Insight | ‘Alert in times of abundance’

Paulo Barbosa

The report on the mid-term review of the city’s gaming industry is a precious tool for the analysis of the status quo in Macau.
The 280-page (Portuguese language version) document was efficiently presented in May by the Secretary for Economy and Finance, Lionel Leong; the director of the Gaming Inspection and Coordination Bureau, Paulo Martins Chan and Davis Fong, the director of the University of Macau’s Institute for the Study of Commercial Gaming, who compiled the commissioned report.
As the Times reported, the study highlights the efforts by gaming operators to add non-gaming elements to their offerings and to employ local residents.
But it is interesting to look closely at other aspects mentioned in the report, such as the well-documented analysis on the social impact of the gaming industry’s liberalization and expansion. One of the most significant effects has been the creation of jobs, with the unemployment rate dropping from 6.3 percent in 2002 to 1.7 percent in 2014. Between 2002 and the end of 2014, the service industry created a stunning 210,000 jobs, including 69,439 directly related to the gaming industry. Given the labor shortage in Macau, there was a need to import workers on a massive scale.
The positive effects listed include the huge increase in average income per capita (from MOP4,801 in 2003 to MOP13,300 in 2014) and the introduction or strengthening of social welfare benefits, such as the cash handout that has been distributed to residents since 2008.
The report notes that “over the past years, the MSAR has managed to transform itself from a small village under Portuguese administration to an internationally renowned city with a focus on gaming, drawing around 30 million visitors annually.”
This dramatic change also led to certain negative outcomes. “The living standard of MSAR residents, particularly those of underprivileged classes, was significantly affected. People with less academic or professional qualifications couldn’t keep up with the soaring prices,” the report said.
Regarding housing prices, it’s interesting to analyze the calculations for the investment that a family with an average income would need to make in order to buy an 80 square meter flat, even with a MOP4 million down payment.  Unsurprisingly, the report states that housing prices are beyond the purchasing power of local residents.
SMEs also face challenges, such as the increasing difficulties in leasing shops and hiring human capital. According to the study, SMEs are hardly able to service the gaming concessionaires, given the “need to adhere to international standards” and to process large orders, among other factors.
The growth of the gaming industry also leads some residents to develop “xenophobic thoughts” and to “frictions or populism between the different social strata given that the benefits resulting from the development are not uniform,” the document reads. Other negative aspects listed include the rise of gambling addiction cases, the soaring of casino related criminality and changing family patterns.
The UM report says that local society has become more dependent on subsidies, which brought negative effects: “It is now a habit to demand a lot and contribute little and some citizens think that public support is a right. (…) There is also an ambiance that leads to mentalities focused on egoism and the search of easy profit, with people becoming indifferent to neighborhood relationships.”
The analysis of the social impacts of the gaming industry’s growth ends with the forecast that it is not expectable that GGR growth will return to previous levels.
“An escalation of conflicts and existing indignations in the local society are predictable. If cases where workers need to be fired occur, there will be opposition to labor import. The government must keep alert in times of abundance, establishing plans to deal with this thematic,” states the report.
Unlike other studies “made in Macau,” the UM mid-term review report is a relevant tool to understand the challenges that this region faces. However, it is, of course, a government commissioned study and some of its conclusions are wishful thinking. Like when it finds that “the MSAR government and society have managed to find the right way to lessen the negative impacts” of factors such as inflation and soaring housing prices.
We can only hope so…