BNU chief says diversification needs joint venture strategy

Carlos Cid Álvares (right) presented with a gift at yesterday’s event

Matching local financing with regional talent and expertise abroad could kickstart Macau’s economic diversification efforts, according to Carlos Cid Álvares, CEO of note-issuing bank Banco Nacional Ultramarino (BNU).
Specifically referring to businesses from the Portuguese-speaking world, Álvares suggested that this joint venture strategy would not only create another source of income for the SAR, but it would help to solve some of the biggest questions surrounding diversification, including the matter of Macau’s very limited pool of human resources talent.
The banking chief gave the example of Macau-based investment and services company CESL Asia, which acquired Portuguese farming group Monte do Pasto last year. Álvares said that this purchase had allowed CESL Asia to expand its portfolio into the agriculture and livestock business, which would have been impossible to do in Macau because of limited land resources.
“That’s what they did in China for the last 30 years. Why not do this in Macau?” he asked on the sidelines of an event held yesterday by the British Chamber of Commerce in Macao.
“We need to look for ways to add value on the value chain. Because in the end you have a product that reaches consumers, but between the origin and the end there is a chain and maybe Macau companies can add value along the chain,” Álvares told Macau Daily Times.
Diversification has been a key goal of successive Macau governments.
The previous administration in Macau, led by Chief Executive Chui Sai On, identified several economic activities as possible drivers of a wider diversification strategy that would wane Macau off its reliance on casinos. Among the chosen activities were traditional Chinese medicine, trade with Portuguese-speaking countries and the cultural and creative industries.
However, even by the government’s own metrics, these sectors remain a trivial portion of the local economy. The most recent diversification report found that gaming and junket activities directly accounted for over half of Macau’s industrial structure in 2018, breaching the 50% mark for the first time since 2014.
Yesterday, Álvares said that he still sees potential in the traditional Chinese medicine sector, one of those prioritized by the last administration and outlined in the first policy address of incumbent Chief Executive Ho Iat Seng.
“If we can have an industrial base [other than gaming], that would be great for Macau,” said Álvares. “I think there are already huge investments in Hengqin related to the pharmaceutical business and Chinese medicine. There is already business in these areas and it can continue to be developed.”
He also said that a successful diversification strategy would require the input of both the government and the private sector.
“The government can build the infrastructure, for example the laws,” said the banking chief. “Then the private sector can appear. And it needs to work with the government […] together for diversification.”
Asked about the challenges facing local businesses amid the pandemic recession, Álvares said that Macau enterprises were proving very resilient. While the territory is heading into a prolonged double-digit recession, Álvares says he has faith in Macau’s ability to weather the downturn.
“Macau is very resilient,” he said. “Macau has no debt. […] Macau is using part of the reserves to help individuals and small businesses so they can survive and recover rapidly [after this pandemic is over]. I think local SMEs are stronger than what financial reports indicate and they have strong reserves to resist periods of lower-income.”