Macau's rotten basket of riches - PROAZN.COM COMMUNITY: Asian Men and All Races of Women Coming Together

AZN · #1 (**permalink**) 04-06-2008, 10:05 PM

Macau's rotten basket of riches
By Kent Ewing

HONG KONG - The news, released last week, that tiny Macau - a sleepy, underachieving Portuguese enclave until its return to Chinese rule in 1999 - has become the richest place in Asia seems counterintuitive to anyone who has been there recently. A closer examination of the figures supplied by the Macau Statistics and Census Service reveals that you should always trust your intuition.

While chief executive Edmund Ho Hau-wah may crow about Macau's new, unrivaled place in the region, this gaudy new status is actually more of an indictment than a celebration of his nearly nine years at the helm.

Here is the good news - Macau's booming casino industry boosted per capita gross domestic product to US$36,357 lastyear, a rise of 26%. That surpasses perennial regional gross domestic product (GDP) superstars such as Japan, Singapore, Hong Kong and Brunei and means the territory now ranks 20th on the list of the world's top-performing economies, ahead of Italy and just behind Germany.

That is where the good news ends. This is neither an economic miracle nor a model that anyone in Asia - or elsewhere - should aspire to follow.

All of Macau's newfound wealth has been generated by casino revenue, which grew 47% last year, so GDP figures present a false economic picture of the city with a population of 538,000. Consider this: the rise in median monthly salaries has not come close to keeping up with Macau's soaring GDP, increasing only 7.5% from a year earlier and now standing at 7,930 patacas (US$990), well below the earning power of its prominent Asian neighbors.

A look at personal consumption expenditure also clearly puts Macau, which has a land mass of only 16 square kilometers, in a far humbler place than its garish GDP banner suggests.

Personal consumption accounted for only 21% of Macau's GDP last year. In Hong Kong, 60 kilometers northeast, personal consumption accounted for 60% of GDP and personal consumption expenditure per capita was $17,800, compared with Macau's $7,500.

Where do you find the rest of Macau's whopping GDP? Most of it has gone into building a gambling mecca that has become the Las Vegas of Asia. Indeed, last year Macau overtook the Las Vegas Strip as the richest gambling market on the planet.

Macau has long been known as a haven for gamblers, but that reputation was greatly enhanced in 2002 when the gaming market was liberalized to include foreign players. Before that, Hong Kong-born billionaire Stanley Ho Hung-sun, now 86, had monopolized the industry for four decades. Las Vegas gambling moguls seized the opportunity and poured money into the city, which now boasts 30 casinos. The Venetian Macau, which was built by the Las Vegas Sands Corp and opened last August, is the largest casino in the world.

While Macau's gambling dens have lured millions of visitors to the city - most of them from mainland China, where gambling is illegal - those tourist dollars are going mostly into the pockets of casino moguls, with ordinary citizens left to pick up the scraps that fall from the banquet table.

Making matters worse for ordinary folk, inflation - as measured by the composite consumer price index - raced along last month at 9.47%, a 12-year high. Rents rose 15.6%, and the cost of a doctor's consultation shot up 24.2%. Add to that sharp hikes in food prices that have also hit Hong Kong and the mainland and the reported 7.5% jump in median monthly income starts to look like a negative.

Unemployment is a mere 2.9%, but that, again, is due to the casino boom. Alarmingly, Macau's younger generation is increasingly choosing to drop out of school in their teens to take casino jobs that pay as much as $2,200 a month. Gambling revenue has allowed the government to boost spending on education, but at the same time casinos are snatching would-be graduates away with the lure of easy money for work that, most likely, will be a dead-end.

Predictably, the growing gambling culture has also led to official corruption at high levels. The poster boy for this trend is Ao Man-long, the former secretary of transport and public works who in January was sentenced to 27 years in jail after being convicted on 40 counts of taking bribes, money laundering and otherwise using his position to help property developers win mega-dollar construction deals.

Prosecutors accused Ao of accepting kickbacks for 41 public-works projects - most of which were either linked to or inspired by the expanding casino industry - leaving him with a personal fortune of more than $100 million, an amount 57 times his reported income as a minister. His illicit wealth reportedly included not only cash and bank deposits but also watches, jewelry and an extensive wine collection.

Casino-related corruption has also seeped into the police department, where one officer turned loan shark was arrested for financing the gambling habit of at least 15 of his colleagues and another was charged with embezzling $36,000 to pay off his gambling debts.

The city's May 1 Labor Day celebrations have in the past two years turned into sometimes violent protests, and official corruption is one of the sticking points with the angry mobs. Another grievance is the migrant labor that has been imported to support the construction boom fueled by the proliferation of casinos. This cheap foreign labor keeps wages down for the average Macau-born worker.

Last May 1, 2,400 demonstrators turned out to air their grievances, and police fired warning shots in the air when the protest turned into a riot. One of the shots apparently struck a passing motorcyclist, who survived the ordeal. Since economic and social inequality are getting worse, not better, in Macau, the protesters should be out in force again next month. One of their favorite chants last year - "Edmund Ho step down" - is likely to be popular again this year.

The 53-year-old chief executive is unlikely to heed the call of the disgruntled masses. The former accountant has clearly aligned his administration with the rich and powerful and does not deign to acknowledge the complaints of those who are the losers in his distorted vision for the city.

Ho, however, must give up his office when his second term expires in 2009, and he will leave a tainted legacy. The lesson of Ho's single-minded vision for his as-yet unnamed successor - is a simple one: don't put all your eggs in one basket, and dispose of the rotten ones.

Kent Ewing is a teacher and writer at Hong Kong International School. He can be reached at kewing@hkis.edu.hk.

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