Economy of Macau

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Economy of Macau
Currency	pataca (MOP)
Fiscal year	calendar year
Trade organisations	WTO
Statistics
GDP (PPP)	$10 billion (2004) (142nd [1])
GDP growth	2.8% (Q3 2005)
GDP per capita	$22,000 (2004)
GDP by sector	agriculture: 0.1%, industry: 7.2%, services: 92.7% (2002 est.)
Inflation (CPI)	3.8% (Q2 2005)
Pop below poverty line	no data
Labour force	251,200 (Q3)
Labour force by occupation	manufacturing 13.7%, construction 10.5%, transport and communications 5.9%, wholesale and retail trade 14.6%, restaurants and hotels 10.3%, gambling 17.9%, public sector 7.8%, other services and agriculture 19.3% (2005 est.)
Unemployment	3.8% (Q2 2006)
Main industries	tourism, gambling, clothing, textiles, electronics, footwear, toys
Trading Partners
Exports	$3.465 billion (2004)
Export goods	clothing, textiles, footwear, toys, electronics, machinery and parts
Main partners	US 57%, mainland China 17%, Hong Kong 11%, Germany 7%, (2005)
Imports	$3.478 billion c.i.f. (2004)
Imports goods	raw materials and semi-manufactured goods, consumer goods (foodstuffs, beverages, tobacco), capital goods, mineral fuels and oils
Main Partners	Mainland China 54%, Japan 13%, Hong Kong 12%, Germany 5%,Taiwan 5% (2005)
Public finances
Public debt	$3.1 billion (2004)
Revenues	$3.16 billion (FY05/06)
Expenses	$3.16 billion (FY05/06)
Economic aid	none
Main source [2] All values, unless otherwise stated, are in US dollars

Macau's economy has remained one of the most open in the world since its reversion to China in 1999. Exports and tourism are mainstays of the economy. Although Macau was hit hard by the 1997-98 Asian financial crisis and the global downturn in 2001, its economy grew 10.1% in 2002, 14.2% in 2003, and 28.6% in 2004.

During the first three quarters of 2005, Macau registered year-on-year GDP increases of 6.2%. A rapid rise in the number of mainland visitors because of China's easing of travel restrictions, increased public works expenditures, and significant investment inflows associated with the liberalization of Macau's gaming industry drove the four-year recovery. The budget also returned to surplus since 2002 because of the surge in visitors from China and a hike in taxes on gambling profits, which generated about 70% of government revenue.

The three companies awarded gambling licenses have pledged to invest $2.2 billion in Macau, which will boost GDP growth. The casino industry, the linchpin of the economy, has been controlled by the Sociedade de Turismo e Diversoes de Macau (STDM) monopoly for the last 39 years. This was changed in 2001 when casino licenses were offered to other casino operators. [3] These new operators include Las Vegas Sands, which opened the Sands Macau in 2004 [4] and will open the Venetian Macau in 2007 [5], the Wynn Macau in 2006 [6] and Galaxy [7] & MGM [8] Casinos over the same period. As a result, total gambling capacity, measured in gaming tables, is planned to grow by about 300% over the next 5 to 8 years. [9]

Much of Macau's textile industry may move to the mainland as the Multi-Fiber Agreement is phased out. The territory may have to rely more on gambling and trade-related services to generate growth. Two new casinos were opened by new foreign gambling licensees in 2004; development of new infrastructure and facilities in preparation for Macau's hosting of the 2005 East Asian Games led the construction sector. The Closer Economic Partnership Agreement CEPA between Macau and mainland China that came into effect on 1 January 2004 offers many Macau-made products tariff-free access to the mainland, and the range of products covered by CEPA was expanded on 1 January 2005.

Macau depends on mainland China for most of its food, fresh water, and energy imports. Japan and Hong Kong are the main suppliers of raw materials and capital goods.

Macau's explosive double-digit economic boom began in 2003. The GDP growth in 2004 of 28% was driven by foreign investments associated with the expansion of the gaming and related industries, increasing tourist arrivals from China and government-led infrastructure development.

1 Employed population by industry
2 Unemployment Rate
3 Trade
4 Financial Institutions
5 Currency/Exchange Rate
6 Tourism
7 Gambling
8 Economic Diversification
9 Energy
10 See also

[edit] Employed population by industry

Below is a table of the employed population in various sectors of Macau.

Occupation	Employed population ('000)
manufacturing	31.6
electricity/gas/water supply	1.0
construction	31.2
wholesale and retail	38.4
hotels and restaurants	28.5
Transport, storage and communications	15.9
Financial services	7.2
Real estate and business activities	16.0
Public admin. and social security	20.3
Cultural, recreational, gambling and other services	50.4

[edit] Unemployment Rate

The unemployment rate is 3.9% in Qtr 1, 3.8% in Qtr 2, 2006. Labour participation rate is 64.7% in Qtr 1 and 65.3% in Qtr 2, 2006.

[edit] Trade

In 1999, Macau's free-market economy produced total exports of US$2.2 billion (MPtc 17.6 billion) and consisted mainly of textiles and garments, toys, electronic goods, and footwear. Total imports for the same period reached US$2 billion (MPtc 16.3 billion), and consisted mostly of raw materials and semi-manufactures, consumer goods, capital goods, and mineral fuels and oils. Total reexports were about US$317 million (MPtc 2.5 billion). In 1999 positive growth rates were seen in all three categories. Principal import trade partners in 1999 were China (35.7%), Hong Kong (18.1%), the European Union (12.9%), Taiwan (9.5%), Japan (6.7%), the United States (5.1%), and other countries (12%). Exports went to the United States (47%), the European Union (30.2%), China (9.2), Hong Kong (6.8%), and other countries (6.8%).

In the second half of the 20th century, Macau's economy was diversified with the development of light industry, the influx of migrants from mainland China to serve as a labor force, and increased tourism. Portugal's efforts to develop economic and cultural links between Macau and Brazil and Portuguese holdings in Africa, however, were not successful. Economic ties to the European Union and Taiwan are considered important aspects of Macau's economic role as part of the People's Republic of China. Direct access to the neighboring Zhuhai Special Economic Zone facilitates trade with mainland China. As a special administrative region, Macau functions as a free port and as a separate customs territory.

[edit] Financial Institutions

Two banks issue currency: the Banco Nacional Ultramarino and the Bank of China (starting in October 1995). There are twenty other licensed banks, sixteen of which are foreign. Macau has five of the top 500 commercial banks in Asia, including Banco Tai Fung (Tai Fung Bank) and Banco Seng Heng (Seng Heng Bank).

[edit] Currency/Exchange Rate

Currency: 1 pataca (P) = 100 avos
Exchange rates: patacas (P) per US$1 - 8.01 (January 2000), 7.99 (1999), 7.98 (1998), 7.99 (1997), 7.962 (1996), 8.034 (1993-95); note - linked to the Hong Kong dollar at the rate of 1.03 patacas per Hong Kong dollar

US$1 = Macau patacas (MPtc, M$, or MOP) 7.9907 (August 7, 2000). One pataca divides into 100 avos. Coins are issued in 10, 20, and 50 avos and 1 and 5 patacas; notes are in 5, 10, 20, 50, 100, and 500 pataca denominations. Hong Kong currency is freely used and represents about two-thirds of the currency in circulation. The new banknotes were issued by the Bank of China and the Banco Nacional Ultramarino on December 20, 1999, and are fully convertible to foreign currencies.

[edit] Tourism

The legal tender is the pataca (MOP). Hong Kong dollars (HKD) are also accepted. Like Hong Kong, traveller's cheques can be exchanged at any bank and major hotel. Credit cards are widely accepted. ATMs are widely available for tourists.

Visitors arrival by place of residence:

Place of residence	Visitors ('000; Q2 2006)
Mainland China	2847.7
Hong Kong	1595.5
Taiwan (ROC)	355.3
Southeast Asia	167.7
Total	5174.5

[edit] Gambling

Gambling has been licensed since 1850 and has always been an important source of revenue for the government. In the early 1960s, gambling provided 50% of Macau's official revenue. Starting in 1962, the gambling industry has been operated under a government-issued monopoly license by the Sociedade de Turismo e Diversões de Macau (Macau Tourism and Entertainment Corporation). Macau had nine casinos in the 1990s; gambling reportedly represented 20 to 25% of Macau's GDP. Direct taxes on gambling were 44.5% of total government revenue in 1998, up from 40.1% in 1997. In 1999, however, there was a 9.1% decrease in this sector. Internet gaming, with its worldwide access, was scheduled to be initiated in Macau in Summer 2000. The monopoly license of the Sociedade de Turismo e Diversões de Macau expires in 2001. Organized crime is reported to be heavily involved in gambling in Macau (see Organized Crime, q.v.).

[edit] Economic Diversification

The large role of gaming and tourism underscores a degree of risk for Macau’s economy. Because the economy is so reliant on tourism and gambling for its well-being, if the flow of tourists slows, it could come as a shock to the small market. The push for diversification came in the closing years of Portuguese administration, under Governor General Vasco Rocha Vieira, and has continued to the present, under Chief Executive Edmund Ho Hau-wah. The government is seeking foreign investment as a means of economic diversification as well. Much of the foreign investment into Macau, however, has gone into the gaming sector after the end of the monopoly in 2001. Otherwise, foreign companies have entered into the mobile phone market and internet services after telecommunications market liberalization in 2001.

[edit] Energy

Electricity - production: 1.893 billion kWh (2004)
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)
Electricity - consumption: 1.899 billion kWh (2004)
Electricity - exports: 0 kWh (2004)
Electricity - imports: 153.3 million kWh (2004)