JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL MACAO SPECIAL ADMINISTRATIVE REGION: ANNUAL REPORT FOR 2019
Date: 2020-07-22
Institutions: European Commission, European External Action Service
Subjects: Macao, activity report, bilateral relations, economic cooperation, economic development, fundamental rights, human rights, political situation, regional cooperation, regional integration

EN 

  EN 

   EUROPEAN COMMISSION HIGH REPRESENTATIVE OF THE UNION FOR FOREIGN AFFAIRS AND SECURITY POLICY Brussels, 22.7.2020  JOIN(2020) 12 final  JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL MACAO SPECIAL ADMINISTRATIVE REGION: ANNUAL REPORT FOR 2019  
 
 
JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

MACAO SPECIAL ADMINISTRATIVE REGION: ANNUAL REPORT FOR 2019 

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  continues  to  abide  by  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 2019, 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.  

In December, a new Chief Executive, Ho Iat-Seng, took office. President Xi Jinping made a 
three-day visit  to  Macao to  mark the  appointment and the twentieth  anniversary  of Macao's 
handover. 

The  rights  and  fundamental  freedoms  of  the  people  of  Macao  continued  to  be  generally 
respected  and  the  rule  of  law  was  upheld  in  2019  under  the  'one  country,  two  systems' 
principle enshrined in the Basic Law of Macao. Macao's media continued to express a broad 
range of views, though there were concerns about increasing self-censorship. 

Whilst  the  Basic  Law  and  other  legislative  acts  do  not  provide  for  the  introduction  of 
universal  suffrage,  the  EU  encourages  the  Macao  authorities  to  foster  greater  public 
involvement in elections for the position of Chief Executive and for the Legislative Assembly. 

On the economic front, Macao remains the world’s largest casino centre, and gaming tourism 
drives the region’s economic growth. The slowing down of the Chinese economy and the US-
China  trade  war  were  the  main  factors  behind  a  3.5%  contraction  in  Macao’s  GDP.  This 
highlights the fact that its small and largely open economy is heavily dependent on economic, 
financial  and  policy  developments  in  mainland  China.  Diversification  efforts  continue,  with 
moderate success, as gaming activities still account for almost half of GDP.  

Economic  cooperation  with  mainland  China  was  stepped  up  in  2019:  new  measures  in  the 
field  of  financial  services  were  announced  around  the  visit  of  President  Xi,  with  a  view  to 
supporting Macao’s diversification.   

Political developments 

There were major changes in the Macao Government at the end of the year with the election 
of the new Chief Executive, Ho Iat-Seng, and appointments to other senior positions.  

The Election Committee selected Ho Iat-Seng as the new Chief Executive to replace Fernando 
Chui on 25 August, with 392 of the 400 ballots cast in his favour. As an alternative candidate 
would have required 66 nominations by the Election Committee, Ho lat-Seng was elected to 
the position unopposed. 

The new Government took office on 20 December. The incoming Chief Executive was sworn 
in during a three-day visit to Macao by President Xi Jinping.  Two of the five secretaries, the 
Secretary for Security and the Secretary for Transport and Public Works, were retained from 
the previous administration. Three of the serving members of the 11-strong Executive Council 
were retained. 

1 

 
 
 
 
 
Several legislative initiatives received significant attention during the year. 

A  bill  on  cybersecurity  became  law  on  22  December  2019.  One  of  its  requirements  is  
mandatory real-name registration by telecom services users for services such as the purchase 
of  pre-paid  SIM  cards.  This  will  be  implemented  by  telecom  services  providers.  Internet 
service providers will retain their users’ online activity logs for at least one year. Operators of 
key  infrastructure  (such  as  transport,  telecommunications,  electricity,  and  water  supply)  are 
mandated  to  enforce  cybersecurity  measures.  A  new  Cybersecurity  Incidents  Alert  and 
Response Centre (CARIC) will be established, under the coordination of the Judiciary Police, 
to serve as a receiving centre for all cyber incidents, and to monitor data transmission and data 
flow. Violations of the law could lead to a fine of MOP 50 000 to MOP 5 million. 

The Secretary for Security, Wong Sio  Chak, stressed that the authorities would not  monitor 
individual online activities or restrict freedom of speech, as the Judiciary Police would only 
monitor  data  movements,  but  not  analyse  their  contents.  The  Macao  Civil  Servants 
Association  (ATFPM)  sent  a  letter  to  the  Secretary  of  Security  voicing  concerns  about  the 
compatibility  of  the  new  law  with  the  Basic  Law  as  regards    personal  freedoms  and  other 
issues.  

A  proposed  new  Civil  Protection  Law  criminalises  the  spreading  of  rumours  and  fake 
information  in  emergency  situations.  The  measure  would  apply  only  when  the  authorities’ 
civil  protection  measures  are  fully  activated,  under  circumstances  such  as  typhoon 
emergencies.  Revisions to the draft law have been welcomed, though civil society and press 
organisations  have  raised  concerns  about  the  measure’s  potential  impact  on  freedom  of 
expression and press freedom. 

A proposal by a pro-democracy lawmaker to amend the Chief Executive Election Law so as 
to  avoid  a  single  final  candidate  for  the  top  position  in  government  was  rejected  on  the 
grounds that only the Government could propose changes to Macao’s political structure. 

The police announced that the first 50 public surveillance cameras with facial recognition in 
Macao would be installed and tested until the end of the first quarter of 2020. Some 50 other 
traffic cameras for the recognition of vehicle licence plates will also be installed and tested. 
Local authorities plan to install 2,400 video surveillance cameras in six phases by 2023. The 
police said in a statement on 7 November 2019 that the facial recognition technology would  
be used only when the police are investigating criminal cases. 

The  Macao  authorities  continued  to  cite  security  concerns  as  the  basis  for  refusing  entry  to 
Macao  to  journalists,  civil  society  activists  and  public  figures,  including  some  from  Hong 
Kong.  Although  Macao's  immigration  authorities  have  the  power  to  refuse  entry  to  its 
territory, there is a lack of transparency in such cases. 

Rights, freedoms and equal opportunities   

The  rights  and  fundamental  freedoms  and  the  rule  of  law  were  generally  respected  to  the 
extent  guaranteed  in  the  Basic  Law  of  Macao  and  in  conformity  with  the  'one  country,  two 
systems' principle.” 

There  have  been  no  moves  to  date  to  establish  an  independent  human  rights  body  in 
accordance  with  the  recommendation  issued  by  the  UN  Committee  against  Torture  in 
December 2015. 

Press  freedom  were  generally respected, though self-censorship was increasingly practised. 
The Macao Journalists Association (AJM) issued statements during the year drawing attention 

2 

 
 
 
 
to issues relating to the freedom of the press for instance regarding pressure ahead of a visit 
by Xi Jinping.  

Freedom of assembly was generally respected in Macao. However, the police have declined 
to permit public gatherings intended to demonstrate solidarity with protesters in Hong Kong. 
On  30  September  2019,  the  Court  of  Final  Appeal  rejected  an  appeal  against  a  ban  on  a 
protest against police brutality in Hong Kong, ruling that such a protest would be illegal for 
reasons,  including the consideration  on the grounds that ‘it would interfere in  Hong Kong’s 
internal  affairs’.  The  30th  anniversary  of  Tiananmen  Square  was  marked  by  a  candlelight 
vigil. 

On 8 July, the Legislative Assembly approved the draft of the government-initiated bill for a 
statutory  minimum  wage  for  all  workers  except  domestic  helpers  and  employees  with 
disabilities.  Macao  has  not  effectively  enforced  freedom  of  association  and  collective 
bargaining  as  enshrined  in  International  Labour  Organisation  (ILO)  conventions.  The  EU 
continues to encourage Macao to do so. 

Marked  efforts  are  being  made  to  address  trafficking  in  human  beings,  through  measures 
including anti-trafficking training for government officials and the investigation of suspected 
cases of forced labour. The EU stands ready to intensify cooperation in order to address this 
global challenge. 

Discrimination  on  the  grounds  of  sexual  orientation  and  gender  identity  continues  to 
cause  concern,  notably  in  the  fields  of  employment,  education  and  healthcare.  Same-sex 
relationships  are  yet  to  be  included  in  the  law  that  makes  domestic  violence  a  criminal 
offence.  In  June  2014,  the  UN  Committee  on  Economic,  Social  and  Cultural  Rights  urged 
Macao to adopt comprehensive anti-discrimination legislation.  

Macao has continued to robustly address corruption, through measures including the work of 
the Commission Against Corruption (CCAC). A new Commissioner Against Corruption was 
appointed in  December  2019. The CCAC annual  report, released in  March, highlighted key 
concerns and continuing efforts to tackle corruption amongst public officials. 

Economic developments 

In 2019, Macao remained one of the world’s richest economies in terms of GDP per capita, 
with the largest gaming industry in the world.  

Over the year, Macao’s economy contracted by 4.7%, essentially because of a decrease in 
exports  of  services  and  in  investment.  Investment  dropped  by  20.1%  year-on-year  (y-o-y), 
largely owing to lower investment in construction. Exports of gaming decreased by 4% y-o-y, 
while tourism services  declined by 5.7%  y-o-y.  The drop in  exports of services  was largely 
the result of an 8% decrease y-o-y in spending by visitors to Macao. Although tourist arrivals 
rose  by  10%  during  the  year  (to  a  total  of  39.4  million  visitors,  70%  of  whom  were  from 
mainland  China),  per  capita  spending  decreased  by  16.5%,  offsetting  the  increase  in  tourist 
numbers.  

Despite the downturn, Macao still enjoys full employment. The unemployment rate has been 
persistently  below  2%  over  the  past  eight  years  (including  the  2014-2016  downturn),  and 
2019  was  no  exception.  In  such  a  context,  the  SAR  relies  heavily  on  foreign  workers,  who 
account  for  roughly  40%  of  the  total  labour  force.  Inflation  was  under  control,  at  2.75%  in 
2019. 

3 

 
 
 
 
Macao’s  fiscal  position  remained  sound  in  2019.  The  SAR  has  deep  reserves 
(MOP 580 billion or €67 billion), and its fiscal account has consistently recorded surpluses.  

In  terms  of  economic  policies,  besides  consolidating  tourism  and  gaming  (Macao's  main 
industries),  it  continued  its  long-standing  efforts  to  pursue  economic  diversification.  These 
priorities  were  restated  by  Macao's  new  Chief  Executive  Ho  Iat-Seng  in  his  inauguration 
speech  and  New  Year  message  in  December,  in  which  he  outlined  a  political  platform 
including  a  focus  on  the  economy  and  livelihood  issues.  The  following  areas  for 
diversification remain: 

 fostering the development of Macao as a hub for traditional Chinese medicine (TCM); 

  developing the convention and exhibition industry and the creative industries; 
 
  promoting specialised financial services such as financial leasing services; and 
 

 developing  Macao  as  a  commercial  and  trade  cooperation service  platform  between 
China and Portuguese-speaking countries. 

Despite  diversification  efforts,  Macao  continues  to  rely  heavily  on  gaming  and  tourism, 
and the gaming sector alone still accounts for half of GDP. A target in Macao’s 2016-2020 
Five-Year Development Plan is to increase the share of casino operators’ revenue from non-
gambling  sources  to  9%  by  2020.  According  to  a  December  report  on  economic 
diversification  by  the  Statistics  and  Census  Bureau,  non-gaming  accounted  for  9.97%  of 
casino  operators’  revenue  in  2018.  As  regards  diversification  beyond  gaming  and  tourism, 
including  developing  the  financial  sector,  the  lack  of  a  suitably  qualified  labour  force  is  a 
challenge for Macao.  

Environmental  protection  and  climate  policy  remain  substantial  challenges.  The  only 
significant developments in 2019 were the long-awaited introduction of a charging scheme for 
plastic bags, improving the pre-processing of waste before export and setting up more electric 
vehicle  chargers,  plastic  bottle  recycling  machines  and  water  dispensers  across  the  SAR. 
During the year, the long-delayed Taipa line of Macao's Light Rapid Transit was opened.  

Regional cooperation 

The long awaited Guangdong-Hong Kong-Macao Greater Bay Area (GBA) blueprint was 
released in February 2019. Macao was designated as one of the four core cities (together with 
Hong Kong, Shenzhen and Guangzhou) to play a key role in the region’s development. The 
plan  states  that  Macao  -  while  continuing  to  diversify  its  economy  -  is  to  consolidate  its 
position as a world-class tourism and leisure centre and as a commerce and trade cooperation 
service  platform  between  China  and  Portuguese-speaking  countries.  Four  months  after  the 
release  of  the  blueprint,  the  Macao  Government  released  an  annex  to  its  Five-Year 
Development Plan (2016-2020), covering its part in constructing the GBA. During the year, a 
patchwork of measures were announced. These include stepping up customs cooperation and 
making it easier for people from Macao to live, study and work elsewhere within the GBA. 

Cooperation  in  the  field  of  financial  services  advanced  in  2019.  In  February,  the  GBA 
blueprint  tasked  Macao  with  carrying  out  a  feasibility  study  on  establishing  a  renminbi-
denominated  securities  market.  In  October,  the  Macao  Monetary  Authority  submitted  an 
application  to  the  central  government  in  this  direction.  In  July,  China  issued  the  first  two 
billion renminbi (US$286 million) of offshore government bonds in Macao.  

Around President Xi Jinping's visit to Macao in December 2019, a raft of measures to support 
economic diversification was announced, with a particular focus on the financial sector. The 
most publicised was an announcement by the People’s Bank of China (PBOC) that the daily 
limit  on  renminbi  remittances  from  Macao  would  be  increased  from  50,000  to  80,000 

4 

 
 
 
renminbi, bringing it to the same level as Hong Kong. Since these remittances, however, refer 
to  transfers  by  individuals,  not  companies,  the  announcement  was  largely  symbolic.  In 
addition,  there were reports  that plans to  set  up a new renminbi  -dominated stock exchange 
and  a  renminbi  settlement  centre  would  be  accelerated.  Policies  were  also  revealed  to 
encourage  mainland  banks  and  insurance  companies  to  set  up  operations  in  Macao,  and  to 
provide support to mainland finance firms for expanding into Macao.  

As regards its role as a bridge between China and Portuguese-speaking countries (PSC), 
Macao aims at being a renminbi clearing centre and a commercial and trade service hub for 
PSC and China, a trading hub for products from PSC, and a convention and exhibition centre 
for economic and trade cooperation. 

Together with Zhuhai, Macao is co-developing the island of Hengqin, located east of Macao 
in  Guangdong  province.  Hengqin  hosts  infrastructure  including  a  ‘Youth  Entrepreneurship 
Valley’,  the  Guangdong-Macao  TCM  Science  and  Technology  Industrial  Park,  the 
Guangdong-Macao Cooperation Industrial Park, and the campus of the University of Macao. 
During his visit to Macao, President Xi announced that Macao would be allocated further land 
on the island to support its further development in areas such as education and healthcare. 

EU-Macao bilateral relations 

In  2019,  the  EU  remained  Macao’s  second-largest  source  of  imports  after  mainland 
China, accounting for 27.6% of Macao’s total imports. On the other hand, only 1.5% of the 
SAR's  exports  of  goods  went  to  Europe.  The  EU  continues  to  maintain  long-standing  trade 
surpluses  with  Macao.  An  explanation  for  that  is  that  Macao's  import  demand  has  grown 
steadily over the years, in tandem with the growth of its gaming and tourism sectors, while its 
manufacturing sector has shrunk to roughly 1% of GDP.  

Bilateral trade in goods rose by 27.1% to €1.2 billion in 2019. EU exports to Macao reached 
€1.1  billion,  a  33.2%  increase  y-o-y,  resulting  in  a  trade  surplus  of  €1 billion.  Macao  is  a 
growing  market  for  European  luxury  goods.  Major  EU  export  products  included  high-end 
leather goods, clothing, watches and jewellery, food and beverages, and automobiles. 

The  EU  is  Macao’s  third-largest  foreign  investor  after  Hong  Kong  and  mainland  China 
(excluding  offshore  centres).  According  to  Macao  statistics,  the  EU  accounted  for  5.3% 
(MOP 15.6  billion)  of  total  FDI  stock  in  2018.  Portugal  alone  accounts  for  60%  of  EU 
investment in Macao, or MOP 9.2 billion.  

The  23rd  EU-Macao  Joint  Committee  meeting  was  held  in  Brussels  on  11  June  2019.  It 
dealt with a broad range of subjects, including trade and investment, multilateral cooperation, 
taxation,  government  procurement,  combating  money  laundering  and  the  financing  of 
terrorism, environmental matters, and trafficking of human beings.  

A  co-funding  mechanism  under  the  EU’s  Horizon  2020  programme  was  established 
following the EU-Macao Joint Committee meeting in 2015. In November 2019, the EU and 
the  Science  and  Technology  Development  Fund  of  Macao  (FDCT)  jointly  organised  a 
conference in Macao to present opportunities for cooperation with Europe and discuss ways to 
improve Macao's participation in Horizon 2020, since no entity from Macao had been selected 
for funding under that programme. 

5 

 
 
 
 
As is the case every year, in 2019 the Macao European Chamber of Commerce (MECC1) 
and  the  European  Chamber  of  Commerce  in  Hong  Kong  jointly  coordinated  European 
participation  in  the  Macao  International  Environment  Cooperation  Forum  and  Exhibition 
(MIECF)  in  March  and  in  the  Macao  International  Trade  and  Investment  Fair  (MIF)  in 
October.  

The  Macao-EU  Cooperation  Programme  in  the  Legal  Field  contributes  to  the 
modernisation  and  development  of  Macao’s  legal  system.  Possibilities  for  extending 
cooperation in this field are being explored. The EU and Macao continued their longstanding 
collaboration on  conference  interpretation  in  2019.  Training  courses  for  interpreters  from 
Macao  have  been  organised  with trainers  from  the  European  Commission’s  Directorate-
General  for  Interpretation  since  2006.  Since  2010,  annual  seminars  have  been  held  in 
the Macao  Polytechnic  Institute  (MPI),  bringing together  EU  trainers  and  interpreters  from 
various Chinese ministries, as well as course leaders from universities in Macao and mainland 
China.  The  new  International  Portuguese  Training  Centre  for  Conference  Interpreting, 
inaugurated in  December 2019 at  the MPI, has benefited the academic strand of EU-Macao 
cooperation in this field.  

1 The Macao European Chamber of Commerce is a hybrid organisation with both direct members (representing companies) and members 
from the national chambers of commerce of EU countries. 

6