Economy of Macau
From Wikipedia, the free encyclopedia
| Economy of Macau | |
| Currency | pataca (MOP) |
|---|---|
| Fiscal year | calendar year |
| Trade organisations | WTO |
| Statistics | |
| GDP (PPP) | US$10 billion (2004) (142nd) |
| GDP growth | 39.4%[1] (Q2 2007) |
| GDP per capita | US$28,853[2] (2006) |
| GDP by sector | agriculture: 0.1%, industry: 7.2%, services: 92.7% (2002 est.) |
| Inflation (CPI) | 4.9%[1] (Q2 2007) |
| Population below poverty line |
no data |
| Labour force | 275,500[3] (2006) |
| Labour force by occupation |
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) |
| Main industries | tourism, gambling, clothing, textiles, electronics, footwear, toys |
| External | |
| Exports | $3.465 billion (2004) |
| Export goods | clothing, textiles, footwear, toys, electronics, machinery and parts |
| Main 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 |
| Main import partners | Mainland China 54%, Japan 13%, Hong Kong 12%, Germany 5%, Taiwan 5% (2005) |
| Public finances | |
| Public debt | $3.1 billion (2004) |
| Revenues | $3.16 billion (FY05/06) |
| Expenses | $3.16 billion (FY05/06) |
| Economic aid | none |
| Main data source: CIA World Factbook All values, unless otherwise stated, are in US dollars |
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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.[4]
During the first three quarters of 2007, Macau registered year-on-year GDP increases of 31.4%.[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.
Contents |
[edit] 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.[5] 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.[6] 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.[6]
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.[5] 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.[7] 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.[5]
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.[5] 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.
[edit] Labor and employment
| Employed population by occupation 2007[8] | ||
|---|---|---|
| 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.[9]
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.[1][3] 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[10]. 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).[11].
[edit] The monetary system
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.[12]
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 currency is freely used and represents about two-thirds of the currency in circulation[citation needed], while 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.
| MOP per USD | Period |
|---|---|
| 8.01 | 2000 |
| 7.99 | 1999 |
| 7.98 | 1998 |
| 7.99 | 1997 |
| 7.962 | 1996 |
| 8.034 | 1993-95 |
[edit] 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, 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.
[edit] Sectors
[edit] Tourism and gambling
| Visitor arrivals by place of residence in 2006[13] | |
|---|---|
| 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. 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.[7] Macau had nine casinos in the 1990s; gambling reportedly represented 20 to 25% of Macau's GDP.[citation needed] 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[1], the largest casino in the world as measured by total number of table games, in 2004[14][15] and Venetian Macau[2] in 2007; Wynn Resorts, which opened Wynn Macau[3] 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 [4] 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[16], making Macau the highest-volume gambling center in the world.[17]. 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.[13] Macau is expected to receive between 24 and 25 million visitors in 2007.[18] 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.[19] Macau is currently rated as one of the world's top tourism destinations by the World Tourism Organisation.[20]
[edit] 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.
[edit] Banking
Macau is an offshore financial centre, a tax haven, and a free port with no foreign exchange control regimes.[21] [22][23] The offshore finance business is regulated and supervised by the Monetary Authority of Macao,[24] while the regulation and supervision of the offshore non-finance business is mainly controlled by the Macau Trade and Investment Promotion Institute.[25] 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'.[26]
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.
[edit] 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.
[edit] 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)
[edit] See also
[edit] References
- ^ a b c "DSEC - for data on the principal statistical indicators". DSEC. Retrieved on 2007-12-27.
- ^ "DSEC - for data on GDP and GDP per capita". DSEC. Retrieved on 2007-12-27.
- ^ a b "DSEC - for the current data of labor force and employed population". DSEC. Retrieved on 2007-12-27.
- ^ a b "Economic statistics from Monetary Authority of Macao". AMCM. Retrieved on 2007-12-23.
- ^ a b c d Chan, S. S. (2000). The Macau Economy. Macau: Publications Centre, University of Macau. ISBN 99937-26-03-6.
- ^ a b Fung, Bong Yin (1999). Macau: a General Introduction (in Chinese). Hong Kong: Joint Publishing (H.K.) Co. Ltd.. ISBN 962-04-1642-2.
- ^ a b (2007) Macau Yearbook 2007. Government Information Bureau of the Macau SAR. ISBN 978-99937-56-09-5.
- ^ "DSEC - for the current data of employed population by occupation". DSEC. Retrieved on 2007-12-27.
- ^ "DSEC - for the current data of unemployment rate and labor force participation rate". DSEC. Retrieved on 2007-12-27.
- ^ "Rare Macau protest turns violent". BBC News - Business. Retrieved on 2007-12-27.
- ^ "Profile of China: The problems behind Macau's prosperity" (in Chinese). BBC Chinese. Retrieved on 2008-01-15.
- ^ "The history of pataca". Monetary Authority of Macao. Retrieved on 2008-01-04.
- ^ a b "DSEC - for the current data of visitor arrivals by place of residence". DSEC. Retrieved on 2008-01-08.
- ^ "Sands Macao-is the largest casino in the world". Ready Bet Go. Retrieved on 2006-08-24.
- ^ Richard N. Velotta and Jeff Simpson. "Las Vegas gaming operations are building Chinese resort town". Las Vegas Sun. Retrieved on 2006-11-02.
- ^ "Macau, a tiny special administrative region of China, appears to have overtaken the famous Las Vegas Strip as the world's top gambling destination". BBC News - Business. Retrieved on 2007-12-28.
- ^ David Barboza. "Asian Rival Moves Past Las Vegas". New York Times. Retrieved on 2007-01-24.
- ^ "Macau expected to receive between 24 and 25 million tourists in 2007". MacauHub. Retrieved on 2007-03-15.
- ^ Theodore Koumelis. "German travel trade give most promising destination award to Macau". Travel Daily News. Retrieved on 2007-03-15.
- ^ "World's Top Tourism Destinations World's Top Tourism Destinations (absolute no.) - Top 25". The Organisation of World Tourism. Retrieved on 2007-11-15.
- ^ Luis Pereira. "Offshore Operation in Macao". Macau Business. Retrieved on 2007-09-05.
- ^ Errico and Musalem (1999). "Countries, Territories, and Jurisdictions with Offshore Financial Centers". IMF. Retrieved on 2006-09-05.
- ^ "Macau Currency". AsiaRooms.com. Retrieved on 2008-01-02.
- ^ "Monetary Authority of Macao The homepage of Monetary Authority of Macao". The Monetary Authority of Macao, the Govt. of Macau SAR. Retrieved on 2007-11-15.
- ^ "IPIM The Macau Trade and Investment Promotion Institute". The Macau Trade and Investment Promotion Institute, the Govt. of Macau SAR. Retrieved on 2007-11-15.
- ^ "Hemscott the web site of Hemscott and Empowering Inverstors". Hemscott.com. Retrieved on 2007-11-15.
[edit] Further reading
- Chan, S. S. (2000). The Macau Economy. Publications Centre, University of Macau. ISBN 99937-26-03-6.
- Fung, Bong Yin (1999). Macau: a General Introduction (in Chinese). Joint Publishing (H.K.) Co. Ltd.. ISBN 962-04-1642-2.
[edit] External links
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