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John Church

Macau is on the fast track to unprecedented success after decades in the doldrums. Its economy is in overdrive and massive redevelopment projects are in the pipeline; Macau has never had it so good.
But what is wrong with this picture? After gaming was liberalised in 2002 Macau seems to have bet everything on one high-stakes game.
An academic highlights the dangers Macau may face and warns the city's planners to diversify the economy. Nagasaki University's Geoffrey Gunn,  who has authored two books on Macau, believes the casino boom since liberalisation is creating 'structural distortions' in the economy.
'There is a mismatch of skills, as was symbolised by the May1 demonstration. Unskilled labour is being squeezed to the margins by imported labour,' he says.
'For these people, property prices are rising, pushing rents higher and squeezing them out of affordable homes,' Professor Gunn, who lectures in the university's Faculty of Economics, says.
Macau's economy spiked to a record in the second quarter of this year, with 31.9 per cent growth according to Vigers international Property Consultants.
Professor Gunn says Macau is on a roll but it is also vulnerable to tourism flows. 'Think what would happen if Sars [came back] or an airline crisis. The only solution is diversification,' he says.
Professor Gunn also says Macau needs help in managing its future and has plenty to gain from recruiting experts from Singapore or elsewhere to show it the way forward.
'Then there is corruption. Macau does not have the well-placed checks and balances of civic-minded groups such as Hong Kong. Transparency, corruption and urban planning - these are Macau's vulnerabilities,' Professor Gunn says. 'In theory, the long-term outlook is good, but casino capitalism will only be sustainable as long as the tourists keep coming. Macau's casinos have come in such a rush that they have overwhelmed everything, from planning to government, water supply and transport.'
For now at least, Professor Gunn says. 'But Macau people basically see it as a good thing as never before did they have such a disposable income.'
University of Macau's Professor Michael Gift  says that Macau has to be looked at 'from a tourism component, not a gaming component'.
'Tourism history shows the average stay of tourists is 1.1 days. That says most tourists are from the mainland and Hong Kong and the majority are in and out for one reason,' says Professor Gift, who lectures in the department of accounting and information management at the university's Faculty of Business Administration.
He warns that the newly opened Venetian with 3,000 rooms needs to tempt tourists to stay at least one night or 'it dies'. But he predicts a change in pattern over the next few years.
'The Cotai Strip, in the next five or six years, will gain another 40,000 rooms, on top of the 11,000 we have now. We're talking about a 400 per cent increase here and if the tourism industry changes in the way they want it to change, we're looking at average stays of three to five days,' Professor Gift says.
'We're looking at people who don't just stay at the tables. They go to restaurants, they shop and take in the sights and a little bit more of that money gets spread around.'
Professor Gift says if the resorts successfully change the behaviour of the typical tourist and draw in the convention component as well, the impact will be significant. 'The financial sector will develop. With casino development the government has already put more financial controls in place. If this sector is enhanced [it will] help develop a financial services sector that may be independent from the casinos.'
Professor Gift also warns that the economy is growing too fast and therefore 'how do you provide regulatory controls for something that's growing as quickly as this economy? The challenges will address [low] wages and [upgrading] social services'.
According to veteran journalist Harald Bruning,  Macau's per capita GDP is slightly higher than Hong Kong's. 'We have one of the highest home ownership rates in the world - 72 per cent of people in Macau own at least one flat,' Mr Bruning, director of the Macau Post Daily  newspaper, says. 'Many Macau workers look for jobs in the casinos because they pay well. A croupier can earn about HK$15,000 a month, and croupiers don't need to be Einsteins.
'For factory workers who were in lowly paid jobs and living a precarious existence, the liberalisation of gaming presented the opportunity for them to improve their living and employment conditions.
'Macau is still very much in transition. Things like home ownership, public health, education, telecoms and waste disposal are all of a high standard and improving. Transport is the main bugbear but a light metro rail system, starting construction next year, will hopefully alleviate these problems.'
However, Mr Bruning says small and medium-sized businesses are hardest hit by spiralling growth. They now face higher rents and higher salaries to attract or keep workers. 'Macau people are changing. This used to be a docile society, especially under Portuguese rule. Now people are demanding change. They have expectations. And, for some there, is a perception of a growing wealth gap.
Turning the tables
Macau recorded 31.9 per cent real GDP growth in the first quarter, the strongest surge since second quarter 2004. The average composite CPI for the 12 months to June rose by 4.63 per cent over the previous period.
Visitor arrivals reached 12.64million in the first half of 2007, up 21.3 per cent on the same period last year.
The unemployment rate for April to June dropped to 3 per cent, a figure generally regarded internationally as 'full employment'.
Casinos keep going up - seven last year and another five this year - raking in more than 60 per cent of government revenue and propping up a community that has come to rely on them more than ever in a relationship that can be traced back to the 16th century.
Source: Macau Statistics and Census Bureau, Foreign Economic Relations Department; Vigers International Property Consultants



Growing pains