Gaming has gifted Macau’s government with surpluses that would be the envy of cities 10 times its size. But it’s been an embarrassment of riches, in many respects, with critical public services in the areas of transportation, housing and health care still waiting to be modernized.
Gambling revenue last year hit US$38 billion, six times that of the Las Vegas Strip, and up from $3 billion only a decade ago. The economy has grown an average of 14 percent a year over that time, the fastest-growing economy in the world. The city enjoys the world’s second-highest budget surplus after oil-rich Kuwait, and more than 80 percent of it comes from its 35 casinos.
The problem is that growth has been so rapid the rest of the economy has yet to catch up.
“The poor state of public services in Macau is the product of decades of under investment by colonial rulers and, more recently, cost overruns and construction delays,” according to a recent report in The Wall Street Journal.
“We have the money, but we don’t have the welfare,” Larry So, associate professor in the Macao Polytechnic Institute’s social-work program, said. “If you get sick in Macau, everybody knows it’s better to go to Hong Kong.”
Spending on education, health care, housing and social welfare was up 74 percent in 2012 from the year before, some of that driven by calls from the central government to diversify the gaming-centric economy. The priority given to completion of the University of Macau’s new $1.3 billion campus on neighboring Hengqin Island can be traced in no small part to the personal interest Beijing took in it. Then-President Hu Jintao officiated at the campus’s groundbreaking in 2009.
“This campus shows that the one-country, two-systems policy actually has a lot of potential,” said Zhao Wei, the university’s top academic official.
That is expected to change at the new campus, which is 20 times larger than the old one. It will include a major hotel school, and plans are to build it into one of the pre-eminent institutions in the world for research on commercial gambling.
It will also provide an intriguing test of China’s vaunted “One Country-Two Systems” policy. The campus is considered Macau territory under its land agreement with the mainland city of Zhuhai, which governs Hengqin, and is sealed off for immigration purposes from the rest of the island and houses its own police and fire stations. When it opens early next year, students from Macau will travel to it via an underwater tunnel, which will be the only legal way to enter and leave the campus. Significantly, it will operate under the laws of Macau, not China, will all that implies in terms of freedom of expression and freedom from Internet censorship.
Not only is Beijing comfortable with this arrangement, it appears to want to encourage more of it.
“We all know that if we put all our hopes in one sole industry, there will surely be a destructive impact on the economy once a crisis occurs,” he told the English-language Macau Daily Times.
He added that as the mainland’s economy shifts from being manufacturing-oriented to more service- and consumer-oriented, Macau will benefit. “The gaming industry in Macau is also a kind of service industry, but a deformed service industry,” he said. “With the mainland highlighting the service industry, more related enterprises will come to Macau.”
But, as with economic reform on the mainland, he predicted, “It will be a long and painful journey.”