CE says residents’ livelihood the top concern for gov’t

Wednesday, November 12, 2008
Issue 525, Page 3 – 4
Word count: 2503
Published in: Macau Daily Times

By Poyi (Natalie) Leung

In the press conference held at the government headquarters yesterday following the delivery of the 2009 Policy Address, Chief Executive Edmund Ho Hau Wah said the SAR government’s overall aim was to secure the foundation of the economy and “make the lives of its people easier” under the global financial turmoil.

Mr Ho also said that his government had sufficient reserves to execute next year’s policies, and it was “justified to share part of the surplus” with local residents who deserved enjoying the “fruits of economic growth over the past few years”.

Meanwhile, the Chief Executive also talked about the response Macau would take if Las Vegas Sands Corp. went bankrupt.

He stressed that his government did not have any plans to interfere in the company’s financing issue, but added that they might take over the company’s local casinos if it was forced to close down in order to protect local workers’ job opportunities.

Below are the extracts of the questions and answers during yesterday’s press conference attended by both local and foreign media.

Reporter: How much can Macau residents get from the cash handout scheme and the medical coupons next year? Will such measures create pressure for the next term of the government administration?

Mr Ho: The amounts given to Macau’s permanent and non permanent residents will be determined on this year’s financial settlement. But basically they will be no less than 5,000 patacas and 3,000 patacas respectively as in this year.
As for the distribution of medical coupons, the values will not be too high but reasonable.
The public may be worried that the cash handout and the medical coupon schemes may create financial pressure to the next government administration. I want to clarify this idea that our principle is always to let our people share the fruit of economic growth. Certainly in the coming years lives will be difficult or tough, but Macau still registers nearly 20 billion patacas of surplus in 2008. Thus we would like to share a part of the revenue to residents next year, and also to take the opportunity to activate the first step of the dual social security system in which eligible residents can open their accounts and put certain deposits which will help secure their retirement life in the future on a permanent basis.
Next year our budget can maintain a balance and won’t have a deficit. The government also won’t need to use any of the reserves accumulated over the past years. With the nearly 13 billion patacas of land fund, the over 50 billion patacas reserve, as well as the 20 billion patacas of surplus this year, I believe there will be about 70 to 80 billion patacas passed on to the new SAR administration. Not only will these measures allow residents to enjoy benefits brought by economic growth, but also have a more significant meaning that the cash handout scheme will let people in need have more money to spend, while those who have less financial difficulties will tend to spend more money. Such plan will further enliven Macau’s internal economy which will then alleviate the pressure especially for the small and medium sized enterprises (SMEs).

Reporter: A survey conducted by a local association earlier showed that a lot of residents thought the government should put more efforts into the aspect of cutting imported labourers. The 2009 Policy Address has touched on this issue but will there be any solid measures?

Mr Ho: Yes there will be. First we will reinforce the strength in reducing the number of non local workers in Macau next year, and secondly we will also put extra effort into combating illegal workers especially in the gaming industry. We will be more cautious about the possible impact that can bring to SMEs. However, the government will continue to coordinate the shifts of labour resources in order to protect Macau people’s employment opportunities.

Reporter: Chairman of Las Vegas Sands Corp, Sheldon Adelson, said yesterday (November 10) that due to financing problems they would suspend the investment project on Cotai Strip in Macau. He also said that the SAR government would help his company raise US$700 million through a Chinese funded bank, is that true?
Also, as you said large private construction projects would slow down next year, do you think Macau will register a slight inflation or deflation? If it is deflation, what suggestions will you give to the people in terms of financial management?

Mr Ho: We’ve always been looking at the changes of Las Vegas Sands Corp. The corporation’s over-leveraged financing in both the US and the world gave us no surprise to hear some of their projects have to be held up. As for the financing process you [the reporter] were talking about, we know a part of it, but Las Vegas Sands is a private enterprise, so we won’t intervene in its business. Until now, the SAR government doesn’t have any concrete proposals to help them solve the difficulty. Certainly the suspension of the Cotai projects will cause a number of workers to lose their jobs, but the Labour Affairs Bureau had today negotiated with the management executives of the Venetian Macao in order to try to protect local workers continue being employed as much as possible.
As for the company’s main business, we cannot yet see any big problems. In the view of the entire gaming industry in Macau, we estimate that their revenues will drop, but still they can make a certain income. Thus we have to be aware of the situation, but at the same time we don’t need to be too pessimistic. Even though one of the gaming corporations’ experience big difficulties, we don’t need to worry too much as the SAR government will immediately take over the business here for it to continue operation for a period of time. Good days must come back eventually, and we can see that one of the characteristics of Macau is that most of our local businesses mainly engage in cash transactions. As long as tourists return and spend money again, our economy will recover very soon.
I suggest that we have to stabilise Macau people’s livelihood as the first priority. The most important thing for residents is to have their lives secure, and thus the key is to maintain the internal consumption on a healthy level. In the next few years, the most significant task is to safeguard the foundation of the whole economic structure. For example, a person is not very smart, but he is able to maintain his health. Even though he can only have three or four meals a day instead of five meals in the past, he becomes thinner but still can overcome the hardships. Or otherwise even when good times come again, there is gold on the streets but he doesn’t have the capability to kneel down and pick it up. Thus, as long as Macau is able to retain our foundation, no matter how long we have to wait, the economy must eventually be restored.
The Chinese central government must support Macau’s development and stability. Our tourism industry although is affected by the global financial crisis, I believe that the SAR government can still execute the policies properly without using the reserves.

Reporter: Next year will be your last year serving in the SAR government. We can see that the morale inside the government is not that strong. How can you ensure that officials can still contribute their best during the last year of their service? Also, will you promote any concrete integrity building measures before your term ends so that the SAR will develop healthily?

Mr Ho: In terms of integrity building, we have done a lot of work on that. Society has a lot of complaints that many of the administrative procedures and operation are ineffective. But it’s actually a process of adjustment, education and improvement. Apart from educating civil servants, we also need to improve the systems. On the other hand, the bill that proposes extending the anti corruption commission’s authority to the private sector had already completed and will be submitted to the Legislative Assembly for deliberation early next year.
For the entire government body, I believe that officials will contribute their best. If there were no such financial turbulence, I think society and the government would still face a lot of other challenges. The current economic downturn exactly requires us to concentrate the whole government’s efforts in order to help society and people overcome the hardships. Our strength is that officials are highly effective and obedient to execute orders. While 2009 will be a year full of challenges, I believe officials will perform their responsibilities to Macau people as well as to the central government.

Reporter: With the impact brought by the financial crisis and restrictions of the Individual Visit Scheme, what measures or plans the government is going to have to ensure the gaming industry’s sustainable growth?

Mr Ho: Although we estimate that gaming revenue will decrease, the reduction will not be too significant to affect our finances. As gaming corporations, they must face difficulties in this situation and we’ll discuss with the industry in order to set out some temporary proposals to help them handle the hardships. But at this moment we haven’t considered at all reducing the gaming tax. Our main concern is always on the other industries especially the SMEs. We launched many policies to help enliven the market in the hope that people can have a better life and continue consumption reasonably. If people don’t spend any money, all businesses will suffer. If only casinos can earn money, society will be in trouble.

Reporter: What will the gaming revenue and unemployment rate be in 2009? In addition, the Chief Executive had just mentioned that the SAR government would take over the local casinos of Las Vegas Sands Corp if necessary, so in what situation will the government do that? And if the Guangdong government tightened the Individual Visit Scheme again, will you demand the central government to relax the restrictions?

Mr Ho: We anticipate that the gross gaming revenue next year will be seven billion patacas per month (In 2008, the figure is about eight billion patacas).We think it’s a reasonable figure although it won’t be 100 percent accurate for every month.
As for the tightening of the Individual Visit Scheme, it is advantageous for adjusting Macau’s gaming industry’s development. At this moment we don’t see any signs that the measure will be changed, but depends on next year’s conditions we will explore the possibility of adjusting the policy with both the central and Guangdong governments at an appropriate time. However, we have to bear in mind that such restrictions are only applied in Guangdong province, thus Macau will still explore tourist markets in other mainland provinces and also in South Asia.
We cannot yet see operation of LVS needing us to take the step of taking over its casino business in Macau. Only when a gaming company faces collapse will the SAR government consider taking control of it. We don’t allow any of the gaming enterprises to close down. We will retain all the staff and salaries will be paid as normal, so when the economy grows stronger problems will then be solved. There are only six gaming licenses in Macau and absolutely they are worth a lot of money. So I’m not too concerned in this matter.

Reporter: Will the government resume the property investment immigration scheme? What is the target of public housing construction at the end of 2009? Is it 2,600 social housing units and 4,000 economic housing units as announced earlier?

Mr Ho: We will regularly announce the progress of public housing construction. In 2009 we will accelerate the existing construction but also begin some new projects. However I don’t have the precise figures here.
At this stage we don’t have any intention to resume the property investment immigration scheme in the foreseeable future. We see that property prices especially the second-hand buildings have already dropped to a certain level. We want to take this opportunity to encourage local residents who don’t own any properties to make their first purchase in order to reduce the demand for public housing.

Reporter: You mentioned that in the worst situation the SAR government will take over the gaming business. Does it imply that workers in the gaming sector are guaranteed not to lose their jobs?

Mr Ho: I cannot say we can fully guarantee every single person will not lose their job. The government mainly is to avoid any large scale of layoffs and unemployment. As for the issue in the gaming industry, first they need to control their costs, and if they need to sack any staff, we require them to sack non-local workers first. Of course we will require them to secure jobs for Macau people. But in individual cases we cannot give a full guarantee. Yet we have a mechanism that anyone who leaves the gaming industry can join the social enterprises to receive training until the market restores the strengths, then they can go back to the industry.

Reporter: Las Vegas Sands Corp last week proposed to the Singapore government to invest in the domestic casino projects when they experienced financial difficulties. Did they come up with the same proposal to the Macau government?

Mr Ho: They didn’t. It’s very clear that the government has no need to invest in casino projects as we receive 35 percent of their gross revenue and thus we’re always the biggest shareholder. Also, in special conditions when a gaming enterprise collapses, we can take control of it in accordance with the law. It may sound too harsh but it’s our policy. We hope every gaming enterprise can run healthily and we also have the responsibility to support them if possible. When facing uncertain factors, the SAR government’s interest is still placed as the first priority. I believe not all the six gaming enterprises will encounter problems at the same time. They’re still facing very good business opportunities. According to the experience, people who come for gambling will still go to gamble, but they will spend less on other expenses which means more severe impact on other industries. We cannot be too greedy, it’s already a very good gaming revenue of seven billion patacas per month when the global economy is shrinking. We cannot expect the figure to jump from eight billion to nine billion patacas, it’s not objective and also unrealistic.

Reporter: What is your prediction about foreign investment in Macau in 2009 under the financial crisis?

Mr Ho: I believe we cannot be too optimistic regarding foreign investment next year. Even though it’s private investment, we also can’t expect too much. But some existing projects such as Galaxy Macau and City of Dreams on the Cotai Strip should be able to continue. And at the same time the SAR government will further develop infrastructure construction in a bid to stimulate the economy.


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