prices, primary commodity prices could rise in reflection of increasing demand among emerging economies and commodityexporting countries enjoying rapid growth ; meanwhile, a prolonged sluggishness in the japanese economy could add downward pressure on medium - to long - term inflation expectations, accelerating the decline in prices. the balance of risks remains somewhat tilted to the downside because of the extremely large negative impact of the financial crisis, yet not to the degree seen a year earlier. in order to lower break - even points or reach out to consumers in the markets of emerging economies, many corporate managers are in a restructuring process of withdrawing from unprofitable areas of business, selling loss - making sections or merging them with other companies, exploring new business areas, and reviewing supply and production as well as research and development capabilities. for this reason, firms might close down existing domestic production facilities and transfer them overseas. even if overseas economies fully recover, domestic business fixed investment would be restrained and a recovery in the employment situation would be limited. for example, production of information and communications equipment for the japanese market, such as flat - panel televisions and cellular phones, is being transferred overseas, increasing the share of imported equipment. research and product development is also being transferred and localized as a result of improved business infrastructure. transfers of research and production overseas, to emerging economies in particular, are likely to increase steadily. whether this trend will accelerate and lead to a hollowing - out of the japanese manufacturing sector is a matter of concern. as a result of the aggressive fiscal policies designed to underpin the economy after the lehman shock, fiscal deficits and government debt have increased to a very high level in many countries. now that the panic - like phenomena in the economy and financial markets have subsided, concerns are growing around the world about the sustainability of government debt. for example, in greece, the new government elected in october 2009 made public that the fiscal deficit was larger than previously announced. this disclosure prompted a downgrade of the sovereign debt rating for greece, leading to a sharp rise in interest rates. in the euro area, portugal, italy, ireland, and spain are also thought to be having serious fiscal - deficit problems, and interest rates are rising in these countries. there was evident concern in the european central bank ’ s comments in a statement issued after a meeting of the governing council on january 14 : “ the very large government borrowing requirements carry the risk of triggering rapid changes in market sentiment, leading to less favourable medium and long - term

during this period, the financial industry made use of the opportunity offered by economic growth, consolidated the foundation for sustainable and stable development. a brief look back of past history of the macao economic development and change in industry, we can perceive the pattern ; the two significant developments of macao financial industry were brought about by the rapid growth of the economy and prosperity. in the 70 ’ s and 80 ’ s, the policy to diversify manufacturing industry enabled new manufacturing industries to flourish. coupled with the prosperous development of other pillar industries and the legislation promulgated in 1982 which allowed banks in macao to expand their activities, the financial system had a rapid growth which in turn stimulated economic development. in 1999, after the return to the motherland, under the auspices of the central government and leadership of the msar government, macao experienced economic consolidation to rapid growth. the financial industry also benefited from phenomenal economic growth. financial products became highly diversified and differentiated. services network, channel and related quality were enhanced. risk control, management and resilience continued to be strengthened. in the face of this unprecedented global financial crisis, our financial system emerged relatively unscathed, while the operating results continued to stay at a high level. all along, capitals from the mainland, portugal and hong kong dominate the macao banking industry and account for a large chunk of the market. together with branches of the us, the uk, france, singapore and chinese taiwan banks, the banking system of macao as a whole is pivotal to the industrial transfer of macao. in the 80 ’ s to the beginning of the 90 ’ s in last century, the pearl river delta was the ideal relocation area in attracting industrial transfer due to its comparative advantage in its convenient location, availability of labour and cheap land cost. macao enterprises made full use of the opportunity provided by the reform / opening - up policy of the nation to move their labour - intensive production base to this area. from a micro point of view, the migrant enterprise, in the course of transfer, will face the problem if it can obtain the much sought financial services in the new location. how the local financial institutions can provide the necessary funding services for the migrant enterprise under controlled risk is an issue for financial regulator. generally speaking, the local financial institution has limited information on the migrant enterprise. there is insufficient knowledge of the financial condition of the migrant enterprise, its cash flow, its profitability, its debt servicing ability, the quality of management, hence it