Pursuing mass-market and non-gaming model
In a February 25 statement on Macau, the International Monetary Fund said the SAR should consider the next three years, from 2020 through 2022, as a time to beef up non-VIP tourism and also improve the city’s tourism infrastructure. During that period, the city’s Big 6 casino concessionaires will all see their gaming concessions come up for retender.
According to Asia Gaming Brief, the IMF appreciated the strength of the city’s gaming economy but called for “judicious and efficient use of gaming-dependent fiscal resources.”
To be specific, the IMF said “diversification policies should be guided by careful study of Macau SAR’s comparative advantage. With all six gaming concessions expiring in 2020 and 2022, the authorities have the opportunity to further advance their growth strategy and should craft the new regulations with stronger incentives for operators to expand non-VIP tourism
“In addition, to accommodate the higher number of tourists under a mass-market and non-gaming model, infrastructure plans should advance in order to ease supply-side bottlenecks. Some of these areas are expanded entertainment, convention and exhibition options, hotels and retail, including via integrated resorts and family-oriented facilities.”
The IMF also called for an “upgraded regulatory framework” to monitor Macau’s junket industry. Since a 2016 evaluation of the SAR’s anti-money laundering and counter-terrorism financing setups, the report stated, Macau “has intensified efforts to limit the number of junket promoters, which could be supported by an upgraded regulatory framework to promote robust AML/CFT controls by junket promoters.”
The report said the Macau economy is especially vulnerable to economic, financial and policy developments in Mainland China, reported GGRAsia. The risks are “tilted to the downside” for Macau. Among the risks are reduced investment, banking sector exposures, the U.S.-China trade war, a possible tightening of global financial conditions in and increasing competition regionally and globally in the gaming sector.
“With most tourists coming from the mainland, any policy that undermines their spending power abroad would negatively affect growth,” the report said. Were casino gambling to be legalized on the mainland or were there to be weaker-than-expected growth in the mainland economy, those factors would also negatively affect Macau’s economic growth.
The negative outcomes possible included “shocks to gaming revenue, reduced investment, and banking sector exposures to the mainland.”
In related news, according to the Macau Financial Services Bureau, in 2018 the government reaped MOP106.8 billion (USD13.21 billion) in direct gaming taxes, up 13.6 percent year-on-year. It accounted for almost 80 percent of total revenue for the period.
