Several days before the Lunar New Year saw Macau’s streets packed with the pandemic controls abruptly lifted. Even though the crowd shows encouraging numbers, Macau still ponders on what the future will be like despite the influx of tourists and casino enthusiasts happening.
The tourists from mainland China can be seen even in the winding passages that lead up to the landmark of the historical 17th-century ruins of St. Paul’s cathedral. The local shops that line up along the road where popular snacks like almond cookies and meat jerky saw sales go through the roof with the unprecedented number of visitors.
One of the business owners in the area surnamed Li told reporters, “We don’t have enough goods for this Lunar New Year as we didn’t expect this.”
This new surge of tourists after a long drawn-out period of pandemic lockdowns is indeed a welcome sight but news from Beijing shows that the former Portuguese colony will not be back to its old self. There are directions to diversify and move away from its gambling-reliant economy.
New directions for Macau
There has been a years-long anti-corruption campaign that has clamped down on money laundering and gambling led by President Xi Jinping. This conflicts with how Macau has found its economy firmly entrenched in casino resorts and other gambling entities.
Gaming consultant, David Green told reporters, “The government has an inherent conflict. It needs to be seen by the central government to be promoting non-gaming, but… it has to be cognizant of maintaining its revenue stream.”
The city of Macau with a total population nearing 700,000, is also the only place in China where the gambling industry operates legally. Gamblers from mainland China as well as global tourists bring in a steady and flourishing economic lifeline to the territory.
Although the pandemic did have a great impact on Macau garnering revenues taking an unprecedented deep plunge to as low as 42 billion patacas (USD5.2 billion) when the government shut down most businesses at the height of a coronavirus wave last year.
Old ways cannot suit the forthcoming changes
Even though there are just six operating concessions in Macau, this has grown into a multi-billion dollar industry that generated six times more than the gaming revenue of Las Vegas before the pandemic hit.
By December, the government still awarded new decade-long concessions to all current operators but they did add new requirements for non-gaming investment. These companies have pledged a total of USD14.9 billion on projects that would also include theme parks, convention and exhibit venues, fine dining establishments and live performance venues.
This is as “a step forward”, shared former lawmaker Sulu Sou. Macau has to set clear demands for diversification instead of relying on vague slogans as it had for years. He further added, “Changes in the industry and shifting attitudes toward gambling in mainland China forced the [Macau] government to spell these requirements out in black and white,”
Sou also highlighted the arrest and sentencing of “junket king” Alvin Chau. The prison sentence was 18 years in prison for illegal gambling on a vast scale. He said, “It was a major signal to society that even as we return to normality, we can’t use the old ways to make a fortune anymore.”
Chau was a prominent player in Macau’s gambling industry founding Suncity and building a business that thrived on enticing high rollers from mainland China to gamble in Macau, by running VIP rooms and extending credit for bets. The VIP guests contributed around 15% of industry earnings before the pandemic, but the majority of this would be “permanently gone” due to regulatory concerns, according to Credit Suisse analysts who earlier in the month digressed, “China’s multi-year campaign against capital outflow and cross-border gambling carried on, rather than eased.”
The effects of the pandemic still felt
Just last month, Macau stopped most of its pandemic controls and reopened its borders. This was coming from Beijing’s abrupt move to pull out from its most stringent zero-Covid policy.
Residents like pharmacist Mariana Soares shared, “It’s a shock to the system.” referring to the sudden reopening that capped off nearly three years of anxiety and economic slowdown but also had a negative effect on things. She added, “Suddenly everyone is coming in and it’s like whatever happened before had been erased.”
Kam Pang, a studio owner, decided to close his business after two “mentally draining” years whereby he lost up to USD 25,000 when the government ordered businesses to close. “We couldn’t do business because all of a sudden we were in lockdown for half a month,” he said.
Determined to put the memory of the pandemic far back into the past, Macau officials have focused all efforts on the lunar new year celebrations with the hopes that the positive momentum can be sustained. So far, high-end hotels were fully booked during the days-long holiday and officials noted that weekend visitor arrivals have recovered to about half of the pre-pandemic levels.
A forecast made by Credit Suisse analysts sees that mass-market gaming revenue should be up to 55% of pre-pandemic levels by the end of the year, and 85% in 2024.
Soares, however, saw things in a different light. She would consider leaving Macau for better economic opportunities as how she can’t see things getting better with her home city. She said, “Macau will bounce back, I just don’t know whether it would go back to its glory days.”
Pang said he believed Macau was “slowly establishing new ways of surviving”. He added, “The question is whether people would like to come to Macau not to gamble but for other things.”
Changes have indeed been abrupt with how the pandemic restrictions were handled in Macau. Suddenly and swiftly that folks weren’t able to adjust to fully understand and adapt to the new changes. Would things have been better if the zero covid policy was slowly eased off? If plans of change were shared with the public and enough time is given to adjust to how things are going to be run? Afterthoughts on this folks? Just comment below anytime. We always look forward to knowing your perspective on things. Thanks!