Kapok: Bottoming at last?

“Bottoming” is the new buzzword that has been on everyone’s lips for a few months now. It intends to convey the positive outlook that our whole economy could soon be recovering after 20 straight months of dwindling gaming revenues. Although it is a very large step away from the more robust “upturn” or “recovery”, one gets the feeling that there is finally some light at the end of the tunnel—even if the light is still distant and the “bottoming” stage surely prolonged.
Beyond the necessary confidence bolstered by casino operators to reassure investors, the “bottoming” credo rests on two main arguments. First, that the shift towards the mass market is finally happening, and that revenues from what constitutes now half of the pie is slowly but surely making gains—only VIP rooms are still steeply declining; and second that the downward trend is decelerating—gaming revenues shrank by 21.4 percent in January 2016 whereas they plummeted by a record 48.6 percent in February 2015. With that perspective in mind, and despite an overall staggering contraction in gaming revenues of 34.3 percent for 2015, one could say that we are now falling at half the pace of a year ago.
All this is very well: casino operators are still turning hefty profits and with an estimated MOP350 billion in GDP for 2015, Macao should still be No. 2 on the world listing of GDP per capita—don’t ask me about distribution though as the last time we “extrapolated” a Gini Index in the SAR was in 2011.
Yet, the “bottoming out”, the real change on the road to recovery, is heavily dependent on the success of the oft-repeated “diversification” and transformation of Macao into “a world centre of tourism and leisure”. The diversification here can be either “path dependent” and/or resolutely novel. The first direction considers the development of tourism as the extension and necessary complement of the gambling industry. Huge properties have already been built, more are scheduled to open (with further delays) in 2016/2017 in Cotai, and then many more will mushroom in Hengqin—Maldives- or Bhutan-like, but all mega in size. Upper mass market is the target, and more in line with the VIP heritage that is presently restructuring. And then there is the entirely new route: think Marina ripping the benefit of an extension of our maritime borders; think business and finance in Shizimen; think creative industries in Xiangzhou Culture Street; think medical tourism investments from well-established local companies; think industrial park; think transportation hub connected with China’s fastest network; etc. In the meantime, local SMEs are being pampered. Energetic young people are opening cafés all around town with generous government funding, and creative industries of all guises are being given the nod.
Indeed, how can one doubt that the next stage of development for Macao has to be found in the periphery if we want to spare the suffocation of Macau’s heart and soul while making the whole ‘MSAR experience’ something that visitors remember and possibly come back to? But the question of the short- and medium-term remains. When will this periphery be up and running? What about the sustainability of all these small service outlets enriching our neighborhoods? Who will actually benefit in the end? Unimaginative and greedy vested interests are also a Macao specialty.
As of now, we had only marginally fewer tourists in 2015 (30.7 million) than in 2014, but tourists still stay on average 1.1 nights per visit (against 3.3 in Hong Kong) and visitor expenditures have gone drastically down with the per capita average registering a staggering 15 percent contraction—so much for the “upper mass market” drive! And then general retail is down too, by 10.4 percent year-on-year—the first yearly decline since 1999! Providing Macao citizens with incentives to consume cannot hurt—“Macao loves locals”—but long-term recovery goals will require bigger sweeteners and a thorough upgrade of the operating system if innovation and talent are to prevail.

© Rodrigo de Matos, MDT

Published in Macau Daily Times, February 26 2016

Kapok: Better Tomorrows

Schizophrenia seems to be a pathological feature of our modern time, and present-day Macau is no exception. On the one hand, gaming revenues have been taking an ever steeper dive for a continuous nine-month streak; on the other, the body of citizens appears to be unfazed by this fairly distressing situation – at least it would be distressing in any other part of the world – and still professes to be mainly and overly concerned by social and welfare issues in anticipation of the Chief Executive’s policy address of March 23. What is wrong with the people, some ask? Is it blindness? Are people too spoiled? Have they lost track of reality and become impervious to imminent danger because of recent (tremendous) successes? Or is it the confidence that they have in the government? Are the soothing words of Chui Sai On and Lionel Leong Vai Tak that powerful? Or is this unfazed reaction due to the casino tycoons’ take on the situation that everything is “according to expectations” and in line with the necessary “adjustment”, which seems to be the new fashionable buzz word accommodating the “new normal” formula for Macao? Could it be the situation itself – not as catastrophic as some would want it to be, but still more challenging than some would like it to be?

Let’s be honest, the results of a survey that was conducted by the Association of Macao New Vision (澳門新視角學會) about the concerns of the people and what they expect from the coming policy address came as a bit of a surprise. The ten most pressing issues, in order, are: First, a hastening of the construction of public housing; second, the strengthening of the supervision of bus services in order to solve traffic congestion issues; third, the extension of measures to control the real-estate market; and thereafter, in order, the acceleration of healthcare reform, measures to rein in inflation, controlling labor imports and protecting local employment, increasing social welfare spending, strengthening people’s training, improving education and (lastly!) promoting a diversification of the economy. When probed according to categories, people want public policies addressing social issues (72.4%), with economic policies coming a distant second (16.6%) and political and legal demands a very distant third (3.6%). As the survey was conducted in February, before the official announcement of the February plunge in gross gaming revenues (the worse drop in the past nine months), one could reasonably assume that the results could prove slightly different if the survey was to be conducted now.

Lionel Leong, being the Secretary for Economy and Finance, was the first one to react and downplay the flashing red numbers on March 3: What is characterized as a simple “decline” is said to be “in line with expectations” and a recovery – deemed not so miraculous – should occur “within one or two months.” The next day, it was Chui Sai On’s turn to comment, with the CE strongly insisting that the decline was not a threat to state capacity, and that sufficient fiscal reserve would allow the government to allocate public expenditure to welfare measures as budgeted (as if anybody doubted that, given the fact that Macao’s government is endowed with the equivalent of eight years of expenditure at constant spending, and that without even receiving any revenue). Then, of course, casino moguls, most of them in Beijing for the “two meetings” (兩會), commented that the “adjustment” was needed and that no sacrifice would be sufficient for making the dream of transforming Macao into a “world center” (for tourism and entertainment) and a “platform” (for cooperation, both regionally and with Portuguese-speaking countries) come true.

Ultimately, with an actual unemployment rate desperately locked at 1.7%, the prospect of some 20,000 new jobs created by Galaxy Phase II and Macau Studio City, and with the number of visitors having passed the 30-million threshold – why would the people worry that much about a few junkets closing down (there’s clearly too many of them anyway) and plummeting gaming revenues, when in this miserable month of February 2015 these are still roughly the same as the whole year of 2002? And then, it is very fine for Macao residents to have (on paper) the fourth-highest GDP per capita in the world, and yet only be endowed with public services that are not even a match for, let’s say, the capital city of Guangxi, Nanning. Confidence in the government, as shown in a Hong Kong University survey back in December, was in the doldrums, so it does not seem that much of a surprise that people would now trust the new team, which was ushered in two months ago, to take the right steps in addressing some very pressing issues.

Published in Macau Daily Times, March 6th 2015

Kapok: Of Cosmopolitanism

Cosmopolitanism is an ancient philosophy that gained particular momentum during the Age of Enlightenment, when universal values were deemed proper to the modern man. But with the advent of modern nations, nationalist ideology and its intrinsic component of xenophobia—literally “the fear of everything foreign”—made cosmopolitanism look like a perversion that threatened values such as patriotism and primary loyalty to one’s own institutions and cultural heritage. Later on, totalitarian states developed a unique abhorrence for any foreign interference, especially when that meddling was seen as a world conspiracy with domestic ramifications: Hitler was obsessed by the “Jewish peril”, and Nazi Germany ultimately decided to implement its infamous “Final Solution”—the simple extermination of the Jews in Europe. The Soviet Union made a wide usage of the nineteenth century expression “rootless cosmopolitanism” after World War II, a term used during anti-cosmopolitan campaigns targeting in particular Jewish intellectuals. With the demise of the Communist Bloc, liberal democracy was seen triumphing at long last, some even prophesizing “the end of history”. Economic globalization of people, goods and services, and its appended “interconnectedness” of the world were seen as the best guarantor of that prophecy—globalization was thus a means, a process and a goal, as it precisely equated with the original yearning of cosmopolitanism. Since then, nations and borders have been revived by the challenge of equally borderless terrorism and the shortcomings of the financial engine of the world economy. Even the European dream of a tolerant and democratic community of destiny rising up from the rumbles of war has clearly bumped into a glass ceiling.
What is there to learn from cosmopolitanism then? What did the Cynic Diogenes in the fourth century BC mean when he replied to someone enquiring about his origin that he was “a citizen of the world” (‘kosmopolitês’)? Weren’t the Stoics right to insist on the very fact that the citizens of the polis and the citizens of the cosmopolis were both aiming at the same improvement of the citizens? And for Immanuel Kant, world peace could only be instituted through the practice of cosmopolitan law grounded on the principle of universal hospitality—nothing to do with a hotel-casino here—ultimately leading to the establishment of a cosmopolitan constitution. Key to that hospitality was the ethical tolerance for the Other. And German sociologist Ulrich Beck advocates a cosmopolitan common sense or realistic cosmopolitanism as the only possible way to respond to such fundamental questions as to “how societies ought to handle ‘otherness’ and ‘boundaries’ during the present crisis of global interdependency”.
Macao is not threatened by terrorism and has been sheltered from the world economic crisis, and yet the tremendous changes brought in by its huge economic success in the past ten years have not made Macao a safer place for everybody—Beck himself is notorious for having made the point that self-assured cosmopolitan globalization is only naturally embraced by the “happy few” highly-educated globe trotters employed by multinationals. Macao is still home today to 60% of a population that was not born here. Back in 2001, less than 8% of the population had gone through tertiary education (today, it is still less than 17%). When Stanley Ho still had the monopoly on gambling—until 2002—croupiers were paid on tips. For young people, rents are just unaffordable and there are three times more young married children still living with their parents than there were back in 2001 and at least 8,000 Macao residents live in Zhuhai or neighboring areas and commute to Macao to study or work. A recent survey done by the University of Hong Kong indicates that “housing” is the top priority for 59% of respondents! And then, more than a third of the Macao labor force is of foreign origin, against less than 10% just ten years ago. Does that justify borderline xenophobic reactions from populist newly elected legislators or lethargic old foxes claiming to represent the have-nots? Of course not. Does that warrant any form of discrimination or national preference for jobs? Of course not. And yet, the worry is legitimate and the answer cannot and should not be grounded in anger and contempt. Just like communication—however widespread, fast and mobile—does not guaranty mutual understanding, full employment and mind-blowing economic growth figures do not dispel anxieties.

Published in Macau Daily Times, January 3 2014

Je reprends ce blog, quelques années plus tard, et peut-être avec enfin quelque chose à dire sur une base régulière. Twitter via Facebook c'est un peu court et avec l'année électorale qui s'annonce à Macao, l'appel du civisme se fait sentir, même si je n'ai toujours pas le droit de vote (eh oui, il faut être résident permanent, soit habiter l'endroit depuis 7 ans ET faire la demande de résidence permanente. En 2010, je serai normalement résident permanent, mais les prochaines législatives ne seront qu'en 2013). Tout ça pour dire qussi que je vais switcher vers l'anglais - I am going to switch to English: even though some of my acquaintances believe that Esperanto is still the way to go, I have given up even before starting (this is called common sense; no sarcasm there).

Today, I just reproduce this piece of good journalism by Destination Macau regarding the January statistics on the economy of Macao (this is dated February 6). The more I live in Macao, the more I think that things have indeed to be spiced up by adding humor to actual reporting and unraveling.

"Gaming revenue crashes, and then ... wow!
We all love Lusa, the Portuguese news agency, for their timely scoops on Macau's gaming revenue figures. But we have to wonder why they released a report just before the start of Chinese New Year showing that Macau's gaming revenue in January was, until that point, down 30 per cent on January 2008. They are smart enough to know that their mole at the DICJ was feeding them these numbers in the full knowledge that Chinese New Year would make them irrelevant in a week's time. But they are also smart enough to know that most US-based fund managers and investment-banking analysts are not knowledgable enough to appreciate that.
The reaction was predictable. Shares in the US-listed operators were hammered. LVS was hit hardest, down almost a third over the week. This is despite the fact that investors would know better if they had memories that could stretch back further than the last piece of bad news. If they could go back to January 2008, they might have remembered that was the month that the Amax deal at Crown kicked in, and VIP revenues went off the charts. This January, Crown's revenues were about half of what they were back then. It was an anomaly driven by a surge in credit and commissions, which has now been corrected.
And then along came Chinese New Year. Even the normally dependable South China Morning Post chose to write reports from the comfort of Quarry Bay when the revised numbers were leaked this week. Those numbers showed that – whoa! – revenues for the first six days of the new year period were nearly the same as last year's comparable period, and the month's overall revenues were only down 17 per cent, at almost 9 billion patacas. If they or anyone else had hopped on a ferry during those six days (that is, if they could have bought a seat), they would have seen that Macau has lost none of its attraction for Chinese at this time of year. The main gaming floors at every major casino were packed. Grand Lisboa executives talked about numbers that were close to their opening days in 2007. The Venetian received 3 million visitors for the month. Even MGM Grand had a spike.
Overall, visitor numbers were 1.5 per cent lower than the same period last year – despite the restrictions on travelers under the Individual Visitation Scheme. In all, about 650,000 tourists crossed over during Golden Week alone. Ku Keng Min, head of the immigration authority, said the numbers were "beyond expectations". He told local media: "Initially we [the Immigration Department] expected that the border crossings would be jumped during the week, but I thought the numbers would still be normal due to the tightening of the individual visit scheme, the separate visa applications to Hong Kong and Macau and also the global economic environment." Ku thought wrong.
To be here, in the midst of an economic recession of incomparable magnitude, with Chinese government officials openly worrying about social unrest if the slowdown continues, and to see this kind of performance at Macau's casinos is remarkable. February may well struggle to follow January's act, but we fail to see how anyone in this industry could not be encouraged by the determination of Chinese gamblers to indulge their favorite pastime at this time of year."