Macao's Economy to Grow at Moderate Pace in 2002: Analysis

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Last updated at: (Beijing Time) Thursday, February 07, 2002

Macao's Economy to Grow at Moderate Pace in 2002: Analysis

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GDP to increase 2.6% in 2002

Macao's economy is tipped to grow at a moderate pace this year, propelled by a steadfast rise of investment and tourism and gambling business.

A latest quarterly report of the Macao Monetary Authority predicts that the city's gross domestic product (GDP) increase for 2002 will hit 2.6 percent and that of 2001 has come to a subdued 0.7 percent.

In a couple of days, the special administrative region (SAR) government will post the list of three winners in months of bidding for new casino licenses. "This will bring another period of high growth of investment," Francis Tam Pak Yuen, secretary for economy and finance, has said, citing that new operators will add facilities.

The official noted the move will close the 40-year monopoly over the gambling market by the Macao Tourism and Amusement Company (STDM) and optimize management of casinos -- a pillar sector that contributes to roughly half of the SAR's fiscal revenues.

Entertainment service contributes to the increase

Figures released by the Statistics and Census Services show that the entertainment and gambling service companies inaugurated in the fourth quarter last year alone involved a combined capital volume of 830 million patacas (103.75 million U.S. dollars), skyrocketing 11.6 times from the year-ago period. Many are scouting for new chances amid market opening.

A grand government plan calls for investment of 1.6 billion patacas (200 million dollars) in construction of basic facilities and other projects to generate 6,000 jobs this year. The Fisherman's Wharf, the largest tourism project for Macao since it returned to the motherland, is being built into a tourist Mecca highlighting recreation, sightseeing and catering.

Still, the SAR government has mapped out a series of flexible fiscal and monetary policies to buoy property investment by individuals and enterprise expansion.

New policy to stimulate economy

Chief Executive Edmund Ho Hau Wah has announced in his policy address for 2002 a tax cut portfolio covering a 25 percent decrease in occupation tax, five percent in tourism tax for catering businesses and 500 patacas (62.5 dollars) in housing tax,as part of a broader effort to spur local consumption.

In a recent interview with Xinhua, Joao Manuel Antunes, director of the Government Tourist Office, said that the tourism industry will get another boost and play a bigger role in the economy if visitors stay longer and spend more in Macao. His office plans to carry on more promotions and try to present tourists a more welcoming environment.

The number of tourist arrivals in Macao hit a record of more than ten million in 2001. "The figure is already very big for the small city," Antunes said, but adding that it will be probably larger on anticipation of a better tourism image of Macao and increasing stopovers in the city of business travelers in the wakeof China's entry into the WTO.

In the near term, Macao expects to witness a huge influx of tourists from China's inland, as the China National Tourism Administration has approved the increase in the number of tourist services handling Macao-bound business to 67 and the SAR government is also selecting the best of its travel agencies to host the inland tourists, upon the approach of the traditional Chinese lunar New Year.

Disadvantage for economic growth

For the Macao economy, export outlook remains a worry, despite the drop narrowing as hoped in 2001 from the previous year, economists say. Ailing demand in the United States and the European Union, the key market for Macao exports, brought down the city's export volume as much as 8.9 percent year on year to 16.76 billion patacas (2.1 billion dollars) from January to November.

This compared with a 6.8 percent rise of imports in the 11-month period, which is considered a disadvantage for economic growth by causing a widening trade deficit.

The SAR authorities hope that the long-awaited recovery in the world economy, foreseen by many economists to come up in the latter half of this year, will stimulate Macao's exports with textile products as a major part.

The Macao economy jumped 4.6 percent in the year 2000 -- the first year since Macao returned to the motherland. Before that time, it was in a downturn territory for four years in a row.

Macao's Economic Growth in 2002

The authorities noted that the SAR's economy will benefit greatly from more investment in the manufacturing sector and the construction of a number of key public facilities including the Fisherman's Wharf in 2002.

The SAR government has mapped out a plan to amend and improve laws and rules on foreign trade, finance, taxation, labor and the use of foreign funds as part of its efforts to further upgrade investment environment.

As a bridge between China's inland and the outside world, Macao will surely see numerous business opportunities after China's entry into the World Trade Organization.

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