Dez anos de RAEM em síntese

10 years after handover, wheel of fortune has turned for Macau

Fox Yi Hu
South China Morning Post
December 19, 2009

Riding the coattails of the mainland economy, in a matter of 10 years Macau has changed from being a colonial backwater to the world's gambling capital.

Much of that transformation was driven by millions of cashed-up mainland punters swamping the former Portuguese enclave - the only pace in China where casinos are legal.

Debate on whether Macau has changed for better or worse is hotting up as the 10th anniversary of its handover to China nears.

It's easy to find locals savouring their fatter pay packets and admiring the city's glittering skyline, but there are grumbles loud and long about runaway housing prices, traffic jams and corruption.

Like other residents, Lao Kei-ngai, 60, makes much of Macau's breathtaking economic growth, but hates what he says is a backward political system that is a hotbed of graft.

"The economy and social welfare have improved a lot, but the government's thinking lags far behind," he said. "Grey areas exist under outdated laws and a backward political system, leading to a lot of corruption."

The numbers speak for themselves. The city's gross domestic product, constant at 2002 prices, almost tripled over the decade, from 45.8 billion patacas in 1999 to 133.8 billion patacas in the 12 months to the third quarter of this year.

A four-year streak of real GDP decline was snapped in 2000 - a year after the city reverted to Chinese rule. Per capita GDP at current prices increased from 110,637 patacas in 1999 to 315,825 patacas last year.

Professor Zeng Zhonglu, an economist and gaming analyst at Macau Polytechnic Institute, said the casino hub's growth was unprecedented. "Las Vegas and Atlantic City are no match for Macau when it comes to the speed and duration of growth."

Behind such growth was the mushrooming of casinos, built amid an influx of mainland punters following the liberalisation of the gaming market in 2002. The 2004 launch of Sands Macau, the first Las Vegas-style casino, effectively ended a four-decade monopoly by Stanley Ho Hung-sun, heralding a sea change.

Gaming tax revenue was only 4.8 billion patacas and made up just 48.4 per cent of public revenue in 1999, but this had jumped to 41.9 billion patacas last year, or 72.7 per cent of public revenue, according to the Macau Statistics and Census Service.

The gaming market's liberalisation alone would not have brought about the breakneck growth, which analysts said was more by accident than design.

To revive Hong Kong's economy after the outbreak of severe acute respiratory syndrome in 2003, the central government relaxed travel curbs for millions of mainlanders. Macau, the other special administrative region, was also allowed to benefit from the Individual Visit Scheme, which allows mainlanders to visit the cities without joining a tour group.

The number of gaming tables ballooned from 424 at the end of 2003 to 4,610 in the third quarter this year, while the number of slot machines jumped from 814 to 14,175.

Over the same period, the number of casinos increased from 11 to 20.

Gross gaming revenue was only 23.5 billion patacas in 2002, but it rose to 109.8 billion patacas last year and 83.9 billion patacas in the first three quarters of this year. Zeng ascribes much of Macau's success to its unique status as China's only place where casinos are legal. "Demand for gambling is huge on the mainland. With a well-regulated gaming industry, Macau has a clear edge over foreign casinos near China's border."

Visitor arrivals, including tourists and non-resident workers, surged to 30.2 million last year from just 7.4 million in 1999. Mainlanders account for more than 50 per cent of arrivals.

The rapid expansion of the gaming industry put a squeeze on traditional sectors such as manufacturing, which struggled against rising costs and a labour shortage. Manufacturing contributed 9.4 per cent of GDP in 1999 but only 2.8 per cent last year.

This over-reliance on gambling alerted the central government, with state officials repeatedly calling for the city to diversify its economy.

Median monthly income nearly doubled over the 10 years, from 4,819 patacas in the fourth quarter of 1999 to 8,500 patacas in the third quarter of this year, but such an increase lags behind the threefold per capita GDP growth. The jobless rate dropped from 6.3 per cent in 1999 to 3.7 per cent in the third quarter this year.

Macau observer Dr Camoes Tam Chi-keung said economic progress over the past 10 years was greater than that over the 150 years to 1999.

"Besides air pollution, traffic jams and expensive houses, Macau people are finding their lives better in most aspects," Tam said.

Changes in the city's Gini coefficient - which gauges the gap between rich and poor - and life expectancy suggest an improvement in living standards. The Gini coefficient rose from 0.43 in 1999 to 0.48 in 2006 before dropping sharply to 0.37 last year. A lower reading suggests a smaller wealth gap.

Life expectancy increased from 77.9 in 1999 to 81.5 in 2006.

But Tam said there had been little change in the political system. "Political development really disappoints, with the electoral system stuck in the 1970s - unchanged for 30 years."

Only 12 out of 29 seats in the legislature are directly elected by residents. Seven seats are appointed by the chief executive and the other 10 are returned through functional constituencies.

In 2005, the number of directly elected seats increased from 10 to 12. The chief executive is elected by 300 privileged voters.

Rising living costs, especially flat prices, became a major source of public discontent and fuelled large protests in the past few years. The average price per square foot soared from about 500 patacas in 1999 to 2,500 patacas last year.

An influx of non-resident workers also angered locals, whose wages were dragged down by the availability of cheap mainland labour.

There were 75,944 non-resident workers in October this year, compared with 31,887 in January 2000.

Traffic jams are another source of public discontent. The number of licensed vehicles jumped 64.7 per cent, from 113,814 in January 2000 to 187,463 in October this year.

But the length of public roads grew only 13.7 per cent, from 270 kilometres to 307 kilometres.

Continuous reclamation saw the land area of Macau rising from 23.8 sq km in 1999 to 29.2 sq km last year.

The city's population increased from 430,000 at the end of 1999 to 541,200 in the third quarter this year.

After the handover, the mainland authorities cracked down hard on organised crime; as a result, the gun battles and turf wars rampant in the late 1990s quickly disappeared.

Still, casino-related petty crimes picked up after the liberalisation of the market, with criminal cases rising from 9,262 in 1999 to 13,864 last year.

A survey on cyberctm.com, Macau's most popular internet forum, asks people whether they like the present government or the pre-handover Portuguese government.

Among 161 people who had voted by Tuesday, 62.7 per cent said they liked the Portuguese government, 2.5 per cent said they liked the present government and the rest said they were equally bad.