True economic diversification of the MSAR could be achieved by promoting and attracting new investments, developing the city as an international trade hub, supporting business licensing, enforcing tax benefits and improving human resources, according to a joint report by the Macau European Chamber of Commerce (MECC) and the Institute of European Studies of Macau (IEEM).
The growth of medical assistance needs, energy consumption, border control security, food safety issues, traffic and waste management were also considered Macau’s greatest current challenges.
The report suggests that in order to solve these issues the MSAR Government could take inspiration from several policies inspired by European Union (EU) measures for waste management, tourism re-branding, environmentally friendly mobility, and low energy consumption.
The current licensing system is described as involving ‘too many departments and taking too long,’ making European companies avoid investing locally, with the authors suggesting a one-stop service should be created by the Macao Trade and Investment Institute (IPIM) for supporting overseas investors in obtaining approvals, and simplifying licensing and administrative procedures.
Favourable taxation policies such as removing double taxation on income and dividends for holding companies and offering tax benefits for leasing companies were also considered as ways to attract investment.
One important step considered by the report was that a ‘clear’ future plan for the development of the gaming and hotel industry and the granting of concessions in the MSAR was essential to generate ‘confidence’ to outside investors.
In order to promote imports and exports between the European Union and the MSAR, the report suggests import logistics in the city be developed by ‘simplifying the import procedures for small orders’ and by developing the storage capacity of Coloane Port.
The report mentions that European companies are facing difficulties in using the Closer Economic Partnership Arrangement (CEPA) zero-tariff agreement as a gateway to Mainland China due to various policies enforced in different Chinese provinces, which should be standardised.
The authors also suggested Macau companies should benefit from preferential treatment when investing in Mainland China, so that European companies could use them as front-runners in the region, and that a mechanism for import and export credit insurance should be put in place.
According to the report, the European Union’s total bilateral trade with Macau in 2015 amounted to 851 million euros (MOP7.27 billion/US$908.2 million), a 39.3 per cent increase from the previous year, with EU countries being Macau’s second largest supplier after Mainland China.
EU imports comprised 22 per cent of all imports to the MSAR in 2015 with France, Italy and Germany the main countries of origin, the report states. Most imports from the EU comprised luxury goods, food and beverages, machinery and transport equipment, while European countries mainly imported machinery, textiles and clothing, food and other raw materials from the MSAR.
Opening the gates
The report considered that current policies restricting experienced and qualified workers from being hired by Macau companies are reducing the city’s competitiveness and quality of its labour force.
‘Taking public infrastructure industry as an example, [a] highly qualified European engineer who wants to work for [the] Macau public work sector will need to finish a two-year internship in Macau and pass an examination before being able to work here. In this case, most of the companies would not be willing to pay for an expert doing internship work. The restrictions might constrain quality delivery in the long term,’ the report stated.
The local government opening up the local market to skilled foreign professionals is described as beneficial to both the economy and local society.
The report also suggests that such openness of the MSAR market should be extended to local government procurement contracts, suggesting that foreign companies be allowed to join public tenders, so that local companies could ‘learn from their experienced practices and further refine their work.’
The further improvement of translation personnel training, especially in European languages such as Portuguese, was also described as a favourable initiative for expanding the local market globally.
Quality of life issues
The report also focuses heavily on how to improve current challenges to sustainable development and environmental issues created by traffic, excessive energy consumption and waste management.
The solution would encompass the implementation of smart city measures similar to those implemented by the EU for developing sustainable mobility, urban planning and infrastructure.
The current number of registered vehicles in the city and the narrowness of local streets are described as factors leading to increased traffic congestion and pollution, an issue that could be improved by applying electric public transportation, thus reducing carbon emissions.
As at November 2016, some 250,871 vehicles were registered in Macau – including cars and motorbikes – an almost 400 per cent increase since the city’s handover to Mainland China, according to data from the Statistics and Census Services (DSEC).
The report also addresses waste management issues created by an annual increase of solid waste of between 8 per cent to 10 per cent, while the recycling rate is only 0.11 per cent of all waste production. Furthermore, the report estimates that by 2020 the total volume of waste the city will have to incinerate will reach 4,000 tonnes.
The study also indicates that the city’s economic growth and local residents’ lifestyle would lead the city’s energy consumption to reach 106 kilowatts per hour by 2020, a 29 per cent increase over a 10-year period.
Macau residents are said to ‘lack environmentally friendly living and consumption patterns,’ suggesting the city government could apply EU minimum energy efficiency measures such as standards and rules on labelling and developing environmentally friendly designs for products, services and infrastructure.
The report suggests certain European Union initiatives for waste re-use be applied, such as a ‘five-step waste hierarchy’ where recycling and re-use would be placed as a priority, while landfill disposal would be considered as a last resort.
Tourism and health
In addition, the report addresses the largest current challenges of the city’s quality of life and suggests measures applied in the European Union to correct them.
With life expectancy in the MSAR having risen to almost 83 years of age and with the local population expected to reach 700,000 people in 2020, further strain will fall upon medical services and elderly resident care, notes the report.
The report states that to meet the increase in the population the number of doctors and nurses should increase by 500 and 639, respectively, until 2020, as increased medical assistance needs increase.
Developing the city into a World Centre of Tourism and Leisure is described as a goal that could benefit from a ‘coherent strategy for diversifying the promotion of tourist services and capitalising on heritage’. Macau’s ‘brand’ images should be developed in co-operation with neighbouring cities in order to complement promotional efforts and differentiate its tourist appeal from other international destinations.