Inside Asian Gaming

November 2008 | INSIDE ASIAN GAMING Cover Story Macau’s GDP has soared over the past few years on the back of increased gaming and visitor receipts and massive investment in new casinos and tourist attractions. That spectacular growth had made the city’s GDP per capita higher than that of any other Asian economy by the end of last year. Media reports have been disdainful of Macau’s newfound prosperity, however, highlighting the worsening wealth gap and other social problems created by the growth, which has been largely concentrated in the powerful gaming and tourism sectors. Despite boasting the highest GDP per capita, Macau’smedianmonthly salary stands at just over 8,000 patacas (US$1,000)—well below that of other advanced Asian economies. Long known for their political apathy, Macau people have over the past two years been involved in a series of unprecedented public protests. In 2004, Chief Executive Edmund Ho was regarded as perhaps one of the most popular heads of government in theworld,withhis approval ratingput at 80%. At the time, people were apparently pleased with the initial spurt of economic growth, after years of economic stagnation prior to the reversionofMacau’s sovereignty toChina (from Portugal) and the liberalisation of the gambling sector. As the negative impacts of that growthbecamemorepronouncedwhile the benefits were not equally distributed, that approval rating plummeted, as is now no longer publicly reported. The Macau’s government’s image has been tarnished by more than its inability to prevent disruption caused by breakneck economic development. There are also mounting accusations of administrative incompetence and corruption within the government.Earlierthisyear,formersecretary for transport and public works, Ao Man-long, was sentenced to 27 years’ imprisonment on charges of accepting bribes, money- laundering and abuse of authority. Mr Ao’s harsh sentence has not entirely reassured the public that the government is serious about tackling corruption, especially given the widespread perception that the corruption of which he was convicted was likely to have involved other members of the government. Pro-democracy advocates have derided Mr Ao’s trial as a show, claiming that corruption in the city is so endemic that it would not be affected by the verdict. Notably, prior to his conviction, Mr Ao was one of the possible candidates to fill the chief executive position, when the term of the incumbent, Edmund Ho, comes to an end in 2009. Beijing’s watching Beijing has been closely following the Macaupopulation’smountingdissatisfaction with its government. Part of the central government’s motivation for applying the brakes on Macau’s overheating gaming sector could be to halt the worsening inequality and social problems that have fuelled the dissatisfaction. At the close of this year’s China’s National People’s Congress in March, President Hu Jintao issued a stern reminder to the Macau government to maintain calm in the lead up to the Beijing Olympics and avoid another messy Labour Day protest. This is a marked shift from four years ago, when Macau appeared incapable of doing wrong in Beijing’s eyes. While Hong Kong’s then chief executive, the beleaguered Tung Chee-hwa (who stepped down in disgrace in 2005), was berated for failing to quell mounting discontent in his city, Macau chief executive Edmund Ho was praised for leading the reversal of Macau’s economic fortunes. This year, President Hu warned Mr Ho to “deal properly with ‘new situations’ and ‘new problems’ Macau faces in its development,” while Hong Kong’s current chief executive, Donald Tsang, was praised for guiding his city’s development“in a good and right direction.” Populist response In April, in a populist response to deflect attention from inequality and social problems and to maintain calm ahead of the torch relay, the government announced a 2.6 billion pataca (US$325 million) cash giveaway from its bulging fiscal reserves, with MPtc5,000 paid to every permanent resident and MPtc3,000 to every non- permanent resident. The measure is ostensibly intended as a means to return some of the wealth generated by the casino and tourism boom to the public, but has been criticised as a token measure intended to shift attention away from worsening inequality and rising inflation in the city. The government’s budget surplus has been steadily widening over the past few years on the back of soaring gambling tax revenue. Also contributing to the surplus has been the government’s failure to meet its spending targets. Macau’s long-term interests may have been better served if the government had instead focused its attention on speeding up investment in the city’s infrastructure, which has been straining under the load of a massive influx of visitors. Other priorities are improving education and helping to diversify the economy in order to reduce its heavy reliance on the tourism and gaming sectors, which leaves it extremely vulnerable to external shocks. Diversification has been hindered by the labour crunch and other shortages created by the casino and tourism boom, with small and medium-sized enterprises struggling to compete for resources with the powerful casinos. 27 Reversal of Political Fortune The spectacular growth in Macau’s casino revenues and GDP has led to a remarkable awakening in its political consciousness Ardent Censors Authorities in Macau are more ardent censors of free speech than their Hong Kong counterparts. A recent report in Hong Kong-daily the South China Morning Post highlighted that Macau’s most popular internet forums had been shut down during politically-sensitive events (including the June 4 anniversary of the 1989 Tiananmen Square crackdown and the Olympic torch relay through the city on May 2 to 4). One person had been arrested for encouraging people to disrupt the Olympic torch relay, and firewalls have prevented the use of politically-related terms such as “gang leader” and “shameless Ho”— a name labour protestors have used in recent years to describe Chief Executive Edmund Ho. The Macau resident arrested on April 26 for posting a message encouraging people to disrupt the relay had been identified to police by Macau’s monopoly internet service provider, CTM. A legislator pointed out that under Macau law, only judges have the right to demand internet service providers to disclose details of users.