EUROPEAN COMMISSION Brussels, 8.5.2019 JOIN(2019) 7 final JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Macao Special Administrative Region: Annual Report 2018



JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Macao Special Administrative Region: Annual Report 2018 Summary Since the handover of Macao to the People’s Republic of China in 1999, the European Union and its Member States have closely followed political and economic developments in the Macao Special Administrative Region (SAR) under the ‘one country, two systems’ principle. The European Union adheres to its ‘one China’ policy and supports the ‘one country, two systems’ principle and its implementation. This annual report on developments in Macao is issued in line with the commitment given to the European Parliament in 1997. In 2018, the ‘one country, two systems’ principle continued to be implemented, to the benefit of the Macao SAR, China as a whole and the international community. The rule of law and the independence of the judiciary are upheld, as seen in the case of the judicial procedures against the opposition lawmaker Sulu Sou. Rights and fundamental freedoms are generally respected. Although civil liberties are protected by Macao’s Basic Law, the political opposition is weak and civil society is not very vocal. The Basic Law and other legislative acts do not provide for the introduction of universal suffrage. Nevertheless, the EU encourages the Macao authorities to provide for greater public involvement in the election of the SAR’s Chief Executive and the Legislative Assembly. This would increase their legitimacy, increase public support and strengthen governance. In 2018, Macao received two recommendations during the Universal Periodic Review of China, carried out in Geneva in November: one on the protection of migrant workers and one on discrimination against LGBTI people. Human trafficking remains an issue of concern. In 2018, the Macao authorities undertook or announced several initiatives to strengthen national security, which brought the SAR’s policy more into line with the views of the mainland: the Legislative Assembly passed an amendment preventing foreign judges from ruling on matters of national security, a national anthem law was passed, and plans to amend national security laws were announced. Macao’s media continued to express a broad range of views despite concerns about increasing self-censorship. Macao’s economy did well in 2018, showing strong growth driven by the gambling and tourism sectors, very low unemployment and a sound fiscal position. The government’s stated aim of diversifying the economy is, however, far from being achieved. Only 6.8 % of the revenue of Macao’s casinos came from non-gambling sources. October 2018 saw the inauguration and opening to the public of the Hong Kong-Zhuhai-Macao Bridge. This major infrastructure project links the mainland city of Zhuhai with Hong Kong and Macao, stretching both over and under the sea for 42 kilometres (55 km if access roads are included). The bridge forges better connections between the cities of the Greater Bay Area and will contribute to greater integration with the mainland, while presenting new opportunities and new challenges. The EU and Macao continued to have solid trade relations and enjoy a good level of cooperation. Political developments In May 2018, pro-democracy opposition lawmaker Sulu Sou was convicted of unlawful assembly for his participation in a protest in 2016. He had been suspended from the Legislative Assembly since December 2017. The prosecution demanded prison terms for Sulu Sou and a fellow anti-establishment activist, Scott Chiang for aggravated disobedience, but the court decided that a prison sentence was not warranted as the protest had been non-violent and short. If Sulu Sou had received a jail sentence of more than 30 days, he would have been disqualified from the Legislative Assembly, which would have further weakened the already meagre opposition. After the court’s decision, Sulu Sou was able to resume his duties as a lawmaker. The prosecution charges were criticised for being politically motivated, but the court’s decision highlights the independence of the judiciary. In March, the government announced its intention to amend its national security law ‘to keep up to date with modern society’. Issues listed as needing urgent amendment were the procedures for collecting evidence in criminal investigations and the special rules for coercive measures in evidence collection. On 3 July, the Legislative Assembly passed an amendment preventing foreign judges from ruling on matters of national security. The definition of national security is a broad one, and can thus be used to exclude foreign judges from many cases. The authorities said that the amendment was essential to protect the State’s fundamental interests. This decision was a significant step back from its current mixed legal system which allows Macao to benefit from the expertise of foreign judges. According to official figures, 10 out of 49 magistrates in Macao hold foreign citizenship, mostly Portuguese.

Veteran legal advisers of Portuguese origin at the Legislative Assembly were dismissed in August 2018. They were on temporary contracts, but the sudden decision raised concerns in civil society about increasing efforts to sideline Portuguese/foreign expertise in favour of Chinese expertise. On 14 August, Macao passed a national anthem law which includes a fine for individuals who disrespect the anthem. The law also includes teaching about the history of the anthem in school curricula. In March 2018, the organisers of the Macao Literary Festival cancelled the participation of writers Jung Chang, Suki Kim and James Church after they were informally notified that they could not be guaranteed entry to Macao. PEN Hong Kong issued a statement expressing dismay at this ‘censoring and authoritative move’. This incident should be seen in the context of a string of bans in 2017 on foreign journalists and political activists from entering Macao. National security grounds were invoked as justification for the refusals to grant entry. Although Macao’s immigration authorities have the power to refuse entry to the SAR’s territory, the lack of transparency in such cases suggests a worrying trend towards political censorship. Equal opportunities, rights and freedoms The rights and fundamental freedoms of the people of Macao continued to be generally respected and the rule of law was upheld under the ‘one country, two systems’ principle enshrined in the Basic Law of Macao. Macao has not established an independent human rights body despite the recommendation to do so issued by the UN Committee Against Torture in December 2015. The November 2018 Universal Periodic Review of China included a section on Macao. Two countries, one of them an EU Member State, made recommendations for Macao: one calling for the ratification of the International Covenant on the Protection of the Rights of All Migrant Workers and Members of their Families, and another calling for the introduction of anti-discrimination legislation to protect all marginalised groups, including LGBTI people. In previous reports, the EU has also voiced concerns about discrimination on the grounds of sexual orientation and gender identity. These concerns are particularly acute in employment, education and healthcare. Same-sex relationships are yet to be included in the law that makes domestic violence a criminal offence. The UN Committee on Economic, Social and Cultural Rights had also urged Macao to adopt comprehensive anti-discrimination legislation. Press freedom is respected. There appears to be a degree of self-censorship, particularly in the Chinese-language media and when reporting on Chinese affairs. NGOs and media activists continue to raise concerns over self-censorship. Another obstacle to freedom of the press is the difficulty to access sources and obtain full information from the authorities. Trafficking in human beings remains a problem in Macao. Macao has an anti-trafficking law but law enforcement needs to be more stringent. The number of prosecutions and convictions for trafficking remains low despite a large number of complaints. In 2018, Macao authorities sent a representative to the Seventh Bali Process Ministerial Conference and Senior Officials Meeting, signalling its willingness to further engage in international cooperation to combat trafficking in human beings. During the annual EU-Macao Joint Committee in March, Macao committed to cooperate with the EU on the fight against trafficking in human beings. The EU stands ready to renew exchanges and to cooperate with Macao to provide technical expertise on best practices to address this global challenge. Macao citizens continue to enjoy freedom of assembly on a variety of issues ranging from the 4 June Tiananmen Square vigil to labour rights. In September, a new demonstration and assembly law was approved, requiring demonstrators to submit a demonstration notice to the police instead of the Civic and Municipal Affairs Bureau. Macao has not effectively enforced freedom of association and collective bargaining as enshrined in International Labour Organisation (ILO) conventions. The EU encourages Macao to take the necessary steps to comply with ILO conventions. Macao does not have a minimum wage, except for cleaning and security workers. The government intends to introduce a universal minimum wage for all workers in 2019. Economic and social inequality is of concern. There is no official poverty rate. The government claims that only 2.3 % of Macao’s population lives in poverty, but civil society organisations estimate that the figure is close to 10 %. In September, the UN Committee on the Elimination of Racial Discrimination (CERD) stated that the need for poverty reduction was an area of concern. The Committee urged the government to take steps to eliminate ethnic economic disparities and to provide statistical indicators on economic, social and cultural rights and on the effectiveness of measures taken. Macao is pursuing the fight against corruption and has not shied away from high-profile cases. Investigations of the President of the Macao Trade and Investment Promotion Institute and of the head of Pension Fund were launched in 2018, illustrating the government’s resolve to show zero tolerance for corruption among public servants. Economic developments Macao’s GDP grew by 4.7 % year-on-year in 2018, compared with 9.7 % growth in 2017. The strong growth in 2017 came after a major downturn in the previous years when the gambling industry was affected by the anti-corruption campaign in mainland China. In 2018, the IMF ranked Macao the fourth- richest economy in the world in terms of GDP per capita. The government is implementing a long-term strategy to diversify the economy, but Macao continues to rely heavily on gaming and tourism. The upturn in 2017 and 2018 was driven by the recovery of the gambling sector and sustained inflows of tourists. In 2018, 35.8 million visitors entered the territory, a 9.8 % increase on 2017. Gambling revenue grew by 14.0 % to reach MOP 303 billion (approx. € 33 billion). Macao enjoys full employment and relies heavily on foreign workers and professionals . The unemployment rate has been persistently below 2 % over the past 7 years (including during the 2014-2016 downturn), and 2018 was no exception. Inflation rose to 3.0 % in the 2018 from 1.2 % in 2017. While 2018 growth numbers are good overall, the economy was decelerating during the year, from 7.6 % in the first half to 2.0% in the second half. The slowdown was due to a decline in investment (particularly construction investment) and to a slowdown in the growth of exports of services (particularly gaming exports). On 15 November, Chief Executive Mr Fernando Chui Sai On delivered his last policy address as Chief Executive. The primary aim remains to consolidate tourism and gaming, Macao’s main industries. The priorities are regulation, fiscalisation and promoting competitiveness. Macao is to pursue economic diversification based on its existing main industries, using existing infrastructure to grow its convention and exhibition industry, foster creative industries and develop specialised financial businesses. The government has also vowed to facilitate innovation and support SMEs by offering incentives to business and by reducing taxes. For the 12th year in a row, the government is implementing a package of financial subsidies, including cash handouts, to improve people’s livelihoods.