Macau economy punches way above its weight

Macau is the Monaco of Asia. Although legally part of the Peoples Republic of China, this small little territory, just 29 kilometers squared and one of the most densely populated in the world, exists under the ‘one country, two systems’ policy of the Chinese government and therefore has its own internal legal system and political makeup. It is this which has enabled Macau, a tiny city-state with no natural resources, to develop one of the highest GDPs per capita in Asia, after Singapore.

This is largely down to the government’s leniency on gaming regulation, which has made Macau into something of a Las Vegas for Chinese and other regional and international tourists. Tourism is our primary industry and the two islands that constitute Macau are filled with luxury hotels and world-class resorts.

And, according to recent reports in the Macau news media, we’re set to cash in on a rise in revenue for the gambling industry in Asia. The results of a survey, which interviewed 21 experts on the gambling industry from around the world, found that 2 out of 3 of them expected Asia to become the number one gambling region in the world (in terms of total revenue produced), in the next three to four years.

This means that the United States will no longer occupy the top spot and when one considers the figures, it becomes clear that Macau stands to benefit the most if expert opinion turns out be true. Total revenue from gambling in the US was around $30 billion in 2009, while Macau’s revenues from the gaming industry in the same year were $14 billion.

Our 29 square kilometers therefore generate almost half of what the US does from the gaming industry, this is in large part because we have one of the highest concentrations of casinos in the world, but if Asia does in fact eclipse the gaming revenues of the US, our little city-state seems poised to reap as much as half of that increase in revenue, around 50%, if our gaming industry grows proportionately to our current contribution.

And international experts believe it will, between 2005 and 2009 the industry in Macau tripled in size and none of the experts interviewed expect this trend to change over the next few years.

Macau news reports recently seemed to support this claim, indeed in the same week that the findings of the survey were announced, Wynn Resorts, a Las Vegas-based casino operator, announced that their Macau subsidiary Wynn Macau had plans to develop a third casino complex here. The mega casino resort was still in the planning stages, but they said development could begin in 2011, with a completion date in 2013 or 2014.

Such growth will be fueled by Macau’s current tourism base, the Chinese mainland.

“The middle class is taking over from the wealthy. We need to focus on this new wave of Chinese customers and find out what preferences they have,” said Francis Lui Yiu- tung, deputy chairman of Galaxy Entertainment Group, referring to the group’s expansion plans in Macau.

Lui added that Macau’s gaming industry is fueled predominantly by tourists from the mainland, in 2009 China had a middle class population of around 380 million with disposable income of around $5 billion, by 2025 our tourism base will have grown to over 500 million people with a disposable income of over $13 billion. This alone shows the huge potential for growth in the gaming industry in Macau. 

There is another side to Macau that should not be forgotten as the cash comes rolling in. Most of our tourists are casino-bound, or here to take advantage of our shimmering malls and luxury resorts. But Macau, although small, has a soul and a culture and history that should not be cast aside, even if we are constantly referred to as a ‘Chinese gambling enclave’ by the international media.

The façade of the Mater Dei church within the Ruins of St. Paul stands as a witness to the religious history of the territory and the faith of the Macanese, while Buddhist temples and ancient Catholic churches are symbols of religious tolerance and cultural diversity. Our colonial architecture bears witness to the struggles and hardships endured in making Macau the thriving city-state it is today and, like our casinos and hotels, we have among the highest number of museums in relation to our population in the world.

So, as the gaming industry, and tourism along with it, grows in the next few years, the government should make an effort to promote the full diversity of Macau to attract a range of tourists and not just those with a poker face.