Roundup: CEPA to Speed up Macao's Economic Restructure

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Last updated at: (Beijing Time) Thursday, August 28, 2003

Roundup: CEPA to Speed up Macao's Economic Restructure

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Although the anticipating signing of Closer Economic Partnership Arrangement (CEPA) between the mainland and Macao may not yield as much profits as that between the mainland and Hong Kong, the trade pact will become a prelude for a major economic restructure conducive to reducing the risk of the unitary economy of the small city, reputed as "Oriental Monte Carlo."

In the drafting of the mainland/Macao CEPA, the Macao Special Administrative Region (SAR) government has received recommendations of 1,000 items of products proposed by influential industry associations for the consideration of being inscribed to enjoy the preferential zero tariff to go into the mainland.

Taken Hong Kong's example that 273 items of products are favored by the mainland/HK CEPA signed on July 1, an equal treatment to Macao would help create a favorable environment to develop an export-oriented manufacturing industry in Macao, whose economy is only one-20th of that of Hong Kong in scale.

Au Chong Kit, chairman of the Macao Small and Medium-sized Enterprises (SMEs) Promotion Association, told Xinhua that Macao should not be content with its unitary economic pillar of the gaming industry. CEPA is a chance bestowed by the Central Government to help Macao diversify its industries and achieve a more steady economic growth.

Compared to HK's estimated one billion HK dollars (128 million US dollars) annual tariff exemption, Macao would not see such a direct result from the signing of CEPA given to the weak manufacturing business. There are a total 15,000 registered firms in Macao, with over 90 percent SMEs. Among them, only 2,000 are engaged in the manufacturing industry, said Au.

Over 60 percent of the government's fiscal income was earned from the gaming industry in 2002, which contributed 7.8 billion patacas (975 million US dollars) to the SAR's tax coffer. However, the simplex economy can hardly afford a short break of the casino business, which runs round-the-clock.

Ieong Wan Chong, an economist with the University of Macao, said that as a free port, Macao has a favorable condition to develop highly value-added products, such as family appliance and telecom equipment. CEPA can make it a more attractive place for mainland and overseas manufacturers.

Some overseas manufacturers have inquired about setting foot in a cross-border industrial park jointly planned by Macao and its adjacent Zhuhai City in south China's Guangdong Province.

Francis Tam, secretary for Economic and Finance disclosed that the park plan is one of the topics in the CEPA talks with the mainland. Macao hoped the plan could get an approval and ready for business invitation before the end of this year.

Under the draft plan, the park will be built on a 400,000-sq.m.reclaimed seashore. The land reclamation coverage will be halved by Zhuhai and Macao with a water separation line, which is to be linked by a bridge. Enjoying both cheap laborers from the mainland and preferential trade policies ensured by the mainland/Macao CEPA, the park will appeal to manufacturers engaged in textile, garment and electronic business.

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