JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ANNUAL REPORT MACAO 2010
Date: 2011-04-14
Institutions: European Commission, High Representative of the Union
Subjects: EU relations, Macao, activity report, cooperation policy, economic policy, economic situation, political situation

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EUROPEAN COMMISSION 

HIGH REPRESENTATIVE
OF THE UNION FOR FOREIGN 
AFFAIRS AND
SECURITY POLICY

Brussels, 14.4.2011 
COM(2011) 205 final 

JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

ANNUAL REPORT MACAO 2010 

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MACAO SPECIAL ADMINISTRATIVE REGION: ANNUAL REPORT 2010 

INTRODUCTION 

Since the handover of Macao to Mainland China 11 years ago, the European Commission has 
been  closely  monitoring  economic  and  political  developments  in  the  Macao  Special 
Administrative  Region  (SAR),  in  order  to  fulfil  its  1999  commitment  to  the  European 
Parliament to issue an annual report on developments. This report covers the year 2010. 

The  European  Union's  relations  with  Macao  are  based  on  common  values,  a  European 
heritage and shared interests in areas such as economy, environment, education and culture. 
During  2010,  bilateral  relations  have  developed  on  a  positive  track  under  the  framework  of 
the Agreement for Trade and Cooperation signed in 1992. 

The  EU  acknowledges  the  satisfactory  implementation  of  the  "one  country,  two  systems" 
policy  during  2010  in  accordance  with  the  Basic  Law  of  the  Macao  SAR;  the  fundamental 
rights and freedoms of Macao's people have in general been respected. The EU hopes to see 
progress towards greater democracy in Macao in the framework of its Basic Law. 

POLITICAL DEVELOPMENTS 

2010 has been the first year in office for Fernando Chui, Macao's new Chief Executive. In his 
policy address delivered on 16 March, Chui stressed that improving people's livelihood, social 
stability,  economic  diversification,  upgrading  Macao's  industry  and  consolidating  the  casino 
industry  would  be  his  government's  main  priorities.  Macao  would  also  intensify  its 
cooperation  with  the  Pearl  River  Delta  region  and  Taiwan  and  serve  as  a  platform  for 
exchanges and cooperation with Portuguese speaking countries around the world.  

2010 saw an increase in contacts with Taiwan. Chui met with Wu Poh-hsiung, the honorary 
chairman of Taiwan's ruling Kuomintang (KMT) party, during Wu's visit to Macao. Cheong 
U,  Macao's  Secretary  for  Social  Affairs  and  Culture,  followed  up  with  a  visit  to  Taiwan  in 
September to strengthen mutual understanding and promote cultural exchanges. 

Macao  has  stepped  up  efforts  to  promote  itself  as  the  gateway  to  China  for  Portuguese-
speaking countries and a platform for sino-lusophone cooperation. In November it hosted the 
3rd Ministerial Conference of the Forum for Economic and Trade Cooperation between China 
and  the  Portuguese-speaking  countries,  a  forum  set  up  in  2003  to  deepen  ties  between  its 
members. Chinese Prime Minister Wen Jiabao attended the Forum. 

One year after the adoption of national security legislation, concerns have been voiced by pro-
democratic  legislators  and  human  rights  organisations  in  Macao  that  potentially  it  could  be 
misused to undermine the fundamental rights and civil liberties of the Macao people. The EU 
notes with concern that in 2010, like in 2009, several Hong Kong-based journalists and NGO 
members have been denied entry in Macao. The  EU reiterates the  importance of  preserving 
the fundamental rights and freedoms guaranteed in the Basic Law of the Macao SAR. 

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ECONOMIC DEVELOPMENTS

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Macao made a strong recovery from the financial crisis in 2010, with only a minimal impact 
on  the  economy.  GDP  growth  in  the  third  quarter  of  2010  was  up  by  27.1%  on  the  same 
quarter  of  2009.  The  expansion  was  led  by  the  tourism  and  gaming  sectors,  with  Mainland 
Chinese  visitors  becoming  the  largest  source  (53%)  of  Macao's  tourist  base.  Gross  gaming 
revenue  soared  to  record  highs,  up  58%  to  188.3  billion  patacas  in  2010.  Macao  has 
maintained  its  position  as  the  world's  biggest  casino  market  with  a  size  now  significantly 
exceeding its nearest competitors.  

The recovery was not fully fledged however. Investment continued to contract over the year. 
Merchandise  exports  remained  sluggish  due  to  weak  external  demand  and  a  shrinking 
manufacturing base. The inflation rate for 2010 stood at 2.81%. The labour market was very 
tight  with  rapid  expansion  of  the  service  industries.  The  unemployment  rate  fell  to  2.8%  in 
2010,  the  lowest  in  the  last  decade.  Limited  human  resources  became  a  bottleneck  to 
sustainable economic development. At the end of 2010, non-resident workers amounted to a 
total of 75,000, accounting for 22% of the total workforce.  

The Macao SAR Government continued its efforts to diversify the economy. The government 
vowed to tame excessive casino growth by limiting the number of casinos, gaming tables and 
slot  machines.  The  goal  is  to  establish  Macao  as  an  international  conference  hub,  further 
developing the MICE (Meetings, Incentives, Conventions and Exhibitions) industry, as well 
as  creative  and  cultural  industries.  Dedicated  industry  committees  have  been  set  up  to 
formulate policy actions and identify partners for cooperation.  

Macao's economic integration with China continued to intensify through closer links in trade 
and economic cooperation with the governments of Zhuhai municipality and the Guangdong 
province. Supplement VII to the Closer Economic Partnership Arrangement (CEPA) between 
China  and  Macao  was  signed  on  28  May  2010.  Under  the  latest  supplement,  China  granted 
wider access for Macao companies to conduct business in a total of 43 services sectors. On 
trade  and  investment  facilitation,  both  governments  pledged  to  strengthen  cooperation  in 
education, culture, innovation, environmental, and convention and exhibition industries. The 
measures  were  aimed  at  boosting  Macao's  economic  development  and  integration  with 
Mainland China. Trade in goods has been fully liberalised since 1 January 2006.  

At  the  provincial  level,  Macao  and  the  neighbouring  Guangdong  Province  initiated  the 
preparatory  work  for  a  framework  cooperation  agreement  aiming  to  enhance  the  socio-
economic  integration  of  the  two  localities.  The  agreement  would  also  facilitate  the 
diversification of Macao’s economy and improve implementation of CEPA.  

The  extension  of  Macao's  geographical  jurisdiction  on  Hengqin  Island  is  a  pilot  project 
between Macao, Guangdong and Zhuhai. Macao has rented a plot of 5km2 on Hengqin Island 
from  Zhuhai  until  2049.  The  Macau  University  will  use  1km2,  and  will  be  under  Macao's 
jurisdiction. The planning for the rest of the plot to be used as an industrial park is underway. 
The  governments  of  Guangdong,  Zhuhai  and  Macao  have  shown  great  interest  in  the  joint 
development of Hengqin. EU Heads of Mission visited the site in September. 

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Economic data  of  Macao  are  official  statistics  released  by  the  Statistics  and  Census  Service  of  the 
Macao SAR Government. 

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Following  the  enactment  of  Law  20/2009  on  11  August  2009  relating  to  the  exchange  of 
information between the Macao SAR and other tax jurisdictions, Macao signed or updated (as 
relevant) its double taxation agreements in 2010, in accordance with the OECD model with 
Cape Verde, Mozambique, Belgium, Portugal and China. 

EU – MACAO COOPERATION 

Bilateral relations between the EU and Macao have continued to develop on a positive track 
during 2010. Enhancing cooperation between the EU and Macao is a key goal, as well as the 
focal point of discussions at the annual EU-Macao Joint Committee Meeting, held on 9 July 
2010 in Brussels.  

During  the  Joint  Committee  meeting,  both  sides  reviewed  the  latest  developments  in  their 
relationship and took stock of cooperation between the two sides, including the recent launch 
of the EU-Macao Legal Cooperation Project in March 2010, which is aimed at strengthening 
Macao's  legal  system  and  enhancing  public  administration,  legal  and  judicial  expertise, 
following the successful completion of a similar project in 2007.  

Both  sides  expressed  their  willingness  to  explore  new  areas  of  cooperation  such  as 
environmental  protection,  academic  and  cultural  exchanges  as  well  as  other  trade  and 
economic issues. The European Commission used this year's annual meeting to also express 
its wish to see progress on other matters such as civil aviation and taxation of savings. The 
European  Commission  highlighted  the  importance  of  good  governance  in  the  tax  area  and 
welcomed Macao's efforts to implement the OECD standard of transparency and exchange of 
information,  whilst  encouraging  Macao  to  make  further  steps  towards  establishing 
equivalence with the measures adopted within the EU under the Savings Directive to ensure 
taxation  of  EU  investors  on  income  from  savings  in  accordance  with  the  rules  of  their 
Member State of residence. 

The "European Union Business Information Programme" for Hong Kong and Macao (EUBIP) 
has  proved  to  be  a  useful  instrument  in  promoting  knowledge-sharing  and  a  better 
understanding  between  Macao  and  the  EU.  In  particular  for  Macao,  the  participation  of  the 
EU alongside Member States and European businesses with a joint EU pavilion and speakers 
has given more visibility to the EU. It has also served as a good network for the Macao and 
EU  business  communities.  A  more  active  participation  of  Macao-based  industry  in  the 
business councils supported under the EUBIP for various industry sectors would contribute to 
a better understanding of business concerns and interests.  

Expanded  people-to-people  contacts  between  Europe  and  Macao  have  also  contributed  to 
enhance  EU-Macao  relations.  Macao  universities  and  students  are  actively  involved  in  the 
Erasmus  Mundus  Programme  and  have  been  awarded  a  2010  Erasmus  project  to  extend 
exchanges and mobility between universities and students of Europe and Macao to deepen the 
understanding  between  us.  The  EU  has  continued  to  support  the  Jean  Monnet  chair  at  the 
University of Macao and many successful Jean Monnet Conferences held throughout the year. 
EU training of interpreters from Macao for conferences has also continued throughout 2010.  

2010  saw  enhanced  contacts  between  senior  officials  from  Macao  and  the  European 
Commission,  both  in  Brussels  with  the  visit  of  Florinda  Chan,  Secretary  for  Administration 
and  Justice,  in  July  and,  in  Macao,  with  Commissioner  Semeta’s  visit  in  August  to  discuss 
customs cooperation and good governance in taxation and to confirm the strong EU interest 
for the establishment of specific cooperation with Macao on income from savings. 

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All  these  exchanges  and  dialogues  should  continue  in  2011.  In  particular,  the  European 
Commission  would  expect  the  negotiations  on  a  horizontal  agreement  in  the  area  of  civil 
aviation to include the principle of EU designation concluded without any further delay. More 
people-to-people  activities  should  be  developed  to  enhance  a  better  knowledge  and 
understanding of the policies and cultures of both Europe and Macao. 

The European Commission will continue to support the implementation in Macao SAR of the 
“one country, two systems” principle and therefore, to monitor closely political, institutional, 
economic and social developments in the Macao SAR. 

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