Economy of Macau

Infobox Economy
country = Macau


width =
caption =
currency = pataca (MOP)
year = calendar year
organs = WTO
rank = 142nd
gdp = US$10 billion (2004)
growth = 39.4% cite web|url=http://www.dsec.gov.mo/index.asp?src=/english/indicator/e_piem_indicator.html|title=DSEC - for data on the principal statistical indicators|accessdate=2007-12-27|author=|publisher=DSEC|language=] (Q2 2007)
per capita = US$28,853 [cite web|url=http://www.dsec.gov.mo//english/indicator/e_pib_indicator_1.html|title=DSEC - for data on GDP and GDP per capita|accessdate=2007-12-27|author=|publisher=DSEC|language=] (2006)
sectors = agriculture: 0.1%, industry: 7.2%, services: 92.7% (2002 est.)
inflation = 4.9% (Q2 2007)
poverty = no data
labor = 275,500cite web|url=http://www.dsec.gov.mo/index.asp?src=/english/indicator/e_ie_indicator_2.html|title=DSEC - for the current data of labor force and employed population|accessdate=2007-12-27|author=|publisher=DSEC|language=] (2006)
occupations = manufacturing 13.7%, construction 10.5%, transport and communications 5.9%, wholesale and retail trade 14.6%, restaurants and hotels 10.3%, gambling 17.9%, public sector 7.8%, other services and agriculture 19.3% (2005 est.)
unemployment = 3.8% (Q2 2006)
industries = tourism, gambling, clothing, textiles, electronics, footwear, toys
exports = $3.465 billion (2004)
export-goods = clothing, textiles, footwear, toys, electronics, machinery and parts
export-partners = US 57%, mainland China 17%, Hong Kong 11%, Germany 7%, (2005)
imports = $3.478 billion c.i.f. (2004)
import-goods = raw materials and semi-manufactured goods, consumer goods (foodstuffs, beverages, tobacco), capital goods, mineral fuels and oils
import-partners = Mainland China 54%, Japan 13%, Hong Kong 12%, Germany 5%, Taiwan 5% (2005)
debt = $3.1 billion (2004)
revenue = $3.16 billion (FY05/06)
expenses = $3.16 billion (FY05/06)
aid = none
cianame = mc
spelling = us

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. cite web |url=http://www.amcm.gov.mo/economic_statistics/economic.htm |title=Economic statistics from Monetary Authority of Macao|accessdate=2007-12-23|publisher= AMCM]

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 since 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 Portuguese arrived in the 16th century, during the Age of Discovery.cite book |title=The Macau Economy|last=Chan|first=S. S.|year=2000|publisher=Publications Centre, University of Macau|location=Macau|isbn=99937-26-03-6] 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 the lucrative Portugal's trade along three major routes: Macau-Malacca-Goa-Lisbon, Guangzhou-Macau-Nagasaki and Macau-Manila-Mexico.cite book |title=Macau: a General Introduction |last=Fung |first=Bong Yin|authorlink= |coauthors= |year=1999|publisher=Joint Publishing (H.K.) Co. Ltd. |location=Hong Kong |isbn=962-04-1642-2|language =Chinese] 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 American 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.cite book|author=|year=2007|title=Macau Yearbook 2007|publisher=Government Information Bureau of the Macau SAR|isbn=978-99937-56-09-5|pages=] 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.

Labor and employment

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. In 1962, the gambling industry operated under a government-issued monopoly license 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. Macau had nine casinos in the 1990s; gambling reportedly represented 20 to 25% of Macau's GDP.Fact|date=January 2008 The monopoly ended in 2001 when the gaming industry was liberalized and several casino operators from Las Vegas attempted to enter 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 [cite web|url=http://www.readybetgo.com/news/sands-Macao-largest--2277.html|title=Sands Macao-is the largest casino in the world|accessdate=2006-08-24|publisher=Ready Bet Go] [cite web|url=http://www.lasvegassun.com/sunbin/stories/gaming/2006/sep/09/566648537.html|title=Las Vegas gaming operations are building Chinese resort town|accessdate=2006-11-02|author=Richard N. Velotta and Jeff Simpson
publisher=Las Vegas Sun] 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 [cite web|url=http://news.bbc.co.uk/2/hi/business/6083624.stm|title=Macau, a tiny special administrative region of China, appears to have overtaken the famous Las Vegas Strip as the world's top gambling destination|accessdate=2007-12-28|author=|publisher=BBC News - Business|language=] , making Macau the highest-volume gambling center in the world. [cite web|url=http://www.nytimes.com/2007/01/24/business/worldbusiness/24Macao.html?ex=1327294800&en=150850fd9370148a&ei=5088&partner=rssnyt&emc=rss|title=Asian Rival Moves Past Las Vegas |accessdate=2007-01-24|author=David Barboza|publisher=New York Times] . 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. [cite web|url=http://www.macauhub.com.mo/en/news.php?ID=2999|title=Macau expected to receive between 24 and 25 million tourists in 2007|accessdate=2007-03-15|publisher=MacauHub] 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. [cite web|url=http://www.traveldailynews.com/new.asp?newid=36081&subcategory_id=107|title=German travel trade give most promising destination award to Macau|accessdate=2007-03-15|author=Theodore Koumelis|publisher=Travel Daily News] Macau is currently rated as one of the world's top tourism destinations by the World Tourism Organisation. [cite web|url=http://www.world-tourism.org/facts/eng/pdf/indicators/Top25_ita.pdf World's Top Tourism Destinations|title=World's Top Tourism Destinations (absolute no.) - Top 25 |accessdate=2007-11-15|publisher=The Organisation of World Tourism]

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 centre, a tax haven, and a free port with no foreign exchange control regimes. [cite web|url=http://www.macaubusiness.com/index.php?id=666|accessdate=2007-09-05|title=Offshore Operation in Macao|author=Luis Pereira|publisher=Macau Business] [cite web|url=http://www.imf.org/external/np/mae/oshore/2000/eng/back.htm#table1|title=Countries, Territories, and Jurisdictions with Offshore Financial Centers|accessdate=2006-09-05|author=Errico and Musalem (1999)|publisher=IMF] [cite web|url=http://www.asiarooms.com/travel-guide/macau/macau-overview/macau-currency.html|title=Macau Currency|accessdate=2008-01-02|author=|publisher=AsiaRooms.com] The offshore finance business is regulated and supervised by the Monetary Authority of Macao, [cite web|url=http://www.amcm.gov.mo Monetary Authority of Macao|title=The homepage of Monetary Authority of Macao|accessdate=2007-11-15|author=|publisher=The Monetary Authority of Macao, the Govt. of Macau SAR|language=] while the regulation and supervision of the offshore non-finance business is mainly controlled by the Macau Trade and Investment Promotion Institute. [cite web|url=http://www.ipim.gov.mo/en/index2.asp IPIM|title=The Macau Trade and Investment Promotion Institute|accessdate=2007-11-15|publisher=The Macau Trade and Investment Promotion Institute, the Govt. of Macau SAR] 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'. [cite web|url=http://www.hemscott.com/news/latest-news/item.do?newsId=47556025388962 Hemscott|title=the web site of Hemscott and Empowering Inverstors |accessdate=2007-11-15|publisher=Hemscott.com]

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 Banco Seng Heng.

Economic Diversification

The large role of gaming 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 Hau-wah. 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.

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)

ee also

* Economy of the People's Republic of China
* Tourism in Macau
* Individual Visit Scheme

References

Further reading

*cite book
first = S. S. | last = Chan
title = The Macau Economy
publisher = Publications Centre, University of Macau
id = ISBN 99937-26-03-6
year = 2000
*cite book
title = Macau: a General Introduction
first = Bong Yin | last = Fung
publisher = Joint Publishing (H.K.) Co. Ltd.
year = 1999
id = ISBN 962-04-1642-2
language =Chinese

External links

* [http://www.gov.mo/egi/Portal/index.jsp Portal of the government of Macau]
* [http://www.dsec.gov.mo/e_index.html Statistics and Census Service of Macau]