Industrial diversity can boost Macao economy
Macao faces a tough development problem: how to shift its economy's reliance from the gaming industry and diversify its economic activity. The Macao Special Administrative Region has to shift its reliance from the gaming industry in order to nurture the financial and technology sectors to ensure long-term economic development.
Macao has a very high per capita GDP, ranking among the top five economies, mainly thanks to its highly lucrative gaming industry. In fact, the ratio of the gaming industry in the SAR's total economy is almost half, while it contributes about 90 percent of Macao's fiscal revenue. This means the SAR should improve its economic structure to deal with possible economic fluctuations.
To preempt economic damage, the SAR has to strengthen its economic resilience by diversifying its industries, such as cultivating new industries including the convention and exhibition sector, cultural innovation industry and traditional Chinese medicine. All these industries, except for convention and exhibition sector, have very low output at present, especially when compared with the gaming industry, whose daily income is about 800 million yuan ($113.72 million).
The goal of the SAR government is to promote industrial development for optimizing and upgrading its industrial structure.
Perhaps Macao should promote industrial transformation by cultivating a sound financial sector first, and then focus on other industries. Three key areas－finance lease, wealth management and Sino-Portuguese yuan clearing－have great potential, and can help develop the local financial industry, considering their overall volume is still comparatively small. For example, the ratio of Sino-Portuguese yuan clearing business in Macao is less than 0.5 percent of the total.
Recent news reports that Macao would build a securities exchange drew widespread public attention, with the Monetary Authority of Macao saying that it is studying the feasibility of establishing such an exchange. But in terms of regional financial cooperation, Macao should develop differently from the Hong Kong SAR, by focusing on technological innovation.
How should Macao, the world's biggest gambling hub in terms of volume, choose its path of technological innovation?
Since Macao's urban development is similar to other Asian cities such as Seoul and Taipei, it could learn from their experiences. And these cities' experiences suggest Macao develop its financial sector to achieve technological innovation and diversified development.
However, when it comes to vital factors such as business environment and capital market that are closely related to finance, Macao's market is not mature enough. Plus, Macao's weak capital market also restrains its technological innovation capacity. No wonder it has not made much headway in technological innovation.
Compared with the economies of Chinese mainland cities, Macao's economy is unique. Its urban scale is small and economic structural diversity low, though its urbanization level is high. Which means Macao has to take multiple measures to achieve urban transformation.
As a small city, Macao should use capital to fuel technological innovation. It should also have a government department dedicated to technological innovation. Maybe it's time for the Macao government to establish a green technological innovation bureau to promote urban transition.
For starters, perhaps sand-box tests such as blockchain research or financial technology development may be conducive to boosting the transition and development of a relatively small economy such as Macao.
The author is director of Macao Sustainable Development Research Institute, Macao University of Science and Technology. This is an excerpt from a speech the author delivered at China Social Science Forum, International Forum on Cities in Ningbo, Zhejiang province, in November. The views don't necessarily represent those of China Daily.