Gov’t to transfer reserves to China Development Bank fund

Lionel Leong

A portion of the MSAR’s financial reserves could be transferred to mainland China for investment purposes. The government intends to introduce the measure in order to boost bilateral cooperation. It also expects the return of the investment to potentially reach 4 percent, which would be higher than the 2 percent recorded last year but still significantly lower than the inflation rate.
According to a TDM report, the Secretary for Economy and Finance, Lionel Leong, plans to transfer between MOP10 and 20 billion from the region’s reserves to be invested into projects overseen by the Sino-Portuguese Speaking Countries’ Development Fund managed by the China Development Bank. The development fund was created through the Forum Macau to finance projects in some of the basic infrastructural, agricultural and manufacturing areas.
On a separate note, the local authorities are in talks with the Guangdong Province in order to investigate investment opportunities.
Commenting on Lionel Leong’s plan, Lawmaker Si Ka Lon noted that governments from other regions in China use agencies to make investments. “We buy bonds and stocks via agencies. The risk [involved in those investments] would be high, but we want a steady investment. Thus, if the government supports China’s development, and the cooperative development between Guangdong and Macau, it would be a normal practice,” he said.
According to a local economist, in the instance that the government intends that the return of financial reserves catch up with inflation, there would be higher risks associated with the investment. Rose Lai, professor of finance at the University of Macau, says that the region should avoid pursuing short-term investments. “Long-term investments would do us more good. If we invest in high-return [financial] products to catch up with inflation, the risk would be high. Do we want that? I believe a responsible government should consider whether we should bear that risk.”
Ms Lai argued that the government should officially elaborate on these plans to the public once they have been drafted.