Diversification produced limited results

The recently released 2026 Policy Address reaffirms the principle of appropriate economic diversification, with an industry insider noting that, despite the government’s efforts to promote four emerging industries to develop non-gaming attractions, these initiatives have yielded limited results.

The policy address outlines governance objectives aimed at sustaining economic recovery, achieving tangible progress in appropriate economic diversification, maintaining positive gross domestic product (GDP) growth, and improving the business environment while continuously enhancing economic vitality. 

When announcing his second policy address, Chief Executive (CE) Sam Hou Fai acknowledged the imbalances in Macau’s economic development and the insufficient results in appropriate economic diversification, stating, “Greater efforts and intensified measures must be taken to address these issues.”

With the 2023 announcement of the Ho Iat Seng administration’s strategy to promote economic diversification, the focus shifted to four major emerging industries: big health, modern finance, high-tech, and MICE (meetings, incentives, conferences, and exhibitions – including sports and culture). 

However, years later, their development has appeared lackluster. CE acknowledged that the strategy has yielded limited results, stressing the need to implement the “1+4” economic diversification objectives effectively.

“Appropriately diversifying the economy is an essential task that must be accelerated and executed well,” he stated during the 2026 Policy Address presentation on Tuesday, underscoring that enhancing the integrated tourism and leisure industry remains a key strategy for this administration. According to the document, proposed measures include expanding the scope of subsidies under the ‘concerts + community consumption incentive scheme’ and a community tourism subsidy program.

On Sam’s remarks that “the economic structure remains unchanged; we must fully unleash society’s inherent vitality,” Lawrence Zeng Zhonglu, chairman of the Asia Pacific Association for Gambling Studies, analyzed the CE statement, pointing out that “in a non-obvious” it refers to the failure of the economic structure to change fundamentally. He emphasized that the economy remains heavily dependent on the gaming industry, with approximately 80% of revenue still deriving from gaming.

However, Zeng noted that years of efforts to diversify the economy have yielded some achievements. He highlighted that from January to September this year, about 25% of tourist spending in Macau was non-gaming, representing a 6% improvement compared to the same period in 2019. Furthermore, he pointed out that non-gaming revenue accounted for only 13% of total revenue for the city’s six gaming operators in 2019. Still, by the first half of this year, that proportion had risen to 18%, an increase of 5%.

“Gaming companies have also made significant progress in diversifying their revenue structures,” he remarked. “On one hand, we have achieved considerable results; on the other, the reliance on the gaming industry remains an urgent issue to address.”

Speaking to the Times, Zeng criticized the government’s efforts to diversify the economy, stating that the current challenge lies in a lack of bottom-up momentum that fails to fully leverage entrepreneurial spirit. “I believe the problem is that the process of promoting diversification is primarily top-down, with the government formulating plans and pushing policies,” he said.

Citing successful entrepreneurs like Jack Ma and Liang Wenfeng—the founders of Alibaba Group and DeepSeek AI, respectively—Zeng emphasized that if Macau could cultivate similar talent, its economic structure would undergo significant transformation. “The four key industries currently being promoted are essentially top-down projects planned by the government. What’s truly needed is for entrepreneurs to independently conceive and execute great ideas, thereby developing substantial industries,” he remarked.

Lawrence Zeng, chairman of the Asia Pacific Association for Gambling Studies

Zeng suggested that in driving economic growth, the government should strengthen bottom-up mechanisms to stimulate societal innovation and entrepreneurial spirit. “This aligns with the Chief Executive’s goal of energizing grassroots vitality. Fully unleashing society’s inherent dynamism requires not only government leadership but also igniting entrepreneurial spirit across the entire community,” he concluded.

Gaming stable revenue cannot be overlooked

Meanwhile, the government announced yesterday its estimate of gross gaming revenue (GGR) next year, projecting it at MOP236 billion. This forecast considers external uncertainties and economic conditions, thoroughly weighing various factors, including the anticipated continued growth of Macau’s tourism industry.

On the topic, Zeng highlighted that Macau’s gross gaming revenue has been increasing rather than declining, indicating a relatively strong recovery this year.

“While monthly revenue previously fell below MOP20 billion, it has exceeded that mark for most of this year, showing the gaming sector is moving in a positive direction,” he stated.

However, he emphasized that gaming growth is not as critical as the importance of non-gaming operations. Zeng anticipates that this year’s GGR will undoubtedly surpass last year’s figures, noting, “Related achievements also stem from a substantial increase in the proportion of non-gaming spending by visitors.”

“GGR for the first 10 months of this year has already reached MOP205.6 billion,” he explained. “Achieving an average monthly revenue of MOP20 billion over the next two months should be relatively straightforward.” He acknowledged that GGR forecasts carry considerable uncertainty, noting that while the first half of this year was not particularly robust, factors such as security issues in the Philippines and mainland China’s more lenient policies toward private enterprises have contributed to a stronger recovery in Macau in the latter half of the year.

It is also important to note that gaming still accounts for 80% of local fiscal revenue, with nearly 28% of residents employed in gaming or related companies, according to him. However, many employees are not accounted for in the statistics, such as those hired by gaming companies through security firms, potentially making the actual employment landscape more complex.

Overall, Zeng emphasized that the gaming industry remains closely intertwined with other sectors of the economy. While the government places greater policy emphasis on diversification, the stable revenue stream from gaming cannot be overlooked.