Asia and Oceania

Macao

Region Name: The Macao Special Administrative Region of the People's Republic of China

Last reviewed: 8 December 2006

Country information

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TRADE AND INVESTMENT

Macao has a small open economy that faces stiff competition from Hong Kong's highly developed services economy and from the low wages and abundant land across the border in mainland China. It is highly dependent on gambling and related tourism industries. Together, they accounted for over half of Macao's annual GDP in 2004.

As the only place in China where gambling is legal, the SAR has imposed a 35 per cent rate of tax on the gaming industry. Taxes on gambling generate nearly 70 per cent of total government revenue.

Three consortia - Sociedade de Jogos de Macau, Wynn Resorts (Macao) Limited and Galaxy Casino Company Limited, two of which have links to Las Vegas, have pledged to invest around USD 2.2 billion in the territory over the next ten years in a bid to attract high rollers from all over Asia. Macao currently has 20 casinos, with 10 more currently under construction. Gaming revenue in 2005 will exceed that of Las Vegas, at approximately USD 5.7 billion.

Macao's main export markets are the United States and the European Union, which purchase about one-half and one-quarter, respectively, of total exports. The EU is the third biggest investor in Macao SAR after China and Hong Kong. UK exports to Macao SAR in 2003 were £42.3 million.

Strong growth in the gaming and tourism sectors continues to drive Macao's economy. The signing in 2003 of a 'Closer Economic Partnership Arrangement' (CEPA) between Macao and Mainland China has also helped by exempt most categories of Macao products from mainland import tariffs and allowing local firms and professionals to be granted preferential access to the mainland market in a wide range of sectors.

One of the most significant elements of this arrangement has been the Individual Visitor Scheme, which allowed tourists from a wide range of mainland cities to visit Macao on an individual basis. Visitor numbers have risen significantly from 11.8 million in 2003 to 18.7 million in 2005. Visitor numbers in 2006 are expected to reach 20 million. In 2005 about 55% (10.4 million) came from mainland China, 2003 figures.

Like Hong Kong, Macao is a gateway to mainland China. It sees itself as a business matching service between local and mainland companies, Portuguese speaking territories and other foreign companies.

Businessmen consider Hong Kong of greater interest, mainly because of its greater financial trade links with the mainland. However, the overheads in Macao are much lower than in Hong Kong. Communications are also relatively good (and far better than they used to be). The Macao Government has also recently enacted favourable legislation on offshore finance.

Macao SAR is the UK's 133rd largest export market and 116th largest source of imports.
In 2005 UK exports to Macao were worth £17m, up 13% on 2004
Imports from Macao in 2005 were worth £24m, down 40.5% on 2004.
Exports between Jan-Sep 2006 were £15.3m, up 24% on the same period in 2005.
Imports between Jan-Sep 2006 were £18.3m, up 44.2% on the same period in 2005.

There are niche opportunities for UK companies in the gambling, construction, education, leisure and tourism, giftware products and services, creative industries, telecommunications and infrastructure sectors.

There is growing British investment in Macao. Among the more well known organisations are HSBC, Standard Chartered Bank and Cable & Wireless, Menzies, FPD Savills who all maintain a presence.

A British Business Association of Macao was established in May 2006 and is affiliated to the British Chambers of Commerce in Hong Kong and the Mainland.

There are now regular trade missions to Hong Kong that also include Macao to take advantage of the opportunities available, particularly in the areas of construction, environment, education and training, healthcare, ICT, leisure and tourism, mass transport, retail and water.

UK Trade and Investment Country Profile: Macao