Inside Asian Gaming

inside asian gaming October 2014 28 of Commercial Gaming at the University of Macau. “As there is limited land in Macau ... the gaming operators can cooperate with the Guangdong government via the coordination of the [Macau] administration to have accommodations on places like Hengqin [a Chinese island located adjacent to Macau] for their migrant workers. Complemented by appropriate traffic arrangements, this can reduce the competition for public spaces between Macau residents and migrant workers.” Mr Fong, a member of the committee that re-elected Mr Chui, adds: “And this will not have much significant impact on the operating costs of the operators.” Mounting labor tensions at Macau’s casinos, which have already witnessed eight public protests this year, are already having an impact on profit margins, with operators having to offer improved salaries and benefits to retain staff in an environment where the citywide unemployment rate of 1.7% is one of the lowest in the world. Analyst Karen Tang of Deustche Bank forecast in an August research note that the casinos’ labor costs in 2014-17 will grow 10-15% annually, up from her previous forecast of 5-8%, potentially dampening margins by 0.5-0.7%. THE HENGQIN OPTION Jack Chang, vice president of the Macau Association of Economic Sciences, says now is a good time for operators to acquire land across the border to build accommodation for their staff, given the recent softness in the mainland Chinese property sector. Mr Chui announced in May that the Macau government had asked Beijing for permission to use an additional 10 square kilometers of land on Hengqin to build accommodations for migrant workers. Already, five square kilometers have been zoned on the island for development by Macau enterprises. Guangdong Gov. Zhu Xiaodan responded a month later that Hengqin must first undergo land reclamation before Macau is awarded any additional space on the island, adding that any further talks on the issue would have to wait until the completion of the reclamation. Mr Chang suggests the government could consider, in the meantime, “allowing casinos to build temporary accommodations on some idle land plots in Macau as a short-term measure”. The border between Macau and mainland China is currently open between 7 a.m. and midnight. “If the border can open around the clock, migrant workers can opt to live on the mainland side, which would reduce pressure on the local property market,” says Tommy Lau, a government-appointed legislator and president of the Macau Association of Building Contractors and Developers. Barclays analyst Phoebe Tse shares that view, stating a 24-hour border crossing “could potentially allow many lower-paid workers to live in Zhuhai and Hengqin and commute to work through these borders”. Mr Chui has said since 2011 that it is his intention to push for borders that are open around the clock, but signs of progress have only emerged recently. Chinese customs officials announced in August, shortly before the chief executive election, that the border terminal at the Macau-Zhuhai Cross Border Industrial Zone would be allowed to operate 24 hours a day, paving the way for mainland workers—the largest segment of the local migrant labor force, accounting for nearly two-thirds of the total—to travel betweenMacau and accommodations on the mainland around the clock, though the officials stopped short of revealing when the new provisions would come into effect. As part of his policy manifesto, Mr Chui reiterated that casino dealer jobs would be off-limits to non-locals for as long as he is in office. He also called on casino operators to promote locals within their ranks and “give priority in purchasing products designed and purchased inMacau”. These issues, as well as the possible imposition of other social responsibilities on casino operators, are likely to come up during the review of the Macau government’s gaming policies and the renewals of the gaming concessions expected to begin next year or 2016. Mr Chui has so far refused to offer more details apart from saying the review process will be transparent and the public actively consulted. Joey Lao of the Association of Macau Economic Sciences, another member of the chief executive election committee, says Mr Chui has made himself very clear on one point: “The economy has advanced so much in the past several years, triggering several deep-rooted issues such as the housing problems. … Mr Chui’s political manifesto clearly states there will be reins put on Macau’s biggest industry—the gaming industry—and the budget surpluses accumulated over the past decade should be invested in improving residents’ livelihoods.” “I think the chief executive has raised important issues, and we need to sit down with the government and work through the issues,” MGM China’s Grant Bowie said, “and one of those things is understanding exactly what the expectations are [and] working collaboratively together.” Feature “Mr Chui’s political manifesto clearly states there will be reins put on Macau’s biggest industry—the gaming industry— and the budget surpluses accumulated over the past decade should be invested in improving residents’ livelihoods.” Joey Lao Chi Ngai president, Association of Macau Economic Sciences Macau Chief Executive Fernando Chui Sai On