May 03, 2007
Macau riots

Macau's Labour Day riots have at least achieved some measure of success: they've got people talking. There's plenty of advice streaming out of Hong Kong as to what the problem is and how to fix it, while newspaper editors give thanks to the protesters for filling many column inches. Jake van der Kamp in today's SCMP gives a concise summary (reproduced below the jump) of why ordinary Macanese workers felt pushed into rioting. And in all the reporting, at least in Hong Kong, there's just a hint of schadenfreude. For many years Macau has gathered the garlands while Hong Kong faced the brickbats...and one can sense the smug smirks in Hong Kong Government offices as they say "But that would never happen here..."

More interesting is this article in the (still gated, still the same old) SCMP which looks at the differing media responses in Macau and Hong Kong to the riots:

The media in Macau was more muted than their Hong Kong counterparts yesterday in their coverage of the Labour Day march in which police fire on protesters. While Hong Kong papers ran reports questioning the police's handling of the protest, Macau's focused on the force's insistence that opening fire was justified.

"It is down to a difference in culture," Chinese University political analyst Ivan Choy Chi-keung said. "Macau is a place dominated by pro-Beijing, pro-government people, and you can see many civil groups are set up and run by these people."

He said the disparity could be traced back to the 1960s - while Hong Kong's leftists were sidelined, those in Macau gained the upper hand. Mr Choy, who taught at the University of Macau in the early 1990s, noted that Hong Kong was a more open society.

"The big newspapers in Hong Kong are kind of anti-government - cynical about the government," he said. "The two biggest Macau newspapers, the Macau Daily News and Jornal Va Kio, are owned by pro-China people and in sympathy with the government."

Perversely, the Macau riots reveal an openly capitalist economy. Open immigration has kept wages down even though per capita GDP is shooting through the roof. Growing inequality has lead to resentment and anger that has spilled over to the streets. What is the solution? Some kind of redistribution of wealth to keep the poor quiet, for example through housing subsidies? That worked in Hong Kong. Or just wait and hope the trickle-down effect can override the downward pressure on wages from mainland immigration?

And most of all, are the right people watching? In many ways Macau is a microcosm of the large economic and social forces at play in China. The stresses of inequality, the impact of migration (in China's case, from the farm to the city), the discord between growing GDP and a lack of real wage growth, social order, corruption and more. They might hope it's an isolated incident, but Macau could well be China writ small, in more ways than one.


"Incensed by a lack of jobs and low pay while mainland labour floods in to drive Macau's casino boom - and accusing the government of corruption - the protesters mounted the most direct challenge yet to Chief Executive Edmund Ho Hau-wah, calling on him to step down."
SCMP, May 2

I cannot substantiate that bit about government corruption, although historically I don't think anyone ever bothered to do so in Macau. It has always been taken as a given. I can, however, substantiate the complaints about low pay and immigrant labour.

Pardon me if you remember seeing the first chart here only a short while ago in this column but when a chart makes a strong point I think it worth repeating. It is certainly worth repeating in the context of the so-called riots in Macau. This is a town that operates on a fascist economy and Macanese workers have reason to protest.

The red line in the chart represents Macau's gross domestic product per capita in pataca of the day terms. It is shown here as an index with a base of 100 for December 1999, the month of the handover to Chinese sovereignty. Since that time, GDP per capita in Macau has more than doubled.

Now look at the blue line. It represents pay for workers in Macau's gambling dens. There is no doubling here. Using that same index base of 100 for December 1999, these people were paid 138.20 at the end of 2006, seven years later.

This works out to a compound average gain of less than 5 per cent a year, which is not much when you remember that these pay figures are expressed in pataca of the day terms, which are not adjusted for inflation, and inflation in Macau is now running at 5 per cent a year. But gambling workers are among the best paid workers in Macau. Look at the green line. It represents the average pay of service and sales workers and this, over the seven years of Macau's existence as a special administrative region, has gone from 100 to only 113.7, a compound average gain of less than 2 per cent a year.

Macau's economy has grown rich. Macau's workers have not. The money has gone elsewhere, mostly into the pockets of casino operators, although others undoubtedly also benefited. I think it safe to assume that the operative rule here required only that the money go into pockets that were already well-filled, as I say, a fascist economy.

This obviously leaves you with a question, however. In normal circumstances any economy that has boomed as much as Macau's has done would soon encounter a shortage of workers and wages would rocket up as employers competed for the few idle hands left to employ. Why has this not happened in Macau?

The second chart gives you the answer to this question. Macau just imported the workers, mostly from the mainland but also quite substantially from Hong Kong, which seems unusual but I suppose was done to get English-speaking hotel staff.

Over the past two years alone, the proportion of non-resident workers on the employment rolls has doubled from 12 per cent to 24 per cent. Over that period, 57,000 new jobs were created in Macau, quite an achievement from a base of 229,000 jobs.

Three-quarters of these new jobs, however, were filled by immigrant workers.

Take note here also that we are talking only of declared foreign workers. I am far from confident that all non-Macanese workers declared themselves. The immigrant effect is almost certainly even greater than the figures suggest.

And undoubtedly this did a great deal to keep wages down. That's why I think it can be taken as no surprise that Macanese workers staged a protest on Labour Day. It could even have been enough to make them riot. But they didn't really. It was Macau's police who came closer to doing that.

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[boomerang] Posted by Simon at 10:43
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August 29, 2006
Monopoly money

It's not easy being a monopolist for 40 years, reaping massive profits, before the harsh winds of competition ruin your monopoly rents. Just ask casino mogul Stanley Ho, who's been mouthing off for weeks. From the unlinkable SCMP:

Gaming mogul Stanley Ho Hung-sun yesterday accused the Macau government of favouring his American competitors. The tycoon also suggested that "vicious competition" in Macau's casino industry may incur the ire of Beijing, while attending the launch of budget airline Viva Macau's first Boeing 767 jetliner at Macau International Airport.

But William Weider, chief operating officer of Las Vegas Sands, said on a different occasion that competition was inevitable and beneficial to Macau's economy.

A grim Mr Ho said: "I can't take it lying down. Why do you so favour the Americans? It's unfair." He said some US stakeholders in the gaming industry had broken their promise of "peaceful competition" while disregarding Macau's future. "At that time they said there would be peaceful competition. We invest in Macau all the money we earn, but you guys [Americans] just take it away."

The tycoon said some US stakeholders had tried to break his helicopter monopoly - important for bringing in high rollers - but he would not give it up.

He also complained about losing casino staff: "They never trained any staff but took away ours." He said the cutthroat competition would hurt the long-term interests of Macau, and even Beijing. "In the long run, they may take away my business and affect Macau. They may send people to the Legislative Assembly and take control of Macau. It may not be good for Beijing either."

Earlier this month, Mr Ho called for an industry chamber to regulate the stakeholders. The tycoon then said one third of his Sociedade de Jogos de Macau's VIP gaming halls faced bankruptcy, putting thousands of jobs at risk.

You hear that, you nasty Americans? Stanley's going to call on Beijing to take control if they don't stop being so, umm, capitalist. Or something. It's not fair. Except for Macau itself, which is experiencing booming economic growth and a massive influx of investment.

Perhaps Mr. Ho should take a look at Hong Kong's gambling "monopoly", the Hong Kong Jockey Club. In this case, the monopolist faces massive competition from illegal bookmakers. So naturally they respond as any player does in a competitive market: they look to match terms. Indeed the HKJC has been lobbying the government for years to change the legislation and tax regime to allow the HKJC to better compete with the illegal bookies.

As I said, it's not easy being a monpolist.

Update 12:51

Hemlock joins in kicking a monopolist while he's down:

The putrid stench of hypocrisy permeates the Big and Little Lychees this morning. In Hong Kong, Gillian Chung of the inane Twins duo sobs to the press in the company of fellow Canto-stars about the terrible ‘ordeal’ she has suffered after gossip rag Easy Finder ran blurred photos of her apparently adjusting her bra strap. All sorts of publicity-seeking invertebrates and moralizing bores, from politicians to feminists to the Society for Truth and Light, are jumping on the bandwagon. Were my hands not occupied gripping an extra-large air motion discomfort receptacle, I would be tempted to give Chung a slap on her tear-streaked face and a reminder to tone down the hysterics. Much more weeping, and she’ll start giving people the impression it’s just an act. They might even think that rather than being the distraught, innocent victim, she is no more than a talentless bimbo who signed up to become a manufactured product created by a company whose boss sleeps with every starlet and her mother and gets his way by ordering kidnapping, rape and choppings. Which, being totally untrue of course, would be tragic. “What I am most worried about,” she tells us, “are my young fans who look up to me as a role model.” They scare me, too.

Meanwhile, in Macau, Stanley Ho is equally distressed about how much harder life is when you no longer have a casino monopoly. In recent remarks on the subject he has accused his new American rivals of poaching staff that he has trained (but also somehow threatening people’s jobs) and taking money out of the city. He has even dropped hints that Beijing will not be happy. Sheldon Adelson, owner of the space-age Sands casino and the vast, forthcoming Venetian, says that the real competition has barely started – wait until Steve Wynn sets up shop.

Ho’s plight is a vivid reminder of how our local tycoons are to real businessmen as Twins are to the Berlin Philharmonic. They don’t do creativity, acumen or skill. All they know how to do is corner a market with Government help and skim the wealth off. Hong Kong’s property development industry has made Li Ka-shing, Lee Shau-kee and the Kwok brothers multi-billionaires, and officials and the public fawn over them as if they were Cantopop’s finest. But the industry is little more than a state-organized pyramid scheme. A chimpanzee could make money out of it. And all the members of the cartel have ever done with their gains is buy up other rigged industries at home, like utilities, bus lines and supermarkets. Only Li has ventured much overseas, and then only to indulge in (sometimes clever) asset trading. Henderson or Sun Hung Kai wouldn’t last five minutes in an environment where you fight to add the most value. They survive only because consumers have no choice. The same, of course, applies to our political leadership. Some places get Bill Gates or Richard Branson, Ronald Reagan or Margaret Thatcher. Here, we’re impressed if you can adjust a bra strap.

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[boomerang] Posted by Simon at 09:27
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May 31, 2006
Faster than a speeding bullet

Quick, name me the world's fastest growing economy. China? Saudi Arabia? Nope - try little 'ol Macau:

Macau’s gross domestic product (GDP) grew by 18.8 percent in real terms in the first quarter of this year, as compared with the same period of 2005, official figures showed.

According to data published Tuesday by the Statistics and Census Bureau, GDP growth was mainly due to a 14.9 percent increase in gaming revenues, a 19.9 percent increase in visitor spending – excluding gaming -, growth in investment in private construction with large projects being carried out and a 26.9 percent increase in exports.

If this gambling bubble ever bursts, it's not going to be pretty in Macau. In the meantime, why isn't the Macau government getting ready for an IPO?

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[boomerang] Posted by Simon at 16:36
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February 13, 2006
Trying to Clean Up Macau

I read today about some small potato immigration officials in Macau that got caught 'red-handed' with bribes they forced out of an air cargo company. I applaud the effort, but wonder how it is that far more egregious cases of corruption in the former Portuguese enclave seem to always go completely unpunished. For too long have mutual back-scratching between members of the (dubious) private sector and government officials gone unpunished.

When I encounter corruption in China, I find that people accept its existence, but also tend to believe (or are resigned to the fact) that there will be a day in the future when those practices may no longer be possible.

But in Macau, a city that has arguably been in permanent twilight for two centuries, not only the corruption itself but also attitudes have become so institutionalized and entrenched that everyone regards it as inevitable. New arrivals, hoping that the current casino boom will also bring about change in the formerly sleepy backwater, often come to realize how utterly futile their hopes are, given how much local interests quietly despise all these newcomers that want to change old Macau's ancient traditions of quiet corruption.

I never thought I'd say this, but I think that any change in social mores regarding corruption in Macau will have to come from China. And maybe they will, as the mainland starts to belatedly grapple with the social and political dimensions of corruption. If Hong Kong is the laboratory where China can experiment with democracy, Macau can be the lab where China tries out new graft-busting techniques.

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[boomerang] Posted by HK Dave at 15:35
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September 16, 2005
Old fashioned politics

Macau often gets called the Las Vegas of Asia. Now it's going for the Chicago of Asia:

Macau's Commission Against Corruption has unearthed a massive vote-buying ring. The commission said Thursday it has recommended prosecution of 485 people...

The commission identified the leader of the ring as a businessman surnamed Wong. He is said to have spent 215,000 patacas (HK$208,550) to secure 430 voter cards through his subordinates. Macau law requires residents to show the cards when they vote...Personnel managers at Wong's company, which was not identified, and two subsidiaries, organized a voter- registration drive for staff last spring. Employees then submitted their voter cards to the managers in exchange for 500 patacas. If they gather 10 more cards from their family and friends, they get an equal reward.

Enterprising fellow. So who ratted them out?
The anti-graft agency started its investigation in May after receiving a complaint about a voter accepting 250 patacas for his card. Wong was soon identified and picked up in a restaurant that month while in possession of multiple cards.
One voter was going to ruin it for everyone and take only 250 patacas! Otherwise the whole scheme would have gone ahead without a hitch. Let that be a lesson to your vote buyers.

As for the state of booming Macau, perhaps it's time to stop looking at the glittering new casinos and rising stock prices, and start following a new index:

Votes were priced at 1,000 patacas in the 2001 cases. Vote buyers this year have promised to pay 1,000 patacas on election day in addition to 500 patacas in cash or gift certificates for voter cards.
A 50% rise in 4 years. Not a bad return.

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[boomerang] Posted by Simon at 11:26
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