Challenges for Macao's economy
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E-mail CNTV, December 15, 2014
Macao has seen rapid economic growth since its return to China in 1999. But the Special Administration Region continues to face the challenges of managing its growing gaming industry and the need to diversify the economy away from heavy dependence on it.
Hatching new dynamics in an abandoned factory. Leading the transformation.
Andy Situ. He's been working on turning this vacant 8-story building into a creative platform. It's called the 678 Culture Creative Park. Young people in Macao can start their own businesses here at low cost and receive professional help.
"There are two major difficulties for young people in Macao to start businesses. First of all, human resources are insufficient. Most people have already found stable jobs in the gaming industry, where they get paid much more than at small and medium-sized enterprises. Second, the rapid economic growth in the region has led to rising rents, which are too expensive to start a business. So, I am trying to help and provide them with a much easier entrepreneurial environment," Situ said.
Monthly rental for a 35-square-meter office usually runs at least 10,000 Macao Patacas. Here in the park, it's only around 6,000, about 750 US dollars.
This culture creative park is not ready yet, but it's surely part of the emerging industries in Macao, where the gaming industry however has the predominant position. It has made Macao one of the world's richest regions per capita. But such a single structured economy is not conducive to the region's social and economic stability, as it leaves the city open to possible turbulence in the surrounding economies. So, economic diversification has become a necessity.
Before the handover, banking, gaming and tourism, and manufacturing, as well as real estate, were the four mainstays of the economy.
But as manufacturing shifted to the Mainland, the gaming industry has taken the leading role.
The city opened up its gaming market to competition in 2002 and the economy exploded.
In 1999, Macao's Gross Domestic Product, or GDP, was around 6 (5.93) billion US dollars.
In 2013, it had grown 8 times, surpassing 50 (51.8) billion US dollars.
But the GDP composition has never really changed.
Last year, the contribution of services to total GDP was more than 93 (93.5) percent, with 45 % from gaming and tourism, while industry took the rest. (industry 6.5%, agriculture 0%)
Lyu Kaiyan, a research fellow at Macao Polytechnic Institute, says the gaming industry has consumed too much land and human resources, making it hard for other sectors to survive.
"The economy is so reliant on tourism and gaming for its well-being. If the flow of tourists slows, it could come as a shock to the small market. To have a sustainable economic development, we have to diversify our economy and build a long-term economic model that's capable of surviving an economic down turn or a casino crisis," Kaiyan, said.
The central and SAR governments have taken measures to offer more options for the city.
For example, the establishment of a traditional Chinese medicine industry park, and the Closer Economic Partnership Arrangement, or CEPA, signed to promote economic cooperation between Macao and the mainland.
"Personally speaking, regional cooperation would promote the diversification of Macao's economy. We need to carry out the process phase by phase. The cooperation provides us with invaluable opportunities, and great potential for development. There are also more fields for us to conduct cooperation. In the long-term, the regional cooperation is vital to us," Fernando Chui Sai On, chief executive of Macao Special Administrative Region, said.
Andy's creative park is rare in Macao, and is far from enough to boost economic diversification.
But it highlights the trend of easing the over-reliance on gaming revenues.
And it's an inspiration, as Macao seeks more and better room for the development of other industries.
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