Source: EURLEX
Language: en
Format: md

*|*

# 52014JC0019

**JOINT REPORT TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Macao Special Administrative Region: Annual Report 2013 /\* JOIN/2014/019 final \*/**

  

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. In line with the commitment given to the European
Parliament in 1999, an annual report is issued on developments in Macao. This is the 12th such report, covering developments in 2013.

The
EU believes that the ‘one country, two systems’ principle, enshrined in Macao’s Basic Law, continued to work well in 2013. The rights and fundamental freedoms of Macao’s people were respected. Economic policy continued to follow market-led principles,
guided by the rule of law. Further progress was made on promoting transparency
and good governance.

Macao’s
political governance system became more democratic, with additional directly
elected seats in the 2013 Legislative Assembly election. The EU hopes further
progress will be made in this regard, eventually leading towards universal
suffrage for electing the Chief Executive and the Legislative Assembly. It is
keen to work with Macao to strengthen the judiciary and improve the regulatory
and institutional framework for doing business.

Bilateral
relations between the EU and Macao continued to deepen. In 2013, the EU and Macao celebrated the 20th anniversary of the entry into force of the Agreement
for Trade and Cooperation. The anniversary was marked by a visit to Macao by the President of the European Commission, José Manuel Barroso, in November 2013.
Trade and investment relations expanded significantly and were mostly
problem-free. The EU and the Macao SAR signed a Horizontal Air Services
Agreement, creating an EU-wide legal framework for developing civil aviation relations
with Macao.

Political developments

2013
was the fourth year in office for Chui Sai On, the Chief Executive of the Macao
SAR. The government’s strategic priorities continued to be diversifying the
economy, strengthening regional cooperation within the Pearl River Delta,
reaching out to Portuguese-speaking countries, and addressing livelihood
issues.

In
his annual policy address, delivered to the Legislative Assembly on 15 November
2013, the Chief Executive said that, with the central government’s strong
support and the concerted efforts of the government and the Macao people, the
region had overcome internal and external difficulties, leading to steady
social, political, economic and cultural development.

Upholding
the ‘putting people first’ policymaking principle, the Macao Government made
efforts to improve policies affecting aspects of people’s well-being and to
promote economic diversification. The Chief Executive highlighted the need to
improve public administration, accountability, transparency and the protection
of the freedom of the press, and to strengthen the rule of law.

Gradual
progress on political reform was made in the Legislative Assembly election on
15 September 2013. The number of Legislative Assembly
members increased from 29 to 33, with two new geographical constituency seats
and two new directly elected functional constituency seats,
which represent business, labour, professional, welfare, education, culture and
sports interest groups. Macao voters elected
representatives for 14
out of 33 seats in the Assembly. This was a modest but positive step towards
strengthening the democratic basis of the Macao
SAR Government.

As
Macao law does not provide for political parties to field individual
candidates, candidates ran as
part of a list. A total of 145 candidates ran on
20 lists, vying for the votes of 277 153
registered voters. The election campaign lasted two weeks and was subject to
strict rules, supervised by the electoral affairs committee.
Allegations were made that the committee
was not completely impartial. The Public Prosecutor’s Office suggested reviewing
the committee’s role
and extending
the campaigning period from two to four weeks.

Of
Macao’s registered voters,
55 % — or 151 881
people —
cast their votes, a drop of 5 %
compared to the 2009 elections and the lowest
turnout since 2001. Pro-establishment candidates won 23 seats (12 geographic
and 11 functional constituencies), constituting a large majority. Given that the
Chief Executive directly appoints members for another
seven seats, the government
can count on the support of almost all members of the Assembly.

In
March 2013, the United Nations Human Rights Committee
(HRC) reviewed Macao’s
ratification of the International Covenant on Civil and Political Rights. In its
conclusions,
it asked
the Macao SAR
Government submit a plan, within a year,
to ‘set timelines for the
transition to an electoral system based on universal and equal suffrage that
will ensure enjoyment by all its citizens of the right to vote and to stand for
election.’
The EU supports this goal.

In
2013, freedom of expression was by and large respected in Macao. Individuals
continued to exercise freedom of expression without hindrance and the print and
electronic media gave voice to a broad range of views. During the election
period, Macao media disseminated election information and the policy platforms
of different electoral lists, and raised awareness of the issues at stake among
the voting public. Some concerns persisted about the state of press freedom and
the government’s policy on journalists’ access to government information. Hong
Kong journalists from opposition media, such as Apple Daily, were denied entry
to Macao on two occasions. Social media, however, continued to operate freely
and developed vibrantly.

Attention
was particularly required in the areas of promoting transparency and good
governance, as shown by several high-profile corruption cases. In 2013, the Commission
Against Corruption (CCAC) reported that in 2012 it had handled 1 279 cases,
including 852 new complaints, an 8 % increase on the previous year. The
Public Prosecutor’s Office filed 183 cases for investigation, 71 cases more
than in 2011, continuing an upward trend that began in 2010. Almost 60 %
of the cases recorded in 2012 were lodged by complainants who provided their
personal data. This showed that citizens were more willing than before to
report crimes and were more aware of their rights.

Economic development

Macao’s
economy achieved robust growth of 11.9 % of GDP in 2013, up from 9.1 %
in 2012. This growth was mainly driven by
strong exports of services relating to the gaming
and tourism sectors. Investment spending also showed a solid increase, thanks
to the construction of new hotels and public housing developments. Inflation
remained relatively high at 5.5 %[1].
This was due to inflationary pressure from higher import commodity prices and
buoyant economic activity.

Tourism
fared well throughout 2013, with visitor arrivals reaching 29.3 million, up 4.6 %
compared to the previous year. Mainland Chinese visitors represented 63.5 %
of the tourists, providing the major impetus for Macao’s strong economic
growth. Gaming revenue showed strong growth of 18.6 %, to MOP 360 billion
in 2013[2].
Macao remained the largest casino market in the world, a position it has held
since 2006.

Capitalising
on gaming-related tourism, Macao continued to develop its conferences and
exhibitions sector and its creative and cultural industries. It hosted several trade
fairs, conferences and events in new areas such as automobiles, yachts,
aircrafts, the environment and medical research. Casino operators built
high-end shopping malls and added a variety of entertainment shows to attract tourists.
Many other Asian cities continued to regard Macao as a model success story.

Macao's
gaming and tourism sectors are set to further expand in the coming years. In
2013, 10 new hotels, with around 4 300 rooms, were being built. Another 18
applications to build hotels, with 18 500 rooms, were submitted to the government
for approval. This new capacity comes on top of the existing 26 000 hotel
rooms in Macao, meaning that its hotel capacity will almost double by 2018,
reaching 49 000 rooms.

To
manage the growth of the gaming sector, the government has capped the number of
gambling tables. The ceiling of 5 500 gambling tables was reached at the
end of 2012. In 2013, the government decided to grant 250 new gambling tables
to two casino operators for their newly completed casino resorts. It maintained
the policy under which the new gambling tables are granted in proportion to the
scale of the non-gaming business (such as shopping, conferences, entertainment
shows, etc.) operated by the new casino. In
the light of the rapid growth of the gaming industry, Macao made significant
efforts to bring the gaming sector into the relevant frameworks and to progress
towards meeting the Financial Action Task Force (FATF) standards. The EU
encourages the Macao authorities to pursue all necessary efforts to take action
against the risks inherent in the gaming sector and stands ready to engage in
exchanges on this.

Despite
the government’s efforts, Macao’s economic
structure has not significantly diversified over recent years. Gaming
contributed increasingly to its GDP, from 32.3 % in 2009 to 45.9 % in
2012.[3]
One quarter of its total labour force was employed in gaming and
entertainment-related businesses. The government relies mainly on gaming tax for
its fiscal income. Casino operators pay 35 % of their gross gaming revenue
as gaming tax, which contributed 81 % of Macao’s fiscal revenue in 2013[4].

Given
the strong growth of the gaming sector in 2013, Macao struggled with inadequate
human resources. For most of the year, the unemployment rate was extremely low
at 1.8 %. Macao therefore relied heavily on foreign workers and
professionals to meet the growing economy’s needs. The number of foreign
workers - which include both non-Macao workers residing in Macao based on
visa/work permit, as well as workers crossing the border for work - had risen to
a historic high of 137 838 by the end of 2013, accounting for 37 % of
the total workforce. While the business sector called for a more flexible
labour import regime to ease manpower shortages, labour unions pressed to
maintain protectionist measures in favour of local workers and reserve some key
posts, such as croupiers in casinos, for local people. In his policy address
for 2014, the Chief Executive confirmed that the government would maintain the
current policy of giving residents priority access to jobs and guaranteed that
non-residents would not be able to work as croupiers.

In
October 2013, the Macao government carried out the first public consultation on
a minimum wage for certain occupations. The consultation proposed a minimum
wage for two occupations — security guards
and janitors employed by property management companies. Macao is the only
jurisdiction in the People’s Republic of China that does not have a statutory
minimum wage law.

Given
the opportunities it offers for economic diversification, regional integration
is a policy priority for the government. A key tool remained the Closer
Economic Partnership Arrangement (CEPA) between the Macao SAR and mainland China, which will fully liberalise trade by the end of 2015. On 30
August 2013, both sides signed Supplement
X. It will provide increased access for Macao companies in 28 services sectors
and subsectors in mainland China. Since its implementation in 2004 up to the
end of July 2013, a total of 435 certificates for Macao service providers have
been issued. There are now 383 liberalisation measures for trade in services
under CEPA.

The
development of the special economic zone on Hengqin Island in Zhuhai, Macao’s neighbouring municipality on the mainland, is a positive result of cooperation with
Guangdong under the Guangdong-Macao cooperation framework agreement. The
Macao-Guangdong industrial park on Hengqin Island attracted strong business
interest from mainland businesses and foreign companies. A total of 89
applications were received to set up business operations in the industrial
park, mainly in tourism, the high-tech sector, culture, medical equipment and
financial services. The new Hengqin campus of Macau University was also completed
on 20 July 2013. Even though it is located on mainland territory, the new Macau University campus will be under the Macao SAR authorities’ jurisdiction.

Macao
continued to capitalise on its role as a hub for cooperation and trade between China and Portuguese-speaking countries. Several major events took place in 2013. The most significant
 one was the fourth Ministerial Conference of the Economic Cooperation Forum
between China and Portuguese-speaking countries, from 5 to 6 November.

EU–Macao cooperation

In
2013, the EU and Macao celebrated the 20th anniversary of the entry into force
of the Agreement for Trade and Cooperation between the EU and Macao SAR. The
highlight of the anniversary was the European Commission President José Manuel Barroso’s
visit on 23 November. President Barroso met Macao Chief Executive Chui Sai On
and other members of the SAR Government. Together with the Chief Executive, he
spoke at a celebratory public conference and opened an exhibition of
photographs of EU capitals. Macao Post issued two special anniversary postage
stamps.

The
Joint Committee set up under the EU-Macao Bilateral Agreement met in Macao on 15 November 2013. It took stock of the positive overall development in bilateral
relations since the Agreement’s entry into force. Trade had flourished and a
broad portfolio of cooperation activities had developed, in areas ranging from
legal affairs to education, research and training interpreters. The Committee
also discussed cooperation on tax matters, taking into account international
developments in automatic exchange of information between tax authorities.
Issues relating to protecting intellectual property rights and government
procurement, including the World Trade Organisation Government Procurement
Agreement, and regional integration, were also on the agenda. There was mutual
interest in cooperating in new areas such as culture, creative industries and
environmental protection. The Macao Government tabled proposals for further
activities in the areas of legal cooperation, environmental protection, the fight
against human trafficking and cultural and creative industries.

The
EU and the Macao SAR signed the Horizontal Agreement on Certain Aspects of Air Services
at a ceremony on 23 November 2013. The signing ceremony was witnessed by Macao’s Chief Executive, Chui Sai On, and the European Commission President, José Manuel
Barroso. The Agreement will restore legal certainty to the 15 existing
bilateral air services agreements between Macao and individual EU Member States
and will provide a sound basis for the development of EU-Macao aviation
relations.

EU-Macao
bilateral trade increased significantly in 2013. Total bilateral trade
increased by 28.3 % to reach EUR 656.5 million[5]. EU
exports to Macao rose by 37 % to EUR 542 million as Macao’s import demand
increased with its robust economy. EU exports were dominated by aircrafts, leather articles and
beverages (mainly wine). EU imports from Macao remained stable, at EUR 114.5
million. In 2013, the EU recorded a trade surplus of EUR 428 million with Macao. It was Macao’s second largest import supplier after China, accounting for 23 %
of its imports in 2013[6].

The
Macao-European Chamber of Commerce was set up in 2013. European Commission
President Barroso officiated at its inauguration on 23 November. Before setting
up the Macau-European Chamber, the European Chamber of Commerce in Hong Kong arranged
for EU participation in Macao’s two annual flagship events, the Macao
Investment Forum and the Macao international environmental cooperation forum
and exhibition. The joint EU pavilion at these two events provided significant
visibility and outreach for EU firms. The two events also provided a good
networking platform for visitors from mainland China.

Following
its launch in December 2012, the EU-Macao academic programme organised its
first activities. The programme, managed by a consortium led by the University of Macau, organised various seminars, held a major conference to mark the 20th
anniversary of the EU-Macao bilateral agreement, organised several events for President
Barroso’s visit, and organised a successful ‘Model EU’ simulation of a European
Council meeting.

The
EU and Macao continued to train bilingual Chinese-Portuguese interpreters under
a Memorandum of Understanding signed in 2012. Interpreters were trained in Macao and Brussels over a five-month period.

A
photo exhibition on Macao, entitled ‘Bridging Time’, opened at the European
Commission headquarters in December 2012. The exhibition was extended until
June 2013.

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. Key priorities for
2014 include legal cooperation, environmental protection, fighting human
trafficking, cultural exchanges and academic cooperation. As part of its
cooperation with Macao to diversify its economy, the EU proposed a dialogue on
the regulatory framework for facilitating trade and investment, including
competition, government procurement, regulatory procedures and intellectual
property rights. It is also keen to cooperate with Macao on promoting EU
business interests in the Hengqin special economic zone and other flagship
economic initiatives.

[1] All economic indicators pertaining to
the Macao economy are official statistics released by the Statistics and Census
Service of the Macao SAR Government.

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

[3] Source: The Statistics and Census
Service of the Macao SAR Government

[4] Source:  The Financial Services Bureau
of the Macao SAR Government

[5] Source:  Eurostat (Comext database).

[6] Source:  The Statistics and Census
Service of the Macao SAR Government.

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