Macau’s economy is characterized by its high dependency and vulnerability.
In the past it depended more on textiles than on the gaming.
Until 2001, exports of goods exceeded gambling revenues in GDP.
Despite the government’s desire to diversify the industry, this ended up being done by seeing the end to textiles, which had accounted for around 86 percent of the exports of goods, similar to our insistence on such repetition today with gaming.
And this, only because local and Hong Kong businessmen, who were always active in Macau’s industries through the benefits of quotas, did not have the financial capacity to wait for long-term results.
When the quota system ended, in the early years of the Chinese Administration, the industry disappeared because it couldn’t compete with the outside world without the quota umbrella!
And although all policy addresses of the Macau Government always include industrial diversification, this was never done.
Macau is currently dependent on just one sector and is much more vulnerable than in the past, because it is in the hands of just one customer, the Chinese citizen.
We are once again talking about Macau’s diversification, but in a territory that would belong to Hengqin, with less beneficial business taxation, much more complicated laws, rules and access, and with which local entrepreneurs are not familiar.
Today, it is clear that China requires Macau to diversify, as it feels uncomfortable with gaming, which is clear, as Macau is on the way to full integration in the Greater Bay, where gambling will continue to be banned.
But experience and common sense teach me that diversification should not be attempted again through the government-enforced liquidation of the golden sector of the economy.
There will be no violation of the “one country, two systems” principle to let new competing activities run parallel to gaming.
Whoever can pedal faster may take the lead in the economy, without resorting to low blows.
You can’t tie up a sector just so that others can grow faster, because there is a danger that other branches of activities, which retain dependence on gaming, will also come down.
This is neither healthy nor theoretically efficient!
Diversification, if it does not have feet of clay, will be done by the dynamism of economic operators, private, public or mixed, that engage in new investments within the territory in key areas for an economy that seeks a future that is not again one more dependency.
The island of Hengqin, with that desired investment format, with all the customs complications and the borders and walls that are being created, will not be the wonderful solution for the diversification of Macau’s economy.
If Macau invests there, it will contribute to its GNP, diversifying its sources of income, but not to its GDP.
And diversifying your sources of income does not necessarily mean improving the well-being of the economy, as these incomes can be applied outside the territory!
It will, however, be a great asset for the island to go international and let’s be smart, Hengqin will become another Macau competitor, but only and only if Macau loses the dynamism of the gaming sector.
If the entire island of Hengqin were made available to Macau (and why not, if Macau is an integral part of China?) and under its full jurisdiction, the scenario would be different, because all the activity there, coming from entrepreneurs from the mainland, from Macau or abroad, would contribute to Macau’s Gross Domestic Product.
With the format that was launched (cooperation zone, under joint jurisdiction and Chinese currency; customs, tax and courts on the mainland), I don’t think the diversification of Macau will happen, unless we are facing a new local specificity: a GDP with Macanese characteristics!