Source: EURLEX
Language: en
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# 52013JC0009

**JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Macao Special Administrative Region: Annual Report 2012 /\* JOIN/2013/09 final \*/**

  

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 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 patacas[2] (€29.6 billion).

GDP was 611 930 patacas per head (EUR 59 635[3]) 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 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 2012[5]
.

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 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.

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.

[1]               Source:
Unless otherwise stated, all economic data are official figures released by the
Census and Statistics Service of the Macao SAR Government.

[2]               Source:
Gaming Inspection and Coordination Bureau of the Macao SAR Government

[3]               The average
2012 exchange rate for euro/patacas is 10.2612.

[4]               Source:
Employment Survey 4Q/2012, Census and Statistics Service of the Macao SAR
Government.

[5]               Source: Financial Services
Bureau of the Macao SAR Government. The 2012 figure covered the period from
January to November 2012 only.

[6]               Source: Eurostat.

[7]               Source:
Statistics and Census Service of Macao SAR Government.

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