Rear Window | Filtering optimism

Severo Portela

If not for the motto we selected today as a title for our column, we would dare to claim that a small revolution is taking place in the MSAR’s troubled economy. Piece by piece, or block by block, like he is in the process of assembling a puzzle, the Secretary for Economy and Finance is readjusting, reshaping and repackaging the gaming industry; name it the new normal or otherwise. Quietly but decisively, Lionel Leong is restructuring departments or bureaus, as well as focusing on laws and regulations. That is to say he did not allow himself to be submerged by the – and pardon the euphemism – pressing needs of the gambling business, gunning for VIP tables and players to roll them high.
As an example of the restructuring process, we have the very bureau of Gaming Inspection and Coordination, known by its Portuguese acronym DICJ, now under the former Assistant Public Prosecutor-General, Paulo Chan, and the Financial Intelligence Office.
However, we would rather mention first something that is not directly related to the industry, but which could indirectly serve as an inspiration. At last, the Macau Special Administrative Region will establish a sovereign wealth fund, through a substantial allocation from the so-called “extraordinary fiscal reserve”- in figures, almost MOP212 billion, which is much more than the primary or emergency reserve, or in the AMCM lingo, the basic reserve of around MOP132 billion.
Macau’s SWF will be managed by a government body, or corporation, underlined unequivocally by the Secretary for Economy and Finance while addressing the Legislative Assembly, as “fulfilling the wishes of the locals”. Lionel Leong seemed cool towards private management of the SWF, which some lawmakers like Chan Meng Kan had mooted in the past, on the grounds of efficiency, or its well-known sister, profitability.
Lionel Leong also had no hesitation to address the issue of the supposed lack of efficiency. Leong admitted that the Macau SWF, to be known as the MSAR Investment and Development Fund, may not be profitable initially, as happens all around. But once the SWF stabilizes and the returns are secure, the fund might open to participation by Macau residents.
Even if we do not know by now the path a private local investor must walk to participate in the MSAR Investment and Development Fund, the idea is a kind of education and a sober recall to the new reality mentioned above. MSAR sovereign wealth fund returns will be conservative but solid, and a world away from the fishy place of depositors or investors in junket operators, like in Dore Investments, and their enormous returns. And a universe away from the idea that Macau people should have by right a share in a gaming concession for locals.
We repeat that the SWF is a way to temper the greed and envy with which some residents look to the gambling revenues. Despite the fact the some funds may invest indirectly in domestic sectors…that will not be the case for the MSAR Sovereign Wealth Fund.
Nevertheless, there is nothing quite as sobering as the truth. Zhonglu Zeng, a professor of gaming studies at Macau Polytech, quoted by Bloomberg, has no doubts: “The gambling market will gradually find its way to get used to negative factors such as China´s economic slowdown and anti-corruption campaign”. And things will not get easier. With China, now the world’s second economy, leading the G-20 (20 years ago China´s economy was the size of Italy´s) and the yuan on step to be included in the IMF basket of currencies, who believes there will be a more liberal stance towards the gambling hub that brought at its peak in 2013 USD45 billion, seven times the size of Las Vegas?