REPORT - MACAU Part 1. The safest bet in Asia

Redefining Asia's map of top destinations

Chief Executive of Macau SAR Government

Macau has burst onto the international scene since it became a special administrative region in 1999. gaming and tourism are transforming beyond recognition to create asia’s greatest leisure, gaming and entertainment spot.

From sleepy colonial outpost to the hottest thing in gaming this side of Nevada, Macau has burst onto the international scene in the six years since the former Portuguese territory became, like neighboring Hong Kong, a Special Administrative Region (SAR) of China in 1999. This year casinos on this tiny peninsula in the southern Chinese province of Guangdong and its nearby islands are expected to rake in more than $5 billion – effectively overtaking the Las Vegas Strip. And with gaming revenues expected to grow by 20% per year over the next five years, Macau could become the world’s most lucrative gaming center by the end of the decade. Macau-linked stocks are soaring, gross domestic product expanded by 28% in 2004, and real estate in the 10 square miles (26 square kilometers) that make up the region is being snapped up by the second. Add to this the roughly $3 billion of resort and entertainment projects now in the pipeline and estimates of more than $12 billion in investment still to come, as well as a potential tourist market of over one billion in mainland China where per-capita income is rapidly on the rise: Macau is not only what may be the most exciting growth story of the decade, but also looks set to permanently redefine Asia’s map of top world-class destinations.

Much of the region’s transformation stems from a 2001 decision by the government to end what had been a 40-year monopoly in the gaming sector by local businessman Stanley Ho. When his license expired in 2002, the SAR government, under the guidance of its Chief Executive Edmund Ho, opened the sector to new players, offering three new permits up for bids. Stanley Ho was awarded one, and the others went to outsiders Steve Wynn of Las Vegas Mirage and Bellagio fame, and to Galaxy Resort and Casino, a consortium of investors from Hong Kong who subsequently granted a sub-concession to Sheldon Adelson, the mastermind behind Las Vegas’s Venetian resort. The fact that both Mr. Wynn and Mr. Adelson have been credited with reinventing Las Vegas as a family tourism and convention Mecca plays perfectly into government plans to expand beyond Macau’s main game.

The goal is to develop the city into a regional hub for business conferences, family-oriented entertainment and host of international events, such as this year’s East Asian Games.

Chief Executive Edmund Ho, the man behind Macau’s resurgence, was appointed by the Chinese government directly after the handover. Spillover from the gaming boom is helping to fuel other sectors of the economy, and Mr. Ho has been intent on using government revenues from gaming, which make up more than 70% of its total, to support this trend and to preserve Macau’s other attractions – its historical monuments and unique cultural fusion. The “one country, two systems” policy of the central Chinese government was a part of the handover agreement and grants Macau a high degree of autonomy for the next fifty years. According to Edmund Ho, it has aided immensely in the SAR’s development. The Closer Economic Partnership Agreement (CEPA) between Macau and mainland China, which came into effect in 2004, will also provide a further boost to local industries.

He comments: “To continue developing, we intend to fully utilize the resources and opportunities offered within CEPA, as well as those in the Pan Pearl River Delta agreement between Macau, Hong Kong and nine mainland provinces.”