisory committee of Effi e China Awards, and Frederico Conde
Chui Sai Cheong
Li Zhi Zhong and Tomaz Mok, chairman of Effi e China Expert Committee Chan Peng Fai
Owen Jie, president of Effi e China
The exhibition
Moments
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ALLEZ FRANCE!The France Macau Business Association held its annual gala dinner at MGM Macau last month. The night was a remarkable success with more than 300 attendees from Macau, Hong Kong and the mainland.
The gala dinner, already in its third edition, aims to gather all the association’s members, plus guests and other potential interested parties for a French-fl avoured soirée.
In addition to a cocktail reception, fi ve-course French dinner and several performances, this year’s event also included a silent auction to raise money for charity. Over MOP70,000 (US$8,750) was raised for the International Ladies’ Club of Macau and the Macau Special Olympics.
Moments108
Franklin Willemyns, Arnaud Barthélémy, Rita Santos, Pansy Ho and José Pereira Coutinho
Silvana Willemyns and Brigitte ChauminPaulo A. Azevedo and João Francisco Pinto
Performers welcome Terry Siu
Irene Sam, Helene Wong, Natasha Fernandez and Mamie Chan
JJ Verdun, Serene Chia and John W. Crawford
Dance performance A packed house
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Tommy Lau Veng Seng, Irene Lau and Franklin Willemyns
The Sofi tel table
Raffl e selling to Mr Paul Tse and wife, and Charles Chaumin
Vincent Marechal
The Seapower table
The Cartier table
Jorge Vieira, Raymond Kuong, Oscar Chu, Fiona Sou, Iun Iok Meng, António Baguinho and Denis Leong
The CSR – Macau Residue System Company, Ltd. table
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JANUARY 2012
Moments110
MACAU RINGS IN NEW YEARMacau welcomed 2012 with a string of countdown parties all over town. Hundreds of revellers saw in the New Year against a backdrop of fi reworks by the Sai Van Lake Square, at a government-sponsored countdown concert, with a similar event taking place by the Taipa Houses-Museum. Casinos, hotels and nightclubs also toasted the new year with a hand-full of bashes, with party-goers dancing to live music and drinking champagne as they cheered out the fi nal seconds of 2011.
Sai Van Lake Square
Taipa Houses-Museum Galaxy Macau
Grand LisboaMGM Macau
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111
SILENCE NEVER LIESStatisticians are frequently under fi re. Often are they accused of tweaking data to give a different version of reality to suit a particular agenda. It is far from new, as shown by the famous phrase attributed to Benjamin Disraeli, the 19th century British prime minister: “There are three kinds of lies: lies, damned lies, and statistics”.
In Macau, our beloved Statistics and Census Service is keen to prove its work is beyond criticism. What better way to do that than by simply not publishing any potentially controversial statistics?
Do you want to know more about wealth distribution in Macau, usually measured by the Gini coeffi cient? The most recent available fi gures are for 2007-2008.
Do you want detailed fi gures about another hot topic, labour mobility? Again, data is available only up to 2008.
Or do you need precise fi gures about the city’s economic engine, gaming, such as the average size of a bet? Sorry, not available.
Keep up the good work, people at the Statistics and Census Service. The best way to stay away from criticism is to keep your mouth shut and do nothing. Work that way and no one can point an accusing fi nger.
DISTORTED SIGNAL
More than a year after the government introduced a bill in the Legislative Assembly revising Macau’s copyright law, lawmakers have yet to give it the fi nal nod. In any other place in the world, this would be an awkward situation. In Macau, it is just one bill among many dragging their feet.
What is special in this case is what divides the legislature and the government. The government wants to punish only those who make a buck out of sharing copyright-protected fi les over the Internet, while the lawmakers argue that even people who share fi les online for nothing should be punished, albeit with lighter sentences.
The government is taking a populist stance on this matter. It wants to avert a public outcry, since we all know how widespread the practice of unauthorised sharing of music, movie and other fi les is.
If the government continues along this path, sooner or later we will have Robin Hood-style justice, where stealing is not wrong – especially from the mighty United States’ movie studios – just as long as you do not profi t from it.
Frozen Spy thinks this is the wrong signal to send, especially in a city that wants to diversify into cultural industries, which earn their bread and butter from copyright-protected material.
SMART CIVIL SERVANTS
We all know knowledge is power. Living in a society where technology is ubiquitous, it is important for everybody to have a high level of computer literacy, starting with the city’s civil servants.
Thanks to the Public Administration and Civil Service Bureau, that is no longer a problem. Last month the body promoted an iPhone workshop to help public-sector workers learn how to get the most of their smartphones.
Next time you are stuck in a waiting room of a government bureau and see a civil servant behind the counter spending several minutes checking her iPhone, please be patient. Maybe she is doing her revision.
WHAT IF?Frozen Spy is amazed by the wishful thinking shown by some of our legislators. The latest example came from veteran Kwan Tsui Hang.
Ms Kwan has demanded that offi cials make public the full reports of all studies commissioned by the government – something that seldom happens. The goal, she says, is to increase transparency and allow the people to assess the quality and relevance of the research.
Looking at the Offi cial Gazette, Ms Kwan discovered that the government has recently commissioned at least 10 separate studies and surveys, with prices ranging from a few million patacas to almost MOP60 million (US$7.5 million).
While Ms Kwan’s idea is interesting, it would mean consultancy fi rms would have to deliver proper results and reports, and that the government would have to explain the need for so many studies and, more importantly, the criteria it uses in choosing the consultancy fi rms.
Finally, Ms Kwan’s idea would oblige somebody in the government to read those reports and perhaps take them into consideration during the decision-making process.
That would be just too troublesome.
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Advertisers IndexJANUARY 2012
Aristocrat Page 02 www.aristocratgaming.com
Art for All Page 85 www.afamacau.comArt for All Page 85 www.afamacau.com
Bally Technologies Page 17 www.ballytech.com
BNU Page 15 www.bnu.com.moBNU Page 15 www.bnu.com.mo
CEM Page 87 www.cem-macau.com
Galaxy Entertainment Group Pages 03, 41 and BC www.galaxyentertainment.comGalaxy Entertainment Group Pages 03, 41 and BC www.galaxyentertainment.com
Goldfi sh Pages 14 and 93 www.goldfi shmacau.com
Jumbo Page 100 www.jumbogames.com.twJumbo Page 100 www.jumbogames.com.tw
Macau Post Offi ce Page 73 www.macaupost.gov.mo
Macau Daily Times Page 77 www.macaudailytimes.com.moMacau Daily Times Page 77 www.macaudailytimes.com.mo
Mandarin Oriental Page 23 www.mandarinoriental.com
MGM Macau IFC and Page 45 www.mgmmacau.comMGM Macau IFC and Page 45 www.mgmmacau.com
MGTO Page IBC www.macautourism.gov.mo
Morton’s The Steakhouse Page 27 www.mortons.comMorton’s The Steakhouse Page 27 www.mortons.com
Our Dental Clinic Page 96 www.ooioc.com
PokerStars Macau Page 05 www.pokerstarsmacau.comPokerStars Macau Page 05 www.pokerstarsmacau.com
Sands China Page 37 www.sandschinaltd.com
Shuffl e Master Page 07 www.shuffl emaster.comShuffl e Master Page 07 www.shuffl emaster.com
SJM Page 49 www.sjmholdings.com
Wynn Macau Page 39 www.wynnmacau.comWynn Macau Page 39 www.wynnmacau.com
Zung Fu Motors – Mercedes Page 01 www.zungfu.com.mo
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