JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Macao Special Administrative Region: Annual Report 2012
Date: 2013-04-30
Institutions: European Commission, High Representative of the Union
Subjects: Macao, economic cooperation, economic situation, political situation

EUROPEAN 
COMMISSION 

HIGH REPRESENTATIVE OF THE
EUROPEAN UNION FOR
FOREIGN AFFAIRS AND
SECURITY POLICY

Brussels, 30.4.2013  
JOIN(2013) 9 final 

JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Macao Special Administrative Region: Annual Report 2012 

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JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Macao Special Administrative Region: Annual Report 2012 

INTRODUCTION 

Since  the  handover  of  Macao  to  mainland  China  13  years  ago,  the  European  Union  and  its 
Member States have closely followed the political and economic developments in the Macao 
Special Administrative Region (SAR) within the framework of the ‘one country, two systems’ 
principle.  To  fulfil  the  1999  commitment  to  the  European  Parliament,  an  annual  report  is 
issued  on  developments  in  Macao.  This  is  the  11th  such  report,  covering  developments  in 
2012. 

The  European  Union’s  relations  with  the  Macao  SAR  are  based  on  common  values,  a 
European  heritage  and  shared  interests  in  the  economy,  the  environment,  education  and 
culture.  During  2012,  bilateral  relations  developed  further  within  the  framework  of  the 
Agreement for Trade and Cooperation. The Agreement signed in 1992 entered into force on 1 
January 1993. 

The  EU  acknowledges  the  satisfactory  implementation  of  the  ‘one  country,  two  systems’ 
policy during 2012 in accordance with the Basic Law  of the Macao  SAR.  The fundamental 
rights and freedoms of Macao’s people were respected. Economic policy continued to follow 
market-led  principles,  guided  by  the  rule  of  law.  Promoting  transperancy  and  good 
governance  remained  a  priority  on  which  some  progress  was  made.  Macao’s  political 
governance  system  moved  towards  a  greater  degree  of  democracy.  The  EU  hopes  more 
progress  will  be  made  in  this  regard,  eventually  leading  towards  universal  suffrage  for  the 
election of both the Chief Executive and the Legislative Assembly.  

POLITICAL DEVELOPMENTS 

2012 was the third year in office for Chui Sai On, Chief Executive of the Macao SAR. In his 
annual  policy  address,  delivered  on  15  November,  he  said  that  over  the  year  the  Macao 
Government had successfully maintained steady economic growth and enabled the necessary 
diversification  of  the  economy,  with  the  objective  of  becoming  a  world  tourism  and  leisure 
centre.  The  Government  continued  to  uphold  the  ’Putting  people  first’  policy-making 
principle and was committed to enabling people from all walks of life to share the fruits of 
economic development and to raising their standard of living. The Chief Executive promised 
to fully exploit Macao’s advantages in order to speed up adequate economic diversification.  

Following public consultations and their approval by the National People’s Congress Standing 
Committee and the Legislative Assembly, Annex II of the Basic Law was amended regarding 
the  method  for  electing  the  Chief  Executive  and  forming  the  Legislative  Assembly  of  the 
Macao  SAR.  The  number  of  Legislative  Assembly  members  was  increased  from  29  to  33. 
There  are  two  new  geographical  constituency  seats  and  two  new  directly  elected  functional 
constituency  seats.  The  amendment  will  be  in  force  for  the  election  of  the  Legislative 
Assembly in September 2013. It also increased the number of members of the committee that 
elects  the  Chief  Executive  from  300  to  400.  It  will  be  the  basis  for  the  next  election  of  the 

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Chief Executive in 2014. All in all, it is a modest but positive step towards strengthening the 
democratic basis of Macao SAR’s governance. 

Freedom of expression is generally respected in Macao. The print and electronic media give 
voice  to  a  broad  range  of  views.  There  is  nonetheless  a  growing  sentiment  that  the  media 
exercise self-censorship. Because the Macao media heavily depend on government subsidies, 
there were reports that decisions about employing journalists were made bearing in mind the 
(perceived) interests of the Government. There is freedom of assembly but there were reports 
that the law enforcement bodies were too restrictive. In accordance with its Basic Law, Macao 
respected  and  protected  freedom  of  religion  and  beliefs.  There  were  no  reports  of  abuse  or 
discrimination  based  on  religious  affiliation,  belief  or  practice.  The  Government  recognised 
that  the  problem  of  human  trafficking  was  getting  worse  and  sought  cooperation  with 
international partners, including the EU, to tackle this. 

Promoting transparency and good governance remained a priority, as shown by several high-
profile  corruption  cases.  As  of  2012,  the  Macao  SAR  no  longer  appears  in  Transparency 
International’s  (TI)  corruption  perception  index.  This  is  due  to  an  internal  change  in  the 
methodology that is unrelated to Macao. In 2011, Macao scored 5.1 on the TI index, 10 being 
the most transparent. In 2012, the Commission Against Corruption (CCAC) reported that, of 
the 804 cases handled in 2011, 350 were criminal cases, a big decrease from the 768 criminal 
cases prosecuted in 2009. This shows that transparency is steadily improving in Macao. The 
Legislative  Assembly  debated  a  government  proposal  on  the  Law  on  Declaration  of  Assets 
and Interests. It requires senior staff of the three branches of government to disclose all local 
and non-local assets. The law was passed on 4 January 2013.  

ECONOMIC DEVELOPMENTS 

The Macao economy slowed down noticeably in 2012, with GDP expanding by 9.9%1 in real 
terms  (compared  to  a  steep  growth  of  21.9%  in  2011).  This  was  due  to  a  less  impressive 
growth in exports of gaming services and visitor spending associated with a relatively weaker 
growth  of  the  Chinese  economy.  The  total  number  of  visitors  to  Macao  was  28  million, 
growing  marginally  at  0.3%  compared  to  the  number  in  2011.  Mainland  Chinese  visitors 
made  up  60%  of  visitor  arrivals.  Private  consumption  expenditure  and  investment  held  up 
reasonably  well.  Inflationary  pressure  was  high  at  6.1%  during  the  year.  Despite  the 
slowdown in growth, Macao retained its position as the world’s largest casino market in 2012, 
a position it has held since 2006. Annual gambling revenue rose by 13.5% to reach a record 
304 billion patacas2 (€29.6 billion). 

GDP was 611 930 patacas per head (EUR 59 6353) in 2012, putting Macao in the world’s top 
ten. At the same time, overall median monthly earnings amounted to 12 000 patacas (around 
EUR  1  169)  in  the  4th  quarter  of  2012.  Many  Macao  citizens  face  difficulties  finding 
affordable  housing  with  the  elderly  often  in  a  vulnerable  position.  To  improve  people’s 
livelihood,  in  his  November  policy  address  the  Chief  Executive  announced  that  the  cash 
bonus scheme begun in 2008 would be continued, with an increased amount of 8,000 patacas 
(€780)  for  all  permanent  residents  and  more  spending  on  social,  educational  and  medical 
benefits. The benefit package included a 600 patacas (€58)  medical voucher, reducing salary 

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Source: Unless otherwise stated, all economic data are official figures released by the Census and Statistics Service of the Macao 
SAR Government. 
Source: Gaming Inspection and Coordination Bureau of the Macao SAR Government 
The average 2012 exchange rate for euro/patacas is 10.2612. 

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income  tax  by  30%,  tax  rebates,  stamp  duty  waivers,  subsidy  and  monthly  pension  for  the 
elderly, education subsidies, electrical bill allowances, assistance for low-income families and 
injecting  funds  into  the  central  saving  accounts.  Ten  billion  patacas  (€970  million)  was 
allocated  to  healthcare  to  build  a  more  effective  medical  system  and  a  primary  healthcare 
network to provide all residents with free health and specialist medical services by 2020. 

Gaming has become more important than ever as the economic pillar of Macao, contributing 
to over 40% of GDP compared to less than 30% a decade ago. The gaming sector in the strict 
sense employed 23%4 of Macao’s total workforce. If related sectors such as tourism services, 
retail  or  gaming-related  construction  are  included,  this  number  is  believed  to  exceed  70%. 
Gaming tax contributed to 83% of fiscal revenues in 20125 .  

Economic  diversification  beyond  the  gaming  sector  remains  a  stated  goal  of  the  Macao 
Government. It took some measures to develop non-gaming economic activities, such as the 
MICE  (Meetings,  Incentives,  Conventions  and  Exhibitions),  and  creative  and  cultural 
industries. Only limited progress was made on diversification, however, due to infrastructure 
bottlenecks, the absence of ancillary business clusters and a shortage of human resources. The 
last  factor  was  a  key  constraint,  because  the  gaming  sector  and  related  sectors  continued  to 
outbid  other  sectors  in  attracting  labour.  The  unemployment  rate  fell  to  1.9%  in  the  fourth 
quarter of 2012, the lowest rate in the last decade. 

To  temper  the  rapid  growth  of  the  casino  industry,  the  SAR  Government  continued  to 
implement  various  control  measures,  including  capping  the  number  of  gambling  tables  at 
5500 until 2013, and limiting the average yearly increase in the following ten years to 3%. By 
the end of 2012, there were 5 485 gaming tables in operation. To prevent young people from 
getting involved in gambling activities, the minimum age for entering casinos was raised from 
18 to 21 as from November 2012. 

To  ease  infrastructure  bottlenecks  and  make  the  economy  more  sustainable,  Macao  agreed 
with  the  Central  Govenment  to  lease  a  plot  of  land  on  Hengqin  Island,  in  the  neighbouring 
municipaility of Zhuhai, in mainland China, which will be developed into a special economic 
zone.  The  Macao  Government  ruled  out  building  casinos  in  this  zone,  focusing  instead  on 
non-gaming sectors, including technology services and creative industries. The zone will also 
accommodate  the  new  campus  of  the  University  of  Macao  whose  construction  will  be 
completed  in  2013.  This  part  leased  by  Macao  for  the  University  will  be  under  Macao's 
jurisdiction until 2049.  

On 12 October, the Macao Legislative Assembly passed measures to curb speculation in the 
property  market.  The  measures  extend  the  special  stamp  duty  on  residential  property 
transactions, introduced in June 2011, to shops, offices and car parks. The latter had become 
the most recent objects of speculators, as hot money reached the market, partly as a result of 
financial easing in the US. The special stamp duty rates were fixed at 20% in the first year, 
dropping to 10% in the second year. Corporate and foreign buyers are charged with an extra 
10% on top of that. 

The  9th  supplement  to  the  China  and  Macao  Closer  Economic  Partnership  Arrangement 
(CEPA)  was  signed  on  2  July  2012.  On  1  January  2013,  48  new  services  liberalisation 
measures  entered  into  force.  Of  the  current  160  service  sectors  in  mainland  China,  149  are 

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Source: Employment Survey 4Q/2012, Census and Statistics Service of the Macao SAR Government. 
Source:  Financial  Services  Bureau  of  the  Macao  SAR  Government.  The  2012  figure  covered  the  period  from  January  to 
November 2012 only. 

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now  open  to  Macao-based  service  providers.  Trade  in  goods  was  fully  liberalised  in  2006 
under Supplement II. The latest supplement focused on facilitating cross-border cooperation 
for  the  concessions  of  Macao  establishments  in  Hengqin.  European  businesses  continue  to 
follow  the  developments  related  to  CEPA  and  the  Hengqin  special  economic  zone  with 
interest, given the investment opportunities these initiatives offer for business with mainland 
China. 

In  addition  to  economic  integration  with  the  Pearl  River  Delta  region,  Macao  continued  to 
strengthen  its  position  as  a  bridge  between  mainland  China  and  the  Portuguese-speaking 
countries  under  the  Macao  Forum  for  Economic  and  Trade  Cooperation.  The  Central 
Government  pledged  to  support  Macao  in  its  bid  to  become  an  international  tourism  and 
leisure hub and a platform for business and trade between China and the Portuguese-speaking 
countries. 

EU – MACAO COOPERATION 

The highlight of EU-Macao cooperation was Macao Chief Executive Chui Sai On’s visit to 
the EU on 10 January 2012, during which he was received by President Barroso. 2012 also 
marked  the  20th  anniversary  of  the  signature  of  the  Agreement  for  trade  and  cooperation 
between the European Economic Community and Macao.  

EU-Macao bilateral trade grew steadily during 2012. In the first nine months of the year, EU 
exports to Macao rose by 17% to €282 million 6 as Macao’s import demand increased with its 
robust  economy.  It  is  a  growing  market  for  EU  luxury  goods,  gourmet  food,  wine  and 
vehicles. This is because casino operators are developing non-gaming income streams such as 
luxury shopping. The EU has recorded trade surpluses with Macao since 2009 (€192 million 
in  the  first  nine  months  of  2012),  and  was  its  second  largest  import  supplier  after  China, 
accounting for 23%7 of its imports in 2012. 

More cooperation between the EU and Macao, including cooperation in new areas of common 
interest  such  as  culture  and  environmental  protection,  remains  a  key  goal  for  both  parties. 
This was confirmed by the constructive discussions at the annual EU-Macao Joint Committee 
Meeting, held in Brussels on 4 December 2012.  

During  the  Joint  Committee  meeting,  both  sides  reviewed  the  latest  developments  in  their 
relationship,  including  developments  in  trade  and  investment.  Both  sides  took  stock  of 
cooperation activities, including the Legal Cooperation Programme, the  training programme 
for  Macao  interpreters  and  the  activities  in  Macao  under  the  EU  Business  Information 
Programme  for  Hong  Kong  and  Macao  (EUBIP).  They  also  discussed  cooperation  on  tax 
matters  and  shared  views  on  possibilities  of  cooperation  in  the  area  of  taxation  of  savings, 
taking into account recent international developments in the field of exchange of information 
between tax authorities and the need for international level playing field. 

The  Horizontal  Agreement  between  Macao  and  the  European  Union  on  Certain  Aspects  of 
Air  Services  was  initialed  in  the  margins  of  the  2011  Joint  Committee  Meeting.  The 
procedures  for  its  formal  signature  were  on  track,  after  the  text  was  translated  into  Chinese 
and Portuguese.  

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Source: Eurostat. 
Source: Statistics and Census Service of Macao SAR Government. 

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The EUBIP activities, co-funded by the European Commission and managed by the European 
Chamber  of  Commerce  (ECC)  in  Hong  Kong  continued.  EUBIP  has  been  a  successful  in 
increasing  business-to-business  links  between  the  EU  and  Macao.  During  the  year,  it 
organised events on the protection of intellectual property, CEPA and trade relations between 
the EU and Greater China, including Macao. It also encouraged EU participation in Macao’s 
two  annual  major  events,  the  Macao  Investment  Forum  and  the  Macao  International 
Environmental Cooperation Forum and Exhibition. The participation of the EU, alongside the 
EU  Member  States  and  European  businesses,  with  a  joint  EU  pavilion  at  these  two  events, 
ensured  significant  visibility  for  the  EU.  It  also  provided  a  good  networking  platform  for 
Macao  and  mainland  Chinese  visitors,  and  an  opportunity  to  showcase  EU  businesses.  The 
EUBIP  programme  ended  in  November  2012;  a  successor  programme  will  be  launched  in 
2013. 

On  1  September  2012,  the  Macao  EU  Academic  Programme  began.  It  is  implemented  by  a 
consortium comprising the University of Macao and the Macao Institute of European Studies, 
as well as EU partners. The aim of the programme is to promote academic research, develop 
outreach  activities  to  enhance  the  visibility  of  the  EU  and  strengthen  academic  cooperation 
with EU higher education institutions.  

The  EU  and  Macao  renewed  their  cooperation  on  training  bilingual  Chinese-Portuguese 
interpreters.  On  21  November  2012  the  Director-General  of  the  EU’s  Common  Service  for 
Interpretation and Conferences and Macao’s Secretary for Administration and Justice signed a 
Memorandum  of  Understanding  to  that  effect,  aimed  at  increasing  the  number  of  qualified 
interpreters  to  meet  the  needs of  the  Macao  administration’s  Chinese-Portuguese  language 
regime. Under the programme, interpreters will be trained in Macao and Brussels over a five-
month period.  

On 4 December 2012, a photo exhibition on Macao, entitled ‘Bridging Time’, was opened at 
the European Commission headquarters in Brussels.  

The EU will continue to nurture its relationship with the Macao SAR, increase economic and 
trade  links,  improve  cooperation  with  business  and  civil  society,  and  promote  mobility  and 
exchanges with the people of Macao. The various exchanges and dialogues between the EU 
and Macao are set to continue in 2013. In particular, the EU expects an increase in activities 
related to cultural exchanges, academic cooperation, environmental and legal cooperation and 
cooperation related to Macao’s goal of economic diversification. 

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