(Last updated: 5 Jan 2012)

Current business situation

The Macau SAR Government is committed to open economies and to enhance cooperation with major trading partners including Australia.

More recently, the environment has been an important concern for the government. The administration has elevated the Environmental Protection Agency in line with green living. The Agency collaborates closely with private sectors and actively promotes public awareness about environmental protection into political agenda.

In September 2011 an incentive policy was launched to encourage businesses to use energy-efficient and green products. This commitment, valued at A$25 million, has translated into business opportunities for Australian companies in energy-efficiency, water resource management and clean air products and services.

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Macau. This is regularly updated, and should be checked before planning travel.

Country facts

'Macau' or 'Macao'? 'Macau' is the official Portuguese spelling while 'Macao' is the traditional English spelling. While either spelling is acceptable, the Portuguese spelling is increasingly being seen in English in both official and unofficial usage.

(Source: Department of Foreign Affairs and Trade country economic fact sheet)
* 3rd Quarter/2011, www.dsec.gov.mo

Economic climate

Macau, like Hong Kong is a free economy in which there is no restriction on the flow of goods and services, moneys or capital. One of the Macau Government’s core economic policies is to maintain a free port status and it implements zero import duty policy for nearly all products.

Macau’s economy has expanded rapidly since 2002 when the liberalisation of its casino sector led to significant investment in new hotels, casinos and convention facilities by developers from Hong Kong, the USA and Australia. As at the second quarter of 2011, there were 34 casinos operated by six concessionaires with 5237 gaming tables and 15,098 slot machines. (2011 statistics, The Gaming Inspection and Coordination Bureau).

Gaming and tourism are the major components of Macau’s GDP, and taxes on gaming income are the major contributor to government revenue. By the 2010 year end, Macau's annual gaming revenue from casinos had soared to a record 188.34 billion patacas (A$22.16 billion). In the same year total revenue generated from other gaming sectors – mainly horse racing and lottery reached A$1.17 billion. (2011 statistics, The Gaming Inspection and Coordination Bureau).

Gaming revenue represents over 80% of the total revenue of the Macau SAR Government annually. Total revenue gained in 2010 registered high growth at 58% following on from 10% growth in 2009. This latest record earning pushed Macau even further ahead of its rival Las Vegas as the top gaming revenue earner in the world, for the fifth year in a row.

It has been forecast that 2012 will also be a good year for the Macau gaming industry. In a research report, Citigroup has revised upward its growth forecast for Macau's gross gaming revenue in 2012 from 15% to 20%, representing an income close to A$36 billion.

Chinese tourists have been the main source of support for Macau’s gaming and tourism industries and contributed over 50 per cent of Macau’s visitor arrivals in 2010.

Several major projects at The Cotai Strip will resume soon and a new hotel-casino property has a plan to open mid-2012. The resumption of the projects (stalled since 2008) will certainly give the gaming sector another boost and should have an impact on the demand chain for labour supply. New labour laws, effective in April 2010, apply more stringent regulations to imported labour, so higher labour costs are envisaged.

The demand for labour is on the rise. According to the Statistics and Census Service, the overall unemployment rate as at the third quarter of 2011, was 2.4%.

The resumption of projects suspended in 2008 will also have significant impact on the GDP per capita which reached new height of A$46,796 in 2010, the second highest in Asia after Qatar and representing growth for 2010 of 26.4%.

(Source: www.dsec.gov.mo/default.aspx)

The gaming industry is entering the third year of adjustment introduced by Macau Government during the period of global financial crisis. The moratorium policy announced by the Macau SAR Government in 2008, to freeze the issuance of gaming licenses and the designation of new land resources for casino development as a measure to contain the excessive growth in gaming, remains in force. The number of gaming tables in Macau will not be allowed to go beyond 5,500 until 2011. The latest policy announced by Macau government on the growth of gaming table number will be capped at not more than 3% until 2023.

Since the moratorium, policy applications to open new casinos have been suspended but development submissions which have been approved prior the introduction of moratorium policy have been allowed to proceed.

There is no change in the economic diversification policy advocated by Macau SAR Government for promoting new economic structure as a means to reduce a heavy reliance on the gaming sector. This policy aims to make Macau a meetings, incentive travel, conventions and exhibitions (MICE) hub that integrates leisure tourism, gaming, shopping, conference and exhibition services.

The Hengqin New Area development program - a large-scale strategic development plan, initiated by the Chinese Central Government was confirmed in August 2011 with clear policies in legal framework, taxation system, border control etc. Under this strategic plan, Macau will have priority access to additional land resources. The Macau SAR Government expects that this access to new land resources will facilitate Macau’s diversification policy into other business service sectors such as cultural, recreational or sporting activities.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade country economic fact sheet and Macau Government statistic services www.dsec.gov.mo/NCEM.aspx.

Political climate

On 20 December 1999 Macau was returned to Chinese sovereignty (two years after Hong Kong) and has also become a Special Administration Region (SAR). Macau, under the same constitutional umbrella, will:

• Reside under a ‘one country, two systems’ policy
• Have a politically stable environment for living and international trade
• Have its own legal system which is based on continental laws, and the judicial system remains essentially the same
• Welcome new business and investment and continue to provide an open and free market
• Be the only Chinese territory where gambling is legally incorporated as the main economy
• Continue to operate autonomously in all trade and economic policies - from a business and cultural environment perspective little has changed

The Chief Executive (CE) is head of Macau’s Government and is appointed by the PRC Government after selection by a 300-member Election Committee representing Macau’s business, cultural and social interests. The CE is responsible for implementing the Basic Laws and other applicable laws. He/she appoints an Executive Council of between seven and 11 members whom he/she consults on major policy decisions.

As part of a separate and independent legal system, the Legislative Assembly is responsible for general lawmaking, including taxation and passing Macau’s budget. The Legislative Assembly has 29 members: 12 directly elected, 10 indirectly elected and seven appointed by the CE. Members of the legislature serve four-year terms.

Macau's civil law tradition is inherited from Portugal, though judicial links with Portugal were severed in June 1999. Members of the judiciary are selected by a committee and appointed by the CE. The judiciary comprises Courts of First Instance, a Court of Second Instance, a Court of Final Appeal and an Administrative Court.

The PRC Government Is responsible for Macau’s foreign affairs but, as with Hong Kong, Macau has considerable autonomy in some external matters, mainly concerning economic and cultural relations and agreements. Macau is a member of several international organisations, including the World Trade Organization as a separate customs territory.

(Source: Department of Foreign Affairs and Trade – Country brief)

Trade relations and statistics

The Basic Laws guarantee Macau’s freedom in international trade relations with other countries and territories. Macau has maintained independent status in the WTO and has also entered unique bilateral trade relationships with the EU through the EC-Macau Joint Committee, a bilateral trade and cooperation agreement through political linkage with Portugal. This unique and distinctive linking facilitates Macau’s trade relationship with Europe.

Very much like Hong Kong, Macau is an alternative gateway for re-export to China, especially to the prosperous southern provinces - the Pearl River Delta Region. After the returning to Chinese sovereignty Macau continued to progressively integrate its economy with mainland China through the Closer Economic Partnership Agreement (CEPA) framework under which various supplements have been signed. This CEPA arrangement provides a platform to integrate the two economies focusing mainly on three economic and trade areas, namely: trade in goods, trade in services and trade and investment facilitation for Macau registered companies and individuals to conduct business in China. Business communities in Macau are in unique position to compete with Hong Kong for business partnerships.

Another economic policy, established by the Macau SAR Government is to capitalise on the advantage of its former political ties with Portugal. Macau has long played a unique role as a trade and economic co-operation service platform between China and Portuguese-speaking countries/regions (Angola, Brazil, Cape Verde, Daman and Diu, East Timor, Goa, Guinea-Bissau, Mozambique, Portugal, Sao Tome e Principe) which have a combined population of 260 million. The Chinese Government has pledged to establish a development fund of up to US$1 billion for co-operation between China and Portuguese-speaking countries, to provide preferential loans and personnel training co-operation projects.

Official trade statistics for 2010 revealed that, Macau’s total export of goods decreased by 9% compared to 2009 while imports grew by nearly 20%.

China remains Macau’s largest trading partner with Australia trailing major trading countries such as Japan and the US. Macau directly imports most industrial goods and equipment, business equipment and electrical equipment. The total import from Australia in 2010 was A$53 million, of which A$23 million or 43% was food and wine products.

Please see the Department of Foreign Affairs and Trade country economic fact sheet for key trade statistics.