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July 2, 2014 8:09 am
By Demetri Sevastopulo in Hong Kong
Macau overtakes Switzerland in income tables
Macau has leapfrogged Switzerland to become the world’s fourth richest territory per person, according to the World Bank, thanks to the influx of mainland Chinese gamblers and tourists.
The former Portuguese colony recorded per capita gross domestic product of $91,376 in 2013, behind Luxembourg, Norway and Qatar. The Chinese territory overtook Switzerland – where on average each person earned $80,528 – with an 18.4 per cent jump that was driven by buoyant gaming revenues.
Since Macau was returned to China in 1999, its economy has grown 557 per cent as the territory of 607,000 people has been transformed into a gambling mecca.
The most dramatic expansion has come since the Chinese territory scrapped a monopoly gaming concession in 2002 and awarded casino licences to six operators that include Sheldon Adelson’s Sand’s China, Wynn Macau and Stanley Ho’s SJM.
In 2013, Macau posted gaming revenues of $45bn – more than seven times Las Vegas – continuing a dizzying rise that has pushed unemployment down to 1.7 per cent. The bulk of the money comes from mainland Chinese punters visiting Macau, the only place in China where casinos are legal.
The local population has benefited from the casino growth through the number of jobs created, although residents are worried about the impact on housing prices and rents. The government has tried to spread the wealth generated by gambling by providing residents with annual subsidies. In 2014, it will provide permanent residents with a handout of about $1,200.
Analysts expect Macau to continue to grow strongly, especially as casino operators open hotel and gaming properties in the developing Cotai Strip area. CLSA, one of the most bullish brokerages on Macau, reckons revenues will reach $90bn by 2018, as more mainland Chinese travel to the territory, partly helped by high-speed rail and other transport links.
Macau will also gain from the expected 2017 opening of the world’s longest bridge that will provide a 30-minute road link from Hong Kong airport, which has more capacity than Macau’s own airport.
But some signs have emerged in recent months that growth is easing. In June, Macau saw its first year-on-year decline in gaming revenues since 2009, in a fall that analysts attributed to punters diverting money to the World Cup. But casinos have also been hit by the slowdown in the Chinese economy in addition to austerity and anti-corruption campaigns by Chinese President Xi Jinping.
Speaking recently in Macau, Steve Wynn, chairman and chief executive of Wynn Macau, said Mr Xi’s campaigns had barely had an impact, but added that luxury retail sales were “off by a small amount”.
“I am sure the new president of China is going to make a very important impact on China as he goes forward, but right here in Macau, things seem the same to us,” said Mr Wynn.
Casino stocks in Macau have also been hit by reports that the territory is clamping down on the use of Unionpay credit cards – China’s biggest credit card operator – to try to curb efforts to circumvent currency controls.
I am sure the new president of China is going to make a very important impact on China as he goes forward, but right here in Macau, things seem the same to us- Steve Wynn
Mr Wynn rejected suggestions that Chinese government concerns about money flowing out of China might hurt casinos in Macau, which ultimately requires approval from Beijing for expansion.
“There is freedom here and the people who are successful in China will travel, shop and spend their money as they fit, within certain reasons, within certain guidelines,” said Mr Wynn. “I don’t see any major change in that . . . As far as wealthy folks in China, just like they always have, they get to do what they want. And if that’s not true then that’s the first time in history that’s not true.”
The rise of Macau as a gaming haven has also spawned sports and entertainment tourism. Over the past year, the territory has hosted musicians such as the Rolling Stones and sports stars such as David Beckham and Tiger Woods.
In 2012, Macau was sixth in the World Bank rankings, behind Bermuda and Switzerland. The 2013 data did not include a figure for Bermuda, but based on its 2012 GDP per capita figure of $84,471, it will probably trail Macau when the data becomes available. The World Bank has also not yet received estimates for Monaco and Liechtenstein for 2012 or 2013, but based on the latest available figures the two would almost certainly top the rankings, pushing Macau and Switzerland down in the table.
Twitter: @AsiaNewsDemetri
