19 measures to help city’s growth
When gaming industry analysts learned that Chinese Premier Li Keqiang would visit Macau this month, they predicted the trip would prove a net negative for the territory and send high rollers scurrying.
While the impact on VIP revenue is yet to be seen, most headlines indicated the visit was beneficial for Macau, which is slowly emerging from a more than two-year slump in its heralded gaming industry.
And despite Li’s presence, GGRAsia reported that gross gaming revenue for the first 10 days of October suggest the month could end with year-on-year growth from as little as 3 percent to as much as 12 percent.
“Historically, VIP gamblers have avoided the market during visits by key officials. Given the recent uptick in VIP business, this visit could crimp revenues over the next week or two,” said analyst Cameron McKnight of Wells Fargo Securities.
When he arrived in Macau for a three-day visit last week, Li hailed the special administrative region as a “treasured lotus land, a beautiful and special place.” He took note of efforts by Macau and its leading industry to diversify their attractions and move away from what Chinese President Xi Jinping criticized as a gaming-centric economy.
The Macau Business Daily reported that Li brought a list of 19 measures that would support the city’s economic development. “The measures seek to support Macau’s economic and social development, as well as to stabilize its long-term prosperity and benefit the Macau residents,” Li said.
Li was in town for the fifth Ministerial Conference of the Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries. According to the South China Morning Post, he praised the city for its work to shift from a gambling mecca to a mainstream tourist destination. Li promised “new measures and policies” to help Macau and make “better use of its position as a world center of tourism and leisure and a commercial and trade cooperation service platform” between China and the world’s Portuguese-speaking countries.
“Premier Li didn’t come empty handed,” said a note from Daiwa Securities analysts Jamie Soo, Adrian Chan and Jennifer Wu. “He reiterated Beijing’s supportive stance to Macau’s economic development and diversification.”
Sanford C. Bernstein Ltd. ventured that though the 19 measures may not directly boost gaming, they will “support tourism and MICE business in Macau, which may be positive for gaming in the longer run.”
“Importantly, the premier continues to openly support Macau as a growing leisure and entertainment region, highlighting the region’s opportunity to develop a convention and exhibition business,” said a note from the Buckingham Research Group.
“The premier also hinted at new policy and support from the central government, to help this become a reality. We would view the completion of the Hong Kong-Zhuhai-Macau Bridge as being the primary step in making this a reality,” said analyst Christopher Jones.
According to the Macau Daily Times, the aid package will be implemented over the course of three years. The 19 measures, divided into five chapters, address areas including financial support to promote industrialization, infrastructures, agricultural and medical projects. Educational assistance could include 2,000 training opportunities to trainees from the Portuguese-speaking countries plus 2,500 scholarships.
After 26 months of successive declines in the gaming industry, the economy is looking up, Li told a conference in Macau. “Growth momentum in the first half continued into the third quarter with some positive signs,” he said. “There’s been some discussion of risks related to China’s debt problem and property market. I think we should take an objective, comprehensive attitude toward the issue. China’s debt risks are generally in control.”
The premier expressed optimism for the future. “Macau is very beautiful,” he told reporters. “It is a place where east meets west. It used to be our gateway, and Macau will be more open in the future. It will surely be better. I wish Macau compatriots good fortune and health.”
Golden Week, a national holiday that spans the first week of October, also turned out better than expected. The number of Chinese visitors to Macau during the holiday rose 13 percent from a year ago to 593 million visitors, the China National Tourism Administration said.
“With the roll-out of non-casino attractions, more non-gamblers will be attracted to these leisure places,” said Catherine Lim, a retail analyst for Bloomberg Intelligence. “The ‘one stop and you get it all for your family’ concept definitely works for Chinese. The families like to visit shopping malls where there are restaurants and playgrounds for their children.”
However, Lim added, “It remains to be seen whether Macau’s visitor growth rate can be sustained. The post-Golden Week performance could be weak and the outbound travel trend has introduced more competition to Macau.”
