Economy of Macau
Encyclopedia
The economy of Macau has remained one of the most open in the world since its reversion to China in 1999. Apparel exports and gambling
-related tourism are mainstays of the economy. Since Macau
has little arable land and few natural resources, it depends on mainland China
for most of its food, fresh water, and energy imports. Japan
and Hong Kong
are the main suppliers of raw materials and capital goods. Although Macau was hit hard by the 1997-98 Asian financial crisis and the global downturn in 2001, its economy grew approximately 13.1% annually on average between 2001 and 2006.
During the first three quarters of 2007, Macau registered year-on-year GDP increases of 31.4%. A rapid rise in the number of mainland visitors due to China's easing of travel restrictions, increased public works expenditures, and significant investment inflows associated with the liberalization of Macau's gaming industry drove the five-year recovery. The budget also returned to surplus after 2002 because of the surge in visitors from China and a hike in taxes on gambling profits, which generated about 70% of government revenue.
arrived in the 16th century, during the Age of Discovery. In 1535, the Portuguese traders obtained by bribing the right to anchor ships in Macau harbors and engage in trading activities. Portuguese and Chinese merchants flocked to Macau, and it quickly became an important regional trading center in Portugal's lucrative trade along three major routes: Macau-Malacca
-Goa
-Lisbon
, Guangzhou
-Macau-Nagasaki and Macau-Manila
-Mexico
. However, with the decline of Portugal as a world power in the 17th and 18th centuries, the trading routes were challenged by other powers such as the Dutch and the British. After China ceded Hong Kong
to the British in 1842, Macau's position as a major regional trading center declined further still because larger ships were drawn to the deep water port of Victoria Harbor. In an attempt to reverse the decline, from 1848 to the early 1870s Macau engaged in the infamous trade of coolies (slave laborers) as a transit port, shipping locals from southern China to Cuba
, Peru
, and other South America
n ports to work on plantations or in mines.
Fishing re-emerged as a dominant economic activity in Macau as it lost its position as a regional trading center. In the early 1920s, over 70% of Macau's 84,000 residents were engaged in fishing. Meanwhile, some other businesses started to develop, such as matches, firecrackers, incense and fishing-boat building. But the most notable was the gambling business. Gambling was first legalized in the 19th century in an attempt to generate revenues for the government. The first casino monopoly concession was granted to the Tai Xing Company in 1937. The company was, however, too conservative to fully exploit the economic potential of gambling. The industry saw a major breakthrough in 1962 when the government granted the Sociedade de Turismo e Diversoes de Macau
(STDM), a syndicate jointly formed by Hong Kong and Macau businessmen, the monopoly rights to all forms of gambling. The STDM introduced western-style games and modernized the marine transport between Macau and Hong Kong, bringing millions of gamblers from Hong Kong every year.
In the 1970s Macau also saw a rapid development in its manufacturing sector. With Macau's low-cost operating environment and its surplus quotas under the Multi Fiber Arrangement (MFA), many Hong Kong industrialists established textile and garment manufacturing bases in Macau. At its golden age in the 1980s, the manufacturing sector accounted for about 40% of Macau's GDP; textiles and garments accounted for about 90% of Macau's total visible exports. However, the manufacturing sector has experienced a gradual decline since the early 1990s due to phasing out of the MFA quota system and the rising labor costs relative to mainland China and Southeast Asian countries.
The work force in Macau is mainly composed of manufacturing; construction; wholesale and retail; hotels and restaurants; financial services, real estate, and other business activities; public administration and other personal and social services, including gaming; transport, storage and communications. Due to the double-digit economic growth in recent years, the unemployment rate dropped from the record high 6.8% in 2000 to 3.1% in Qtr 3, 2007.
With the opening of several casino resorts and other major constructions underway, it is reported that many sectors, especially the construction sector, experience a shortage of labor. The government responds by importing labor from other neighboring regions, including mainland China, Hong Kong
, the Philippines
and India
. Currently the number of imported labors stands at a record high of 75,391 (Q2 2007), representing more than a quarter of the labor force in Macau. Some local workers complain about the lack of jobs due to the influx of cheap imported labor. Some also claim that the problem of illegal labor is severe. Another concern is the widening of income inequality in the region: Macau's Gini coefficient
, a popular measure of income inequality where a low value indicates a more equal income distribution, rises from 0.43 in 1998 to 0.48 in 2006. It is higher than those of other neighbouring regions, such as mainland China (0.447), South Korea
(0.316) and Singapore
(0.425).
Macau adopts the so-called currency board system
under which the legal tender
, pataca
(MOP), is 100 percent backed by foreign exchange reserves, the Hong Kong dollar
(HKD). Moreover, the currency board, Monetary Authority of Macao
(AMCM), has a statutory obligation to issue and redeem pataca on demand against Hong Kong dollar at a fixed exchange rate and without limit. The pataca is pegged to the Hong Kong dollar at a rate of 1.03 MOP per HKD, which is maintained by the AMCM.
Each pataca divides into 100 avos. Coins are issued in 10, 20, and 50 avos and 1, 2, 5, and 10 patacas (2 and 10 patacas coins are rarely used in the territory); notes are in 5, 10, 20, 50, 100, 500, and 1000 pataca denominations. Hong Kong dollar is freely used and accounts for more than half of the total deposits in Macau's banks. In addition, Chinese yuan
is also widely accepted. Two banks issue currency: the Banco Nacional Ultramarino
and the Bank of China
(starting from October 1995).
The historical exchange rates between the pataca and the US dollar (USD) are given below.
In the second half of the 20th century, Macau's economy was diversified with the development of light industry, the influx of migrants from mainland China to serve as a labor force, and increased tourism. Portugal's efforts to develop economic and cultural links between Macau and Brazil and Portuguese holdings in Africa
, however, were not successful. Economic ties to the European Union
and Taiwan
are considered important aspects of Macau's economic role as part of the People's Republic of China. Direct access to the neighboring Zhuhai
Special Economic Zone
facilitates trade with mainland China. As a special administrative region, Macau functions as a free port
and as a separate customs territory.
Tourism is the backbone of Macau's economy, and much of it geared towards gambling, which was legalized in the 19th century and has since been the linchpin of the economy and an important source of revenue for the government. From 1962, the gambling industry operated under a government-issued monopoly licence by Stanley Ho
's Sociedade de Turismo e Diversões de Macau
(STDM), which replaced the Tai Heng Entertainment Corporation that had held a gaming monopoly for the previous 24 years. In the 1990s Macau had nine casinos and gambling reportedly represented 20 to 25% of Macau's GDP. The monopoly ended in 2001 when the gaming industry was liberalized and several casino operators from Las Vegas
entered the market. These new operators include Las Vegas Sands
, which opened Sands Macao http://www.sands.com.mo/, the largest casino in the world as measured by total number of table games, in 2004 and Venetian Macau http://www.lasvegassands.com/venMacau.html in 2007; Wynn Resorts
, which opened Wynn Macau
http://www.wynnmacau.com/intro.htm in 2006; and MGM Mirage
, which opened MGM Grand Macau
in 2007.
In addition, other casino owners, including Australian Crown Casino
and Hong Kong Galaxy Entertainment Group http://www.galaxyresorts.com/ have also opened several hotel casinos in Macau. As a result of the surge in number of casinos and construction from other new casino entrants, Macau's economy has been growing rapidly in recent years. Gaming revenues from Macau's casinos are now greater than those of Las Vegas Strip
, making Macau the highest-volume gambling center in the world. Numerous other hotel casinos, including Galaxy Cotai Megaresort and Ponte 16, are also to be opened in near future.
Due to the opening of the new hotel casinos and China's easing of travel restrictions, there has been a rapid rise in the number of mainland visitors. From 9.1 million visitors in 2000, arrivals to Macau has grown to 18.7 million visitors in 2005 and 22 million visitors in 2006, with over 50% of the arrivals coming from mainland China and another 30% from Hong Kong. Macau is expected to receive between 24 and 25 million visitors in 2007. Macau also received the Future Award 2007, voted by 26,000 German travel trade members of GoAsia, for being regarded as the most promising future tourism destination in Asia
. Macau is currently rated as one of the world's top tourism destinations
by the World Tourism Organisation.
Much of Macau's textile industry has moved to the mainland as the Multi-Fiber Agreement is phased out. The territory has relied more on gambling and tourism-related services to generate growth.
, a tax haven
, and a free port
with no foreign exchange control regimes.
The offshore finance business is regulated and supervised by the Monetary Authority of Macao
, while the regulation and supervision of the offshore non-finance business is mainly controlled by the Macau Trade and Investment Promotion Institute. In 2007, Moody's Investors Service upgraded Macau's foreign and local currency government issuer ratings to 'Aa3' from 'A1', citing its government's solid finances as a large net creditor. The rating agency also upgraded Macau's foreign currency bank deposit ceiling to 'Aa3' from 'A1'.
There are twenty other licensed banks, sixteen of which are foreign. Macau has five of the top 500 commercial banks in Asia, including Banco Tai Fung and Industrial and Commercial Bank of China
.
and tourism
underscores a degree of risk for Macau’s economy. Because the economy is so reliant on tourism and gambling for its well-being, if the flow of tourists slows, it could come as a shock to the small market. The push for diversification came in the closing years of Portuguese administration, under Governor General Vasco Rocha Vieira
, and has continued to the present, under Chief Executive Edmund Ho
. The government is seeking foreign investment as a means of economic diversification as well. Much of the foreign investment into Macau, however, has gone into the gaming sector after the end of the monopoly in 2001. Otherwise, foreign companies have entered into the mobile phone
market and internet services after telecommunications market liberalization in 2001.
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)
Electricity - consumption: 1.899 billion kWh (2004)
Electricity - exports: 0 kWh (2004)
Electricity - imports: 153.3 million kWh (2004)
Gambling in Macau
Gambling in Macau has been legal since the 1850s when the Portuguese government legalized the activity in the colony. Since then, Macau has become known worldwide as the "Monte Carlo of the Orient"....
-related tourism are mainstays of the economy. Since Macau
Macau
Macau , also spelled Macao , is, along with Hong Kong, one of the two special administrative regions of the People's Republic of China...
has little arable land and few natural resources, it depends on mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
for most of its food, fresh water, and energy imports. Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
and Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
are the main suppliers of raw materials and capital goods. Although Macau was hit hard by the 1997-98 Asian financial crisis and the global downturn in 2001, its economy grew approximately 13.1% annually on average between 2001 and 2006.
During the first three quarters of 2007, Macau registered year-on-year GDP increases of 31.4%. A rapid rise in the number of mainland visitors due to China's easing of travel restrictions, increased public works expenditures, and significant investment inflows associated with the liberalization of Macau's gaming industry drove the five-year recovery. The budget also returned to surplus after 2002 because of the surge in visitors from China and a hike in taxes on gambling profits, which generated about 70% of government revenue.
History
Macau was a barren fishing village with a population of about 400 before the PortuguesePortugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
arrived in the 16th century, during the Age of Discovery. In 1535, the Portuguese traders obtained by bribing the right to anchor ships in Macau harbors and engage in trading activities. Portuguese and Chinese merchants flocked to Macau, and it quickly became an important regional trading center in Portugal's lucrative trade along three major routes: Macau-Malacca
Malacca
Malacca , dubbed The Historic State or Negeri Bersejarah among locals) is the third smallest Malaysian state, after Perlis and Penang. It is located in the southern region of the Malay Peninsula, on the Straits of Malacca. It borders Negeri Sembilan to the north and the state of Johor to the south...
-Goa
Goa
Goa , a former Portuguese colony, is India's smallest state by area and the fourth smallest by population. Located in South West India in the region known as the Konkan, it is bounded by the state of Maharashtra to the north, and by Karnataka to the east and south, while the Arabian Sea forms its...
-Lisbon
Lisbon
Lisbon is the capital city and largest city of Portugal with a population of 545,245 within its administrative limits on a land area of . The urban area of Lisbon extends beyond the administrative city limits with a population of 3 million on an area of , making it the 9th most populous urban...
, Guangzhou
Guangzhou
Guangzhou , known historically as Canton or Kwangchow, is the capital and largest city of the Guangdong province in the People's Republic of China. Located in southern China on the Pearl River, about north-northwest of Hong Kong, Guangzhou is a key national transportation hub and trading port...
-Macau-Nagasaki and Macau-Manila
Manila
Manila is the capital of the Philippines. It is one of the sixteen cities forming Metro Manila.Manila is located on the eastern shores of Manila Bay and is bordered by Navotas and Caloocan to the north, Quezon City to the northeast, San Juan and Mandaluyong to the east, Makati on the southeast,...
-Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
. However, with the decline of Portugal as a world power in the 17th and 18th centuries, the trading routes were challenged by other powers such as the Dutch and the British. After China ceded Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
to the British in 1842, Macau's position as a major regional trading center declined further still because larger ships were drawn to the deep water port of Victoria Harbor. In an attempt to reverse the decline, from 1848 to the early 1870s Macau engaged in the infamous trade of coolies (slave laborers) as a transit port, shipping locals from southern China to Cuba
Cuba
The Republic of Cuba is an island nation in the Caribbean. The nation of Cuba consists of the main island of Cuba, the Isla de la Juventud, and several archipelagos. Havana is the largest city in Cuba and the country's capital. Santiago de Cuba is the second largest city...
, Peru
Peru
Peru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
, and other South America
South America
South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...
n ports to work on plantations or in mines.
Fishing re-emerged as a dominant economic activity in Macau as it lost its position as a regional trading center. In the early 1920s, over 70% of Macau's 84,000 residents were engaged in fishing. Meanwhile, some other businesses started to develop, such as matches, firecrackers, incense and fishing-boat building. But the most notable was the gambling business. Gambling was first legalized in the 19th century in an attempt to generate revenues for the government. The first casino monopoly concession was granted to the Tai Xing Company in 1937. The company was, however, too conservative to fully exploit the economic potential of gambling. The industry saw a major breakthrough in 1962 when the government granted the Sociedade de Turismo e Diversoes de Macau
Sociedade de Turismo e Diversões de Macau
The Sociedade de Turismo e Diversões de Macau, SA is a company in Macau owned by Stanley Ho and his family. Historically it held a monopoly to Macau's gambling industry as the only licensee for casinos. In 2002, the Macau government began issuing more licenses and the monopoly was broken...
(STDM), a syndicate jointly formed by Hong Kong and Macau businessmen, the monopoly rights to all forms of gambling. The STDM introduced western-style games and modernized the marine transport between Macau and Hong Kong, bringing millions of gamblers from Hong Kong every year.
In the 1970s Macau also saw a rapid development in its manufacturing sector. With Macau's low-cost operating environment and its surplus quotas under the Multi Fiber Arrangement (MFA), many Hong Kong industrialists established textile and garment manufacturing bases in Macau. At its golden age in the 1980s, the manufacturing sector accounted for about 40% of Macau's GDP; textiles and garments accounted for about 90% of Macau's total visible exports. However, the manufacturing sector has experienced a gradual decline since the early 1990s due to phasing out of the MFA quota system and the rising labor costs relative to mainland China and Southeast Asian countries.
Labor and employment
| Employed population by occupation 2007 | ||
|---|---|---|
| Occupation | No. in thousands | |
| Senior officials/managers | 14.6 | |
| Professionals | 9.9 | |
| Technicians | 28.1 | |
| Clerks | 83.7 | |
| Service & sale workers | 63.2 | |
| Workers in agriculture/fishery | 0.8 | |
| Craft & similar workers | 33.7 | |
The work force in Macau is mainly composed of manufacturing; construction; wholesale and retail; hotels and restaurants; financial services, real estate, and other business activities; public administration and other personal and social services, including gaming; transport, storage and communications. Due to the double-digit economic growth in recent years, the unemployment rate dropped from the record high 6.8% in 2000 to 3.1% in Qtr 3, 2007.
With the opening of several casino resorts and other major constructions underway, it is reported that many sectors, especially the construction sector, experience a shortage of labor. The government responds by importing labor from other neighboring regions, including mainland China, Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
, the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
and India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
. Currently the number of imported labors stands at a record high of 75,391 (Q2 2007), representing more than a quarter of the labor force in Macau. Some local workers complain about the lack of jobs due to the influx of cheap imported labor. Some also claim that the problem of illegal labor is severe. Another concern is the widening of income inequality in the region: Macau's Gini coefficient
Gini coefficient
The Gini coefficient is a measure of statistical dispersion developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper "Variability and Mutability" ....
, a popular measure of income inequality where a low value indicates a more equal income distribution, rises from 0.43 in 1998 to 0.48 in 2006. It is higher than those of other neighbouring regions, such as mainland China (0.447), South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
(0.316) and Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
(0.425).
The monetary system
Currency board
A currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the exchange rate target....
under which the legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
, pataca
Macanese pataca
The pataca is the currency of Macau. It is subdivided into 100 avos , with 10 avos called ho in Cantonese. The abbreviation MOP$ is commonly used....
(MOP), is 100 percent backed by foreign exchange reserves, the Hong Kong dollar
Hong Kong dollar
The Hong Kong dollar is the currency of the jurisdiction. It is the eighth most traded currency in the world. In English, it is normally abbreviated with the dollar sign $, or alternatively HK$ to distinguish it from other dollar-denominated currencies...
(HKD). Moreover, the currency board, Monetary Authority of Macao
Monetary Authority of Macao
The Monetary Authority of Macao is a regulatory institution established on December 20, 1999, upon the transfer of the sovereignty of Macau from Portugal to the People's Republic of China as the Macau Special Administrative Region .- History :...
(AMCM), has a statutory obligation to issue and redeem pataca on demand against Hong Kong dollar at a fixed exchange rate and without limit. The pataca is pegged to the Hong Kong dollar at a rate of 1.03 MOP per HKD, which is maintained by the AMCM.
Each pataca divides into 100 avos. Coins are issued in 10, 20, and 50 avos and 1, 2, 5, and 10 patacas (2 and 10 patacas coins are rarely used in the territory); notes are in 5, 10, 20, 50, 100, 500, and 1000 pataca denominations. Hong Kong dollar is freely used and accounts for more than half of the total deposits in Macau's banks. In addition, Chinese yuan
Chinese yuan
The yuan is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.A yuán is also known colloquially as a kuài . One yuán is divided into 10 jiǎo or colloquially máo...
is also widely accepted. Two banks issue currency: the Banco Nacional Ultramarino
Banco Nacional Ultramarino
Banco Nacional Ultramarino was a Portuguese bank with operations throughout the world, especially in Portugal's former overseas provinces. It ceased existence as an independent legal entity in Portugal following its merger with Caixa Geral de Depósitos, the government-owned savings bank, in...
and the Bank of China
Bank of China
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. It was founded in 1912 by the Government of the Republic of China, to replace the Government Bank of Imperial China. It is the oldest bank in China...
(starting from October 1995).
The historical exchange rates between the pataca and the US dollar (USD) are given below.
| MOP per USD | Period |
|---|---|
| 8.01 | 2000 |
| 7.99 | 1999 |
| 7.98 | 1998 |
| 7.99 | 1997 |
| 7.962 | 1996 |
| 8.034 | 1993-95 |
Trade
In 1999, Macau's free-market economy produced total exports of US$2.2 billion (MOP 17.6 billion) and consisted mainly of textiles and garments, toys, electronic goods, and footwear. Total imports for the same period reached US$2 billion (MOP 16.3 billion), and consisted mostly of raw materials and semi-manufactures, consumer goods, capital goods, and mineral fuels and oils. Total reexports were about US$317 million (MOP 2.5 billion). In 1999 positive growth rates were seen in all three categories. Principal import trade partners in 1999 were China (35.7%), Hong Kong (18.1%), the European Union (12.9%), Taiwan (9.5%), Japan (6.7%), the United States (5.1%), and other countries (12%). Exports went to the United States (47%), the European Union (30.2%), China (9.2), Hong Kong (6.8%), and other countries (6.8%).In the second half of the 20th century, Macau's economy was diversified with the development of light industry, the influx of migrants from mainland China to serve as a labor force, and increased tourism. Portugal's efforts to develop economic and cultural links between Macau and Brazil and Portuguese holdings in Africa
Africa
Africa is the world's second largest and second most populous continent, after Asia. At about 30.2 million km² including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area...
, however, were not successful. Economic ties to the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
and Taiwan
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
are considered important aspects of Macau's economic role as part of the People's Republic of China. Direct access to the neighboring Zhuhai
Zhuhai
Zhuhai is a prefecture-level city on the southern coast of Guangdong province in the People's Republic of China. Located in the Pearl River Delta, Zhuhai borders Jiangmen to the northwest, Zhongshan to the north, and Macau to the south. Zhuhai was one of the original Special Economic Zones...
Special Economic Zone
Special Economic Zone
A Special Economic Zone is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws...
facilitates trade with mainland China. As a special administrative region, Macau functions as a free port
Free port
A free port or free zone , sometimes also called a bonded area is a port, port area or other area with relaxed jurisdiction with respect to the country of location...
and as a separate customs territory.
Tourism and gambling
| Visitor arrivals by place of residence in 2006 | |
|---|---|
| Place of residence | No. of visitor arrivals (in thousands) |
| Mainland China | 11985.6 |
| Hong Kong | 6940.7 |
| Taiwan (ROC) | 1437.8 |
| Southeast Asia | 693.4 |
| Total | 21998.1 |
Tourism is the backbone of Macau's economy, and much of it geared towards gambling, which was legalized in the 19th century and has since been the linchpin of the economy and an important source of revenue for the government. From 1962, the gambling industry operated under a government-issued monopoly licence by Stanley Ho
Stanley Ho
Stanley Ho, GBM, GLM, GBS, GML, OBE , also known as Ho Hung Sun, Stanley Ho Hung Sun, is an entrepreneur in Hong Kong and Macau. Ho is sometimes nicknamed "The King of Gambling", reflecting the government-granted monopoly he held of the Macau gambling industry for 40 years...
's Sociedade de Turismo e Diversões de Macau
Sociedade de Turismo e Diversões de Macau
The Sociedade de Turismo e Diversões de Macau, SA is a company in Macau owned by Stanley Ho and his family. Historically it held a monopoly to Macau's gambling industry as the only licensee for casinos. In 2002, the Macau government began issuing more licenses and the monopoly was broken...
(STDM), which replaced the Tai Heng Entertainment Corporation that had held a gaming monopoly for the previous 24 years. In the 1990s Macau had nine casinos and gambling reportedly represented 20 to 25% of Macau's GDP. The monopoly ended in 2001 when the gaming industry was liberalized and several casino operators from Las Vegas
Las Vegas metropolitan area
The Las Vegas Valley is the heart of the Las Vegas-Paradise, NV MSA also known as the Las Vegas–Paradise–Henderson MSA which includes all of Clark County, Nevada, and is a metropolitan area in the southern part of the U.S. state of Nevada. The Valley is defined by the Las Vegas Valley landform, a ...
entered the market. These new operators include Las Vegas Sands
Las Vegas Sands
Las Vegas Sands Corp. is an integrated resort company based in Paradise, Nevada, USA.-History:Founded in 1988, the company was the owner and operator of the Sands Hotel, which was demolished in 1996 to make room for The Venetian, which opened in 1999....
, which opened Sands Macao http://www.sands.com.mo/, the largest casino in the world as measured by total number of table games, in 2004 and Venetian Macau http://www.lasvegassands.com/venMacau.html in 2007; Wynn Resorts
Wynn Resorts
Wynn Resorts Limited is a publicly traded corporation based in Paradise, Nevada that is a developer and operator of high end hotels and casinos. It was formed on October 25, 2002 by former Mirage Resorts Chairman and CEO Stephen A...
, which opened Wynn Macau
Wynn Macau
Wynn Macau , owned by Wynn Resorts, is a luxury integrated resort in Macau Peninsula, Macau, People's Republic of China, offering gaming combined with a deluxe hotel, restaurants, designer shops, spa, and a "Performance Lake". It is the first Las Vegas-style integrated resort in Asia. It opened on...
http://www.wynnmacau.com/intro.htm in 2006; and MGM Mirage
MGM Mirage
Not to be confused with the Las Vegas, Nevada based casino/resort operator Resorts International Holdings.MGM Resorts International is a Paradise, Nevada based corporation that brands itself as a global hospitality company. It is the second largest gaming company in the world by revenue - about...
, which opened MGM Grand Macau
MGM Grand Macau
MGM Macau is a 35-story, 600-room casino resort in Macau which officially opened on 18 December 2007. Under a sub concession approved by the Macau government, the project is owned and operated as a 50-50 joint venture between MGM Resorts International and Pansy Ho Chiu-king, daughter of Macau...
in 2007.
In addition, other casino owners, including Australian Crown Casino
Crown Casino
Crown Casino and Entertainment Complex is a large casino and entertainment precinct located on the south bank of the Yarra River, in Melbourne, Australia. Crown Casino is a unit of Crown Limited....
and Hong Kong Galaxy Entertainment Group http://www.galaxyresorts.com/ have also opened several hotel casinos in Macau. As a result of the surge in number of casinos and construction from other new casino entrants, Macau's economy has been growing rapidly in recent years. Gaming revenues from Macau's casinos are now greater than those of Las Vegas Strip
Las Vegas Strip
The Las Vegas Strip is an approximately stretch of Las Vegas Boulevard in Clark County, Nevada; adjacent to, but outside the city limits of Las Vegas proper. The Strip lies within the unincorporated townships of Paradise and Winchester...
, making Macau the highest-volume gambling center in the world. Numerous other hotel casinos, including Galaxy Cotai Megaresort and Ponte 16, are also to be opened in near future.
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
. Macau is currently rated as one of the world's top tourism destinations
World Tourism rankings
The World Tourism rankings are compiled by the United Nations World Tourism Organization as part of their World Tourism Barometer publication, which is released three times throughout the year...
by the World Tourism Organisation.
Manufacturing
Macau's manufacturing industries emerged in the first few decades of the 20th century, which mainly consisted of junk building, factories for matches, firecrackers and incense. Modern industries, however, did not take off until the 1970s when the textiles and garments industry was rising rapidly, while other light industries such as plastics, electronics, toys, and artificial flowers also experienced respectable growth. Textiles and garments further increased its dominance in the manufacturing sector towards the end of the 1980s.Much of Macau's textile industry has moved to the mainland as the Multi-Fiber Agreement is phased out. The territory has relied more on gambling and tourism-related services to generate growth.
Banking
Macau is an offshore financial centreOffshore financial centre
An offshore financial centre , though not precisely defined, is usually a small, low-tax jurisdiction specializing in providing corporate and commercial services to non-resident offshore companies, and for the investment of offshore funds....
, a tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
, and a free port
Free port
A free port or free zone , sometimes also called a bonded area is a port, port area or other area with relaxed jurisdiction with respect to the country of location...
with no foreign exchange control regimes.
The offshore finance business is regulated and supervised by the Monetary Authority of Macao
Monetary Authority of Macao
The Monetary Authority of Macao is a regulatory institution established on December 20, 1999, upon the transfer of the sovereignty of Macau from Portugal to the People's Republic of China as the Macau Special Administrative Region .- History :...
, while the regulation and supervision of the offshore non-finance business is mainly controlled by the Macau Trade and Investment Promotion Institute. In 2007, Moody's Investors Service upgraded Macau's foreign and local currency government issuer ratings to 'Aa3' from 'A1', citing its government's solid finances as a large net creditor. The rating agency also upgraded Macau's foreign currency bank deposit ceiling to 'Aa3' from 'A1'.
There are twenty other licensed banks, sixteen of which are foreign. Macau has five of the top 500 commercial banks in Asia, including Banco Tai Fung and Industrial and Commercial Bank of China
Industrial and Commercial Bank of China
Industrial and Commercial Bank of China Ltd. is the largest bank in the world by profit and market capitalization. It is one China's 'Big Four' state-owned commercial banks .It was founded as a limited company on January 1, 1984...
.
Economic diversification
The large role of gamingGambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...
and tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
underscores a degree of risk for Macau’s economy. Because the economy is so reliant on tourism and gambling for its well-being, if the flow of tourists slows, it could come as a shock to the small market. The push for diversification came in the closing years of Portuguese administration, under Governor General Vasco Rocha Vieira
Vasco Joaquim Rocha Vieira
Vasco Joaquim Rocha Vieira was the last Governor of Macau.-Background:He is the son of João da Silva Vieira Vasco Joaquim Rocha Vieira (b. Lagoa, 16 August 1939) was the last Governor of Macau.-Background:He is the son of João da Silva Vieira Vasco Joaquim Rocha Vieira (b. Lagoa, 16 August 1939)...
, and has continued to the present, under Chief Executive Edmund Ho
Edmund Ho
Edmund Ho Hau Wah, GCIH, GML, GCM was the Chief Executive of the Macau Special Administrative Region of the People's Republic of China. He is now the vice-chairman of the 11th Chinese People's Political Consultative Conference....
. The government is seeking foreign investment as a means of economic diversification as well. Much of the foreign investment into Macau, however, has gone into the gaming sector after the end of the monopoly in 2001. Otherwise, foreign companies have entered into the mobile phone
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
market and internet services after telecommunications market liberalization in 2001.
Energy
Electricity - production: 1.893 billion kWh (2004)fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)
Electricity - consumption: 1.899 billion kWh (2004)
Electricity - exports: 0 kWh (2004)
Electricity - imports: 153.3 million kWh (2004)
See also
- Economy of the People's Republic of ChinaEconomy of the People's Republic of ChinaThe People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
- Gambling in MacauGambling in MacauGambling in Macau has been legal since the 1850s when the Portuguese government legalized the activity in the colony. Since then, Macau has become known worldwide as the "Monte Carlo of the Orient"....
- Tourism in MacauTourism in MacauMacau is famous for the blend of Portuguese and Chinese cultures and its gambling industry, which includes Casino Lisboa, Macau, Sands Macau, The Venetian Macao, and Wynn Macau.-External links:*...
- Individual Visit SchemeIndividual Visit SchemeThe Individual Visit Scheme began on July 28, 2003. It allowed travelers from Mainland China to visit Hong Kong and Macau on an individual basis...