Public projects get tiny slice of Macau's billions

Macau is raking in billions from its gambling boom - but only a tiny fraction of it is being invested in infrastructure.

The government has ambitious plans to transform public housing and bolster transportation in the congested city, but by the end of last month just 15 per cent of the annual budget allocated for the plan had been spent. Overall public spending stood at 21.69 billion patacas (HK$20.7 billion) for the first six months, just under one-third of the annual budget.

Meanwhile, the government has already beaten its budget surplus target for the year, earning almost 40 billion patacas more in taxes than it spent, against a target for the year of 36 billion patacas.

Behind the glitzy skyscrapers and glamorous casinos, Macau has problems. Traffic is snarled in the tightly knit streets of the peninsula, while the cost of buying a flat has trebled this year. The CIA World Factbook ranks Macau 152nd in the world for education spending, with just 2.2 per cent of GDP going to learning - behind even poverty-ravaged Laos.

'Public investment is practically frozen, said Tiago Azevedo, editor at the Macau Business Daily. 'The government has pledged to increase the rate of execution of the public investment plan, but it's far from achieving that goal.'

The Macau government has pledged to complete 19,000 public flats by the end of the year, but is rushing to meet the deadline. A light railway transit system was due to be completed by last year, but officials now say it will not be up and running until 2015 due to legal obstacles.

But the financial services bureau says the figures for public investment will be in line with budget by the end of this year. 'The execution rates will be higher in the second half of the year as payment usually lags behind the actual construction work done,' it said.

For Patrick Ho Wai-hong, an associate professor of economics at the University of Macau, it was too early to judge if the investment plan for the year had been implemented poorly.

The huge budget surplus will put more pressure on the government to give a cash handout to residents. Macau has given out a sweetener every year since 2008 - a practice that was widely mocked in Hong Kong, at least until Financial Secretary John Tsang Chun-wah announced a HK$6,000 giveaway for every permanent resident last year.

This year's handout was the biggest single giveaway yet, with 7,000 patacas for permanent residents and 4,200 for non-permanent residents. Macau Chief Executive Fernando Chui Sai-on also handed extra cash to elderly people and university students, and injected cash into retirement accounts.

Azevedo and Ho believe the handouts contribute to inflation, which hit 6.19 per cent in June.

If there is to be another handout next year, Ho said, it should not exceed the median monthly salary of 10,000 patacas.

But Hoi Hoi-tong, 30, a maintenance worker, favours the practice. 'The money will just go into the pocket of corrupt officials if it is not given to us,' he said, in a reference to the graft case of former public works chief Ao Man-long.