Stimulus likely to stabilize market, but more explanation needed: scholar

The third round of the government’s stimulus package is expected to be efficacious in stabilizing Macau’s economy and employment rate, but it should be extended to travelers to generate a more forceful momentum, Kwan Fung, assistant professor in the Department of Economics of the University of Macau (UM), told the Times in a phone interview yesterday.
Kwan, who is a scholar specializing in economic growth and development economics, opined that the third round of financial relief package will serve a different purpose to the last two rounds introduced last year.
Echoing Secretary for Economy and Finance Lei Wai Nong’s remarks on Monday, Kwan agreed that it is time for the “consumption market to take the steering role to stabilize the economy.”
Macau’s economy is regarded as “distinguished” on a global level, and it is not as “sluggish” assome has claimed it is, said Kwan. The city’s market itself can certainly prop up the city’s economy, he added.
“It is rare for an economy which has contracted by half, to still maintain its unemployment rate at around 3-4% [during Covid-19],” Kwan said, bolstering his stance with statistics.
According to official data, Macau’s gross domestic product (GDP) dwindled by 45.9% year-on-year in the fourth quarter of 2020. Meanwhile, the unemployment rate of residents stood at 3.8% in the same quarter.
“However, the scheme, which predominantly covers only Macau ID holders, should be extended to travelers to instill a stronger stimulation into Macau’s economy,” he added.
Kwan suggested that the government launch promotions to lure mainland travelers to stay further nights in Macau, pointing out that “It is natural that the longer they stay, the more expenses they will [incur] in Macau.”
Macau attracted a total of 556,765 visitor arrivals in January, representing more than 80% of Macau’s population of 683,100. Considering this is a significant floating population, Kwan said it is best if the government works in parallel to entice both residents and tourists to spend more in the city.
However, Kwan acknowledged that further explanation of the scheme’s intention, execution, and expected outcome should be carried out to allow the public grasp the concept more clearly, and to address negative speculation.
The new stimulus package, since its announcement on March 15, has attracted widespread criticism, with most pointing the finger at the “spend first; redeem later” e-voucher scheme which, most think, involves too many complicated regulations.
The MOP5 billion e-voucher program is offered to all people residing in Macau, including all Macau ID holders, blue card holders, and foreign students. However, it requires an individual to spend first, before receiving an e-voucher, through one of the city’s eight mobile payment tools. Also, the individual must spend at least MOP30 in each transaction to redeem one MOP10 coupon.
When asked about a possible pitfall of the scheme in which a user may receive multiple subsidies whilst using more than one mobile payment tool, Kwan said even if this would be the case, it wouldn’t be considered a “waste of public money.”
“It is as if the government gives you a candy as an incentive so that you are motivated to purchase an abalone later. This will create a greater boosting effect for the market,” Kwan explained.
Last year, the government introduced the first two rounds of electronic consumption voucher schemes which distributed MOP3,000 and MOP5,000 to every Macau ID holder in May and August 2020 in the form of a prepaid card, respectively.
Eileen Stow, chief executive of Lord Stow’s Bakeries & Cafes, told the Times that the new e-voucher scheme will be more confusing for the consumer, though it will still drive spending.
When asked whether the earlier e-voucher scheme drove Lord Stow’s revenue, Stow replied: “I would say we benefitted from footfall but felt obliged to give discounts, which more than wiped out any profit at this time. I would say it cost us money, but may have increased visibility for our cafes.”
A report by Chinese media outlet, Shimin Daily, stated that the remarks made by Tai Kin Ip, director of the Economic and Technological Development Bureau, hinted that a person is allowed to redeem multiple vouchers through various e-payment tools. However, the authorities have yet to clarify the matter.
The e-voucher scheme may also exclude children who do not own a mobile phone. In response to this, Kwan said it is hard for a policy to benefit all in the community.