RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/181 
26 March 2007  
 
(07-1177) 
Trade Policy Review Body Original: English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
MACAO, CHINA 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statemen t by Macao, China is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Macao, China.Macao, China WT/TPR/G/181 
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CONTENTS 
 
    P a g e  
I. OVERVIEW  5 
II. INSTITUTIONAL DEVELOPMENTS 6 III. RECENT ECONOMIC DEVELOPMENTS 7 
 (1) Macroeconomic Developments 7 
 (2) Regional Cooperation 8 
IV. THE TRADE AND INVESTMENT ENVIRONMENT 9 
 (1) Trade environment 9 
(a) Customs Procedures 9 (b) Tariff Policy 10 
(c) Consumption Tax 10 
(d) Government Procurement 10 
 (2) The Investment Regime 11 
V. SECTORAL DEVELOPMENTS 11 
 (1) Trade in Goods 11  (2) Trade in Services 12 
(a) Overview 12 
(b) Tourism, Gaming and Related Services 12 
(c) Telecommunications 13 
(d) Financial Services 13 (e) Construction 14 
(f) Transport Services 14 
 (3) Intellectual Property Rights 14 
VI. FUTURE PROSPECTS 15 
 
 Macao, China WT/TPR/G/181 
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I. OVERVIEW 
1. The Government of the Macao Special Admini strative Region (MSAR) is pleased to present 
this report on developments in the economic and trade environment of the MSAR since the Trade 
Policy Review carried out in 2001.  During the period under review these developments have in 
general been highly positive :  on the basis of the legal and constitutional guarantees provided by the 
Basic Law, and of stability in economic and trad e policy, the economy has enjoyed sustained and 
rapid growth. 
2. Seven years after the resumption of the exercise of sovereignty of Macao by the Peoples’ 
Republic of China it can be seen that the principl e of "one country, two systems" established under 
the Basic Law, has operated very effectively. Macao, China enjoys, inter alia , a high degree of 
autonomy in economic and trade relations, with its  own currency, separate customs territory and 
border controls, as well as all the rights and obligations of a full Member of the WTO.  It remains one 
of the most open economies in the world, a free port w ith no tariffs or other charges or restrictions on 
imports and exports, welcoming fo reign investments and fundamenta lly committed to free trade. 
These policies ensue from our free-trading traditions  and from the requirements of a small economy 
wholly dependent on exchanges with the outside worl d: most importantly, they are guaranteed by the 
Basic Law. 
3. Against this background of policy stability there have been a number of major developments 
since 2001, as a result of which the experience of the economy over the period presents a strong contrast with that covered in the second Trade Po licy Review, 1994-2000.  That was a time of severe 
economic difficulty, in which investment fell, unemployment increased and the GDP contracted 
sharply. Since 2001 Macao, China has experienced su stained and rapid growth, stimulated by the 
economic recovery in Asia but res ponding in particular to the liberalization of the gaming industry 
and to a massive increase in the number of visito rs from Mainland China. This has underlined the 
critical importance of the Closer Economic Partne rship Arrangement (CEPA) with Mainland China. 
The vast manufacturing potential of the Mainland o ffers great scope for Macao’s entrepreneurs and 
suppliers of business and professional services. 
4. The economy of Macao has been transformed in  the past decade and more from its former 
dependence on manufacturing industry into one dominated by services, which now account for more 
than 90% of GDP. This transformation has been encouraged by incentives to investment in key 
service sectors and by improvements in the legal and business environment.  It will be further 
stimulated by the designation of the Historic Centre of Macao as a World Heritage Site by UNESCO 
and by the development of the city as a conven tion and conference venue. At the same time, the 
Government of the MSAR is resolved to mainta in a healthy manufacturing sector, and has introduced 
a number of policies to promote new investment , particularly by small and medium-sized 
manufacturing enterprises.  The basic policy of  the Government, in both the services and 
manufacturing sectors, is to foster investment and competition in a business environment of legal 
security, minimal intervention and low taxation. Ta x on corporate profits, which ranges from 3% to 
12%, is the lowest in the region. By investment in public infrastructure, particularly for housing and 
transport, the Government is seeking to create a phy sical environment equally conducive to efficiency 
and human welfare. 
5. Macao, China has fulfilled all of its oblig ations as a Member of the WTO and has 
strengthened its capacity to play an active part in the work of the Organization by opening the Macao 
Economic and Trade Office in Geneva in 2003.  Under the Doha Development Agenda, Macao, China 
has greatly improved its offer of commitments on services. The MSAR earnestly hopes that these WT/TPR/G/181 Trade Policy Review 
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negotiations, which are essential to sustain and st rengthen the multilateral trading system, will be 
concluded successfully. 
II. INSTITUTIONAL  DEVELOPMENTS 
6. There have been no changes in the constitutional and legislative system established in 1999 in 
accordance with the "one country, two system s" principle enunciated in the Basic Law.1  However, 
since 2001 there have been some important admini strative reforms resulting in new institutions and 
authorities. A major priority of Macao’s policy-make rs has been the promotion of reforms in public 
administration and the enhancement of government services. Administrative efficiency has been 
improved by training of civil servants and the pr ovision of "one-stop" services to the public and 
business. A sustained and successful effort has been  made to raise ethical standards in public 
administration. The Commission Against Corruption is vigorously exercising its powers to prevent 
and punish corruption and fraud in the public sector , and has earned the confidence of the general 
public, which is showing greater readiness to bring concerns and complaints about maladministration 
to the Commission. In consequence Macao was ranke d fourth, after Singapore, Japan and Hong Kong, 
in the annual report for 2006 of the Political and Economic Risk Consultancy on the Trend of 
Corruption in Asia. In addition, Macao was ranked 26th in the 2006 edition of the Transparency 
International Corruption Perceptions Index 2006 (CP I), an index ranking more than 150 countries and 
regions by their perceived levels of corruption,  as determined by expert assessments and opinion 
surveys. The Commission of Audit is simultaneous ly monitoring and improving the efficiency of 
public Departments. 
7. Cooperation with neighbouring authorities has also  been intensified, to combat cross-border 
and international crime. Macao, China is determin ed to preserve and strengthen its reputation as a 
stable and efficient place to invest and do business. 
8. Several new governmental bodies have been estab lished. Those of most interest for the 
purposes of this Review are the following:  
- The Economic and Trade Office to the WTO  
The Economic and Trade Office in Geneva is Macao’s permanent representation to the WTO. 
It was created in accordance with the Basic La w in August 2003 to participate in the full 
range of WTO affairs. It has made possible a more sustained and involvement by the MSAR 
in negotiations and the other work of the WTO. 
-  Macao Customs Service  
Macao’s unified Customs Service was created in 2001, combining the formerly separate 
Marine and Customs Police services. In additi on to all customs functions, its responsibilities 
include the prevention and suppression of comm ercial fraud and a wide range of duties 
related to external trade, notably the prot ection and enforcement of intellectual property 
rights, both at the border and internally.  
- Bureau of Telecommunications Regulation  
The Bureau of Telecommunication Regulati on was established in March 2006, replacing the 
former Office for Development of Telecommunica tions and Information Technology.  It is a 
                                                      
1 The Chief Executive, who is the head of the MSAR  Government and representative of the Region, is 
exercising his second and fina l 5-year term. The Legislative Assembly is currently in its third term (2005-2009).  Macao, China WT/TPR/G/181 
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modern independent regulator, whose duties incl ude regulation, supervision and promotion of 
telecommunications services and ensuring fair competition in the telecommunications sector. 
One of its responsibilities is the granting of ne w mobile and internet licences. The Bureau 
also promotes the competitiveness of the te lecommunications market and safeguards the 
rights and interests of users.  
- Financial Intelligence Office  
The Financial Intelligence Office is responsible for the collection and analysis of information 
concerning transactions which may be suspect or of interest to the authorities in the context of 
money-laundering. 
- Science and Technology Development Fund  
The Science and Technology Development F und, whose objective is to promote the 
development of new technologies and to e nhance scientific knowledge and capacity, was 
established in 2004. It provides funding for scien ce-related education, research and project 
development. 
III. RECENT ECONOMIC DEVELOPMENTS  
(1) Macroeconomic Developments 
9. The period under review has been one of str ong and sustained economic growth. The contrast 
with the period 1994-1999 could hardly be more striki ng. The recovery which began to manifest itself 
in 2000 was sustained throughout the period 2001- 2006, despite the outbreak of the Severe Acute 
Respiratory Syndrome (SARS) in neighbouring territories in 2003. Although this caused a decline in 
the number of tourists and in tourism revenues, the impact was  short-lived; the economy grew by 
14.2% even in 2003, and by 28.3% in 2004. In 2001-2005 real economic growth averaged 14.5% annually and GDP per capita rose from USD 14,253 to USD 24,316. Investment, both public and 
private, increased even more rapidly, by 36.1% a ye ar on average over the same period.  The rate of 
GDP growth moderated to 6.7% in 2005, but very fa st growth was resumed in the first three quarters 
of 2006. Unemployment fell to about 11,000, or 3.8%, in the third quarter of 2006. In the absence of 
major external shocks there is good reason to expect that the economy will continue to expand, even if 
the extraordinary rates of growth which followed the liberalization of the gaming industry are not 
sustained. 
10. Two major policy decisions account for most of  the accelerating growth of Macao, China’s 
economy in this period. The first was the decision by the MSAR Government to liberalize the gaming 
sector in 2002. The second was th e signing of the Closer Economic Partnership Arrangement with 
Mainland China in 2003, under which the Individual Traveller Scheme allowed for residents from 
44 Chinese cities to visit Macao on an individual b asis. This brought about a massive surge in the 
number of visitors from Mainland China, who now acc ount for more than half of all arrivals in 
Macao. Their number increased by 66% in 2004 and by  a further 9.8% to a total of 10,462,966 in 
2005, as compared with just over 3 million in 2001. Th is provided a sharp boost to all tourism-related 
industries – casinos, hotels, restaurants and transpor t – which rapidly recovered from losses caused by 
the SARS outbreak. The total number of visitors from all sources has doubled since 2000. Tourist 
facilities of all kinds, and the transport infrast ructure, are being upgraded and expanded to 
accommodate this continuing growth. 
11. The decision to liberalize the gaming industry, which had been a monopoly under one 
concessionaire for 40 years, was taken in 2001, in order to promote competition and new investment WT/TPR/G/181 Trade Policy Review 
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in the industry. In 2002 gaming licences were gr anted, after a competitive tendering process to three 
concessionaires, each of which now has one sub-c oncessionaire. The liberalization policy has been 
remarkably successful. In 2002 ther e were 11 casinos in the MSAR: by the end of 2006 the number 
had risen to 24 and it is likely to reach 28 in 2007. The scale and quality of the new establishments is 
even more striking than their number.  
12. The establishment of new casino resorts is bringing benefits far beyond increased gaming 
revenues. The grant of new gaming concessions was made conditional on major investment undertakings by the concessionaires. As a result th ey have not merely e xpanded and upgraded gaming 
facilities to the highest international level: th ey are doing the same for the entire hotel and 
entertainment sector, through the development of large integrated hotel/resorts providing gaming, accommodation, entertainment and shopping under one roof.  Foreign Direct Investment in the MSAR 
has increased dramatically in the past three y ears as a result of the liberalization of the gaming 
industry.  At the end of 2005 "cultural, recreationa l, gaming and other services" accounted for some 
60% of the total stock of FDI: the shares of the financial and industrial se ctors were about 20% and 
7% respectively. 
13. These developments, along with the major progra mme of investment in housing and public 
infrastructure undertaken by the Government, largel y explain the remarkable transformation of the 
performance and prospects of the MSAR economy in  this period. As a result, the macroeconomic 
situation of the MSAR is strong; the overall fiscal surplus rose by 102.1% per annum on average in 
2001-2005 and the Government has no external debt . The balance of payments was in surplus 
throughout the period. The large surplus on invisible trade, boosted by the growth of tourism, more than offset the growing deficit on visible trade a nd a net outflow on the capital and financial account. 
14. Since the Macao pataca (MOP) is pegged to the Ho ng Kong dollar, and thus indirectly to the 
US dollar (at a rate of about MOP8:USD1) the effect ive exchange rate index against the currencies of 
trading partners declined by about 10.5% between 2001 and September 2006. 
15. In the property sector demand and prices rose strongly over the period, and the overall rate of 
inflation rose from about 1% in 2004 to 4.7% in the third quarter of 2006. Rising demand for manpower has generated a labour shor tage, particularly in the cons truction industry and in casinos, 
which is being addressing throu gh re-training programmes and by increasing the number of non-
resident workers admitted to work in the MSAR. Th e total number of non-resident workers increased 
from 27,736 in 2004 to 62,045 in November 2006. More than half of these come from Mainland 
China. Hong Kong and the Philippines are the other major sources. The productivity of labour is 
being raised by promotion of the concept of "lifelong learning" through vocational training and 
retraining within the community. The Macao Produc tivity and Technology Transfer Centre provides 
advanced training in languages, information tec hnology and textiles and clothing manufacture.  
16. The strength of confidence in the economy is also  evident in the rapid increase in the number 
of newly formed companies, from 1,597 in 2003 to 3,072 in 2005 and 2,313 in the first three quarters 
of 2006.  
(2) Regional Cooperation 
17. These positive developments have taken place in th e context of a highly favourable external 
environment, dominated by the strong growth of  the neighbouring provinces of Mainland China and 
of East Asia as a whole. Since the MSAR economy  is heavily dependent on external demand it is 
vulnerable to adverse developments in the wo rld and regional economies. The Government is 
therefore seeking both to diversify the economy and to strengthen economic cooperation with 
neighbouring economies. Macao, China WT/TPR/G/181 
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18. The Closer Economic Partnership Arrangement  between the MSAR and Mainland China was 
signed on 17 October 2003. It is designed to lib eralize progressively trade in all goods and services 
and to facilitate trade and inv estment between the two sides. Under the CEPA, goods imported from 
Macao into Mainland China enter duty-free, if they satisfy the CEPA rules of origin. Macao does not 
impose tariffs on imports from all sources. The shar e of Macao, China’s exports to the Mainland 
benefiting from CEPA treatment is still growing, as exporters are developing th eir networks. In 2006, 
rules of origin have been agreed for 625 tariff lin es; others will follow, as applications to import 
additional products are received. Three Supplemen ts to the CEPA were signed in 2004, 2005 and 
2006.  
19. In services, China has conferred preferential treatment on MSAR suppliers through specific 
commitments in 27 service sectors, in most cas es permitting the establishment of wholly-owned 
Macao enterprises and opening the sector to Macao s uppliers one to three years earlier than is 
required by China’s commitments under the GATS.  Any company established in the MSAR may 
benefit from the CEPA’s liberalized treatment of goods and services. 
20. The CEPA also provides for closer cooperation between the two economies in a wide range of 
activities, including trade facilitation, trade and i nvestment promotion, electronic business, sanitary 
and phytosanitary measures and intellectual propert y protection. It has been notified to the WTO 
Committee on Regional Trade Agreements, which carri ed out the third round of its examination in 
April 2006.  The CEPA can already be seen to have stimulated investment by Macao service suppliers 
in the Mainland, and will increase the attraction of  the MSAR to third-country investors aiming to 
serve the Mainland market. 
21. The most significant expression of the increasing interaction between the MSAR and 
Mainland is the great increase in the number of vi sitors to Macao from the Mainland, referred to 
above. This also reflects the importance of th e CEPA, under which the Mainland introduced the 
Individual Travelers Scheme.  
22. Apart from the CEPA, Macao, China has no preferen tial trade relationships with any country. 
However, efforts have been made to sustain and deepen cooperation among the Portuguese-speaking 
countries, on the basis of Macao’s unique histor ical relationship with Portugal. The Framework 
Agreement on Cooperation between the MSAR and Po rtugal, signed in 2001, is intended to promote 
cooperation in economics, finance, science and other key areas. With the strong encouragement of the 
People’s Central Government, the role of Macao, Ch ina as a platform for trade between China and the 
Portuguese-speaking countries was emphasized. As a result, the Forum on Economic and Trade 
Cooperation between China and the seven-member Community of Portuguese-speaking Countries 
(Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, Portugal and East Timor) took place in 
Macao. In the first Forum, held in 2003, it was ag reed to establish a permanent secretariat in Macao. 
The second Forum took place in 2006, in  which it was agreed that the next  Forum will also be held in 
Macao in 2009. 
IV. THE TRADE AND INVESTMENT ENVIRONMENT 
(1) Trade Environment  
(a) Customs Procedures 
23. The Macao Foreign Trade Law, enacted in J une 2003 has simplified and streamlined all 
import and export procedures. In ge neral, imports and exports of all goods are subject only to a 
declaration, for statistical purposes, to the Macao  Customs Service: customs clearance is normally WT/TPR/G/181 Trade Policy Review 
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effected within 20 minutes, in conformity with the Service’s Performance Pledge to traders, and even 
less when declarations are made electronically.  
24. Macao has no rules of origin, and it imposes no tariffs, and no anti-dumping, countervailing 
or safeguard laws. Import licences are required for imports of live animals and plants, optical discs manufacturing equipment and raw materials,  telecommunication and radio communication 
apparatuses, wine and tobacco, arms and ammuniti on and explosives, toxic chemicals and precursory 
substances, medicines and pharmaceuticals, gasolin e and motor vehicles, ozone-depleting substances 
and plant and animal species protected by CI TES. Importation of used cars and heavy passenger 
vehicles is prohibited for environmental reasons.  
25. Export certificates, to prove Macao origin, ar e required for goods exported to the Mainland 
under CEPA and are available, at the option of the ex porter, for exports to some other markets. Export 
licences are also required for optical discs, related equipment and raw materials (in furtherance of 
intellectual property protection), textiles and clot hing, CITES species, ozone depleting substances, 
toxic chemicals and precursory substances and for arms, ammunition and explosives. The government 
provides no subsidies or other financial incentives to exports. 
26. Many customs declarations are now made electronically through the Electronic Data 
Interchange system which was initia ted in 1999. In the near future, all customs clearance procedures 
are expected to be paperless.  Almost all licence applications and approvals  can also be handled 
electronically. This is an important step forward bot h in trade facilitation and in improving trade data 
accuracy.  
(b) Tariff Policy 
27. The longstanding policy of duty-free entry for all imports from all sources will be maintained, 
irrespective of tariff bindings. However, Macao, Ch ina has bound at zero 28.6% of its tariff lines, 
including all agricultural products and products covere d by the ITA and, in the context of a successful 
tariff negotiation in the Doha Round, would exp ect to make many more bindings on industrial 
products, as a contribution to the success of the Round and to trade liberalization on the multilateral 
level.  
(c) Consumption Tax 
28. The consumption tax applied to tobacco products , alcoholic drinks, fuels and lubricants is 
levied on both imports and domestic production,  though mostly these goods are imported. Motor 
vehicles, which were previously subject to cons umption tax, have been subject since 2002 to the 
motor vehicle tax, which rises progr essively from 30% to 55% according  to the value of the vehicle. 
(d) Government Procurement 
29. Although Macao, China is not a member of the plurilateral Government Procurement 
Agreement, it is fully aware of the need to obtain the best possible value in its procurement of goods 
and services for government use, and welcomes te nders from all sources. It promotes openness and 
transparency at all stages of the procurement pr ocess, from posting of tenders to announcement of 
their results. Detailed information is available on the official website, from which tender documents 
can be downloaded. Procedures regul ating procurement are currently un der review, to align them with 
best international practice and to ensure the most efficient use of computer technology.  
30. Procurement of construction services is in gene ral handled by the Lands, Public Works and 
Transport Bureau, but for very large projects proc urement is the responsibility of the Office for the Macao, China WT/TPR/G/181 
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Development of Infrastructures, which is seeki ng wider foreign particip ation in building and 
management contracts through advertisements. For these projects, joint ventures between local and 
foreign companies are highly desirable, and it is hoped that the new website will generate additional 
participation by foreign contractors, who are requi red only to register with the Lands, Public Works 
and Transport Bureau. 
(2) The Investment Regime 
31. Macao’s economy is open to foreign investment as it is to foreign trade, as a matter of 
deliberate policy. The attractiveness of the SAR as an  investment location is founded on the rule of 
law, low rates of tax on company profits and the absence of any discrimination against foreign 
investors. There are no restrictions on imports of capital, capital equipment, raw materials or professional staff, or on the repatriation of profits and procedures for the approval of investments by 
foreigners are the same as for locals. The Macao Trade and Investment Promotion Institute operates a 
"One-Stop Service" for investors setting up and regi stering a company in Macao, its mission being to 
see the process of establishment through from start to finish. A foreign company setting up for the 
first time may be granted temporary office space an d other facilities such as meeting rooms, free of 
charge, for several months.  
32. The Government provides a number of fiscal a nd financial incentives to investment which are 
available to both local and foreign investors. Co mplete or partial exemption from property tax, 
business registration tax, corporate income tax, touris m tax, consumption tax on fuel for industrial use 
and stamp duty may be granted for projects whic h promote economic divers ification, technological 
modernization or exports to new markets or  which add value to the production chain. 
V. SECTORAL DEVELOPMENTS 
(1) Trade in Goods 
33. The export of manufactures, especially clothing a nd textiles, was traditionally the mainstay of 
Macao’s economy, but its relative importance has st eadily declined over the past twenty years and 
more, as the services sector has accounted for an ever larger share of ex ports, investment and 
employment. This trend will certainly continue. Employment in manufacturing stood at under 15% in 
2005, compared with 28.5% in 1992. 
34. The deficit on visible trade increased throughout  the review period. Goods exports increased 
by 2.6% annually in 2001-2005, while goods imports rose by 13.7% a year. The United States 
continues to be by far the largest market for th e MSAR’s merchandise exports. The share of the EU, 
in second place, declined steadily over the peri od while those of China and Hong Kong, China 
increased. Over 80% of imports, by contrast, ca me from Asia, 43.1% from China alone in 2005. 
Given the great preponderance of textiles and clothing in the industrial history of Macao, the 
termination of the system of quotas under the Ag reement on Textiles and Clothing in January 2005 
was bound to be a historic turning point: textiles and clothing still account for over 90% of domestic 
exports, and of these about 90% had traditionally gone to the two great restricted markets of the USA 
and the EU, which would now be open to imports fro m all sources. In the event, exports to these 
markets fell steeply in 2005, but recovered in the first three quarters of 2006. 
35. The Concordia Industrial Park, established on  reclaimed land in 1993, has now been 
supplemented by the Macao section of the Macao- Zhuhai Transborder Industr ial Park, which opened 
in December 2006. When fully developed it will provid e 27 industrial units of different sizes, all of 
which have already been allocated to manufacturer s of pharmaceuticals, textiles and clothing, health WT/TPR/G/181 Trade Policy Review 
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foods, chemicals and information technology among ot her products. Preference has been given in the 
allocation of sites to projects offering new techno logy, high added value or similar benefits to 
Macao’s industrial development. Round-the-clock dire ct access to the customfree zone of the Zhuhai 
section will greatly facilitate cross-border c ooperation and exports to the Mainland.  
(2) Trade in Services 
(a) Overview 
36. The future growth of the economy neverthel ess depends on the services sector, which is 
already by far the most important in terms of employment, GDP, investment and tax revenues. The 
Government’s policy is to create conditions in whic h the market can work efficiently, with minimal 
restrictions on market entry and business operations but with all means of re gulation and supervision 
in place. The objective is not merely to promote dom estic growth, but to expl oit the potential of the 
MSAR as a services hub for the Pearl River Delta re gion and further afield, building on its strengths 
in business and other services and on its history of East-West interchange. 
37. The openness of trade in services is exemplif ied in Macao, China’s revised offer of 
commitments on services in the Doha Round. Macao, China supports the GATS principle of 
progressive liberalization, in line with Members’ level of development, but the Government also 
believes that a successful negotiation on services s hould benefit developing and least-developed 
members in particular.  Whereas in the Uruguay Round Macao had made commitments in financial services, tourism and leasing services, the revised offer is far more comprehensive, with commitments 
in eight of the eleven sectors covered by the GATS (73 sub-sectors). This is perhaps one of the most 
improved offers so far submitted in the Round, and is intended as a contribution to the success of the 
services negotiations. 
38. The commitment to liberalization of the service industries on this scale is a new departure for 
Macao. An evolutionary step is the liberalizati on of the gaming industry and mobile telephony 
services. Nevertheless, some other public utilities such as water and electricity supply are provided 
under concessions due to the small size of the domestic market.  
(b) Tourism, Gaming and Related Services 
39. The extraordinary transformation of the econom ic performance and prospects of the MSAR 
since 2001 essentially results from the massive in crease in visitors from Mainland China and 
investments in casino resorts following the liberali sation of the gaming industry. In 2005 visitor 
receipts and gaming revenues together accounted for 72% of GDP and direct taxes on gaming 
provided around 70% of total tax revenues. In tota l, taxes account for about 33% of the industry’s 
gross revenues. As the Individual Travellers Scheme  is extended to new citie s and regions in China, 
and major new casino/hotel complexes now planned or  building come into operation, the flow of 
visitors and tourist revenues will increase. Funds generated by gaming will finance the improvements 
in infrastructure needed to serve the needs of visitors. 
40. It is the Government’s stated policy to deve lop the city as a world-class tourist venue, 
symbolised by the designation of the Historic Centre of Macao as a UNESCO’s World Heritage Site and taking full advantage of its cultural diversity an d vitality. Over the next ten years 58 new hotels 
and around 41,000 new rooms will be added to the city’s capacity.  Business tourism is being 
promoted by the creation of sophisticated exhibition and conference facilities. Tourism based on meetings, incentives, conventions a nd exhibitions (MICE) is expected  to enhance the consumption of 
individual visitors and prolong their stay in the city. The casino operators themselves are diversifying Macao, China WT/TPR/G/181 
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into family-oriented and conference services. New fac ilities have also been developed for cultural and 
sporting events. In order to host the 4th East Asian Games, which it did with great success in 2005, 
Macao created a full range of stadia to the high est international standards, and these will form a 
permanent attraction for events of this kind. 
(c) Telecommunications 
41. Basic telecommunication services have been  provided since 1981 by the Companhia de 
Telecomunicações de Macao, under a concessionary ag reement. The exclusive rights provisions were 
extended in 1999 to 2011. However, the scope of the Agreement was limited to fixed lines, data 
communication and leased lines. Internet services a nd mobile telephony were  opened to competition 
in 2000 and 2002 respectively. As a result, Macao h as five mobile operators, ten internet service 
providers and eight internet content providers. Further, a public tender for 3G operation licenses was 
opened in April 2006. Three licenses were granted in itially in October. 3G mobile services will be 
available in 2007. Broadcasting services are also ve ry dynamic, with five television and two radio 
broadcasting companies. Where the regulatory framework is concerned, the Bureau of 
Telecommunications Regulation was establishe d in May 2006 to administer the Basic 
Telecommunications Law and related regulations an d to ensure fair competition in the sector. In 
addition, the Government is conducting a feasibility  study on the establishment of a second fixed or 
wireless network for the pr ovision of broadband services. 
(d) Financial Services 
42. The financial sector has always been notably op en to foreign particip ation.  The absence of 
restrictions on investment and of discrimination against foreign suppliers was reflected in Macao’s 
very comprehensive commitments on insurance and banking services under Mode 3 of the GATS in 
the Uruguay Round. In terms of foreign investment, the MSAR financial sector is undoubtedly one of 
the most open in the world.  
43. At the end of 2006 there were 27 banks opera ting in Macao, 12 locally incorporated and 
15 incorporated elsewhere. 5 banks, 1 locally inco rporated, opened in the period 2001-2005. Only two 
banks, plus the Government-owned Postal Savings Ba nk, are registered with local capital; all others 
are registered with foreign capital. Mainland Chin a and Portugal between them accounted for about 
70% of banking assets at the end of 2005. All banks operating in Macao have full access to central 
bank credit (with the exception of offshore banks) lo cal financial markets and settlement and clearing 
facilities. 
44. The regulation and supervision of the entire fi nancial sector is the responsibility of the 
Monetary Authority of Macao (AMCM), which also  performs the functions of a central bank. Its 
supervisory structure and procedures for banking were  assessed in 2001 by the IMF, which concluded 
that they were in full compliance with the Basel Core Principles for Effective Banking Supervision. 
45. Particular attention has been paid to prev ent from money-laundering activities. The Law on 
Prevention and Suppression of the Crime of Money Laundering came into force in April 2006, greatly 
strengthening the authorities’ capacity to detect suspect transactions and puni sh offenders. Moreover a 
new Financial Intelligence Office has been establishe d with responsibility for collecting and analysing 
information on suspect transactions.  
46. There are no restrictions on the entry of fore ign insurers into the market, other than an 
obligation to invest in stated fu nd assets and to have their general representative permanently resident 
in Macao. Licensing criteria are the same for all insu rers seeking authorisation to carry on insurance 
business and all are subject to identical prudential su pervision, whatever their origin. In 2006 there WT/TPR/G/181 Trade Policy Review 
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were 24 insurers operating in Macao, 16 of them overseas-based. Overseas insurers accounted for 
some 83.7% of life insurance business in the third quarter of 2006, and for about 22.4% of non-life 
business. Insurers are not permitted to provide  life and non-life insurance concurrently.   
(e) Construction 
47. The construction sector has enjoyed unprecedented growth in recent years, as result of three 
factors: a boom in residential and commercial bu ilding, major development such as the third Macao-
Taipa Bridge and the new sporting facilities for the East Asian Games, and the building of new casino 
resorts. 
(f) Transport Services 
48. Air cargo services are flourishing in the MSAR: cargo movements through Macao 
International Airport increased ten-fold betw een 2001 and 2005. Passenger movements increased 
from 3.8 to 4.2 million, but are expected to multip ly in response to Macao’s development as a world-
class tourist destination. Air Macau is the sole  concessionary operator of scheduled passenger and 
cargo services, but during 2006 it granted sub-concessi ons to 2 other companies to operate services to 
destinations not served by Air Macau. Two additi onal companies operate helicopter and executive jet 
services respectively. Apart from Air Macau, there are 12 airlines currently conducting business in 
Macao. Because of the expected rise in regional to urist traffic and in cargo traffic boosted by re-
exports from the Mainland, the International Airport needs to be expanded, and this is now underway. 
49. Maritime transport services are also being expa nded to handle the growing number of visitors. 
In addition to the enlargement of the main ferry terminal, two new terminals are now under 
construction, one of them adjacent to the Airpor t. There are no restrictions on the number of sea 
transport operators. 
(3) Intellectual Property Rights 
50. There have been important developments sinc e 2001 in the protection of intellectual property 
rights – not through amendment of the law, which ha d been comprehensively reformed in 1999, but in 
its enforcement. The legislation, including the Laws on Copyright and Re lated Rights and on 
Industrial Property, both enacted in 1999, was revi ewed by the TRIPS Council in 2000, Macao, China 
having volunteered to be one of the first devel oping Members to undertake the review process. 
Further, the legislation is being revised, inter alia  to reflect the fact that since 2004 the examining 
entity for patent applications has been the State Intellectual Property Office of the PRC: invention 
patents granted in the Peoples’ Republic can now be extended to the MSAR. But the system, which 
implements the MSAR’s obligations under the TR IPS Agreement, is firmly established. Its 
management is the responsibilit y of the Intellectual Property Department of Macao Economic 
Services.  
51. Confidence in the system, and in the health of the economy, is indicated by the very striking 
increase in the number of applications for industr ial property rights over th e period under review.  
Trademark applications increased from 1,696 in 20 01 to 4,651 in 2005, and applications for patents 
and models and designs increased in proportion, t hough from much lower levels. An Association of 
Copyright Owners has recently been established in Macao. The system for the registration of rights is 
essentially the same as in the EU, having  been based on that of Portugal. 
52. The Macao Customs Service was created in November 2001 with strong powers to prevent 
and punish violations of intellect ual property rights, and its efforts have been remarkably successful. 
The production and sale of illicit optical discs in Macao, has been effectively eliminated. As a Macao, China WT/TPR/G/181 
 Page 15 
 
 
consequence, more than 30 illegal producers whic h were operating before 1999 have been closed 
down. 25 production lines have been seized. Two le gitimate operations, a plant producing blank discs 
and a stamper factory, remain in operation. Th e importation and exportation of raw materials and 
machinery for disc production takes place under licence and is stringently controlled.  
53. Retailing of optical discs is also strictly controlle d:  retailers wishing to sell them must obtain 
advance authorisation and discs must carry an indi vidual Source Identification code. Using its powers 
of random inspection of retailers and seizure of pirated products, the Customs Service has virtually 
eliminated the retail sale of pirated optical disc s. In consequence the Macao Customs Service was 
awarded the "Sixth Annual Global Anti- Counte rfeiting Award" by the Global Anti-Counterfeiting 
Group in 2003. 
VI. FUTURE PROSPECTS   
54. Prospects for the economy of Macao, China for th e foreseeable future are very positive. In the 
short term - strong but sustainable growth is exp ected on the basis of majo r investment commitments 
already scheduled, in the city’s in frastructure, in hotels and casinos, in housing and in manufacturing. 
As these projects mature, complementing the investment  boom of the last five years, the signature of 
CEPA, the liberalization of gaming and the designati on of the Historic Centre of Macao as a World 
Heritage Site, the flow of visitors and business i nvestors will increase. And in the medium and longer 
term the economic integration of the Macao with  the surrounding regions will deepen, strengthening 
its role as a regional business and service centre an d as a bridge to the Mainland economy. It is the 
firm intention of the Government, as stated in the 2007 Policy Address, to promote diversification of 
the economy and the development of a more varied  and sophisticated tourism sector, based on the 
territory’s unique mix of cultures and its outst anding modern facilities: gaming will remain an 
important constituent of the economy, but Macao is not positioned merely as a gaming centre. 
55. The dramatic recovery of Macao, China’s ec onomy since 2001 would have been impossible 
without the great stimulus of external demand a nd investment. However, the economy’s ability to 
respond so effectively to this stimulus is a refl ection of its inherent strengths: the confidence and 
flexibility derived from free trade, efficient regulation and the rule of law. In a highly competitive and 
dynamic region, Macao’s future as a modern economy , and especially its conti nuing ability to attract 
investment, will depend on the transparency, fairness and efficiency of its regulatory system, and on 
the essential discipline of non-discrimination. The Government will maintain these conditions, as it 
will maintain Macao’s free port status and its r espect for all WTO obligations as the foundation for 
the effective formulation and implemen tation of economic and trade policy. 
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