Analysts: Sam Hou Fai faces pressure to diversify economy beyond gaming industry

Sam Hou Fai visits members of the fourth sector of Macau’s deputies to the National People’s Congress, yesterday

There is a clear expectation for Chief Executive Sam Hou Fai to reduce Macau’s dependence on casino-driven capitalism, according to a political expert.

Political scientist Sonny Lo told the Times that while it may be premature to gauge his contributions, he expects Sam’s economic governance to rely heavily on his financial officials, with more continuity than change.

This follows statements from the former president of the Court of Final Appeal, emphasizing the need for moderate and diversified economic development in Macau, warning that the city’s overreliance on the gaming industry poses significant risks to its long-term prosperity.

During an hour-long press conference last week, Sam articulated his vision for a balanced economic future, stating that “having only the gaming industry dominate” is detrimental to Macau’s development. He highlighted the necessity of integrating into the national development blueprint, asserting that the Special Administrative Region (SAR) must capitalize on its unique advantages as the “One Centre, One Platform, and One Base.” He underscored that economic diversification is a critical issue that “cannot be ignored,” adding that “there is no turning back,” and emphasizing the importance of developing in a diversified manner.

“After the return of sovereignty, Macau held an open tender for the gaming industry, and the tourism and gaming industry developed rapidly afterwards. However, for a period of time, the sector developed in an uncontrolled manner,” Sam said. He added that the disorderly development of the gaming industry has strained Macau’s labor market and limited employment opportunities for young people.

Despite Sam’s impressive legal qualifications, some analysts have expressed concerns about his lack of experience in other essential areas crucial for leading Macau. “He has no experience in economic matters, regional cooperation, or in exporting China’s soft power,” one expert noted.

Ieong Meng-u, an assistant professor at the University of Macau’s social science faculty, said: “His track record in the judiciary system has nothing to illustrate he was capable of handling economic restructuring, regional collaboration or even bridging Macau with the world.”

The academic noted that Sam’s position as top judge was not particularly helpful in cultivating a robust social network, which could have supplied talent for his administration, as cited in a South China Morning Post report.

Sam has pledged to work closely with community organizations and enterprises to explore strategies for assisting local businesses facing hardship, particularly those located in the Northern District.

Lo anticipates Sam’s governance will focus on “expanding the Hengqin cooperative zone and fostering job creation, while also introducing innovative policies to support small businesses.” He predicts a continued emphasis on expanding Hengqin further and job creation, but with a shift towards diluting the focus on casino-driven capitalism and perhaps more innovative and supportive policies for small businesses. “His governance in economic aspects will depend significantly on his financial officials, so we need to observe who will be the economic experts in his current campaign team,” added the political expert.

Economist Jose Sales Marques also highlighted the necessity for Macau’s economy to diversify and anticipated that Sam will adopt a range of strategies to accomplish this goal. To the Times, the economist highlighted the “1+4 strategy,” which aims to reduce reliance on gaming—a sector that is highly sensitive to external shocks, as demonstrated during the Covid-19 crisis. He added, “Macau’s economy needs a balancing strategy between the gaming and non-gaming industries.”

Marques expects policy adjustments from the new Chief Executive, focusing on enhancing employment opportunities and balancing the gaming and non-gaming sectors. He believes the development of the joint cooperation zone of Hengqin is a critical part of this diversification strategy. Both Lo and Marques share a common understanding of the challenges Macau faces in moving away from its gaming-centric economy, albeit from different perspectives—with Lo focusing on political implications and Marques on economic strategies.

If elected, Sam would be the first judge to lead the Macau SAR. The nomination period for candidates commenced on Aug. 29 and will run until Sept. 12. Sam has already received endorsements from prominent local figures, including former CE Edmund Ho, Kou Hoi In, president of the Legislative Assembly, and Chui Sai Cheong, president of the Macao Chamber of Commerce.

Sam is intensifying his efforts to secure additional nominations from members of the Chief Executive Election Committee. Yesterday, as cited in a press release, he met with members from the professional sub-sector and lawmakers to discuss their expectations for future policies. Nadia Shaw