MACAU BUSINESS Macau Business: The Macau gaming sector
is evolving. Internal and external reasons are changing its paradigm, from heavily depending upon VIP gaming to more mass market. More gamblers instead of volume of bets. Is this good news for Macau Government strategy? Paulo Martins Chan: Whether you like it or not this is the way out. This is what we need to do. In the past we were depending too much upon the VIP market and when there are some economic factors that affect this group of people our revenue will be affected. So, I think the only way out is to go to the mass market. The example is very easy. For instance, if
we’re talking about fashion, when the economy is affected the first to be affected will be the designer labels, the high end, while the ones like Zara and H&M will still be full of customers. That’s the reason we need to develop the mass market more.
MB: Which means we need more tourists; but this is a small town with infrastructure delays which will not permit us to go from 30 million visitors to 55 million in order that the mass market be able to replace part of the VIP revenues we’re losing. So, public and private needs to work together, right? P.M.C.: Sure. Although tourism is not my area
I understand that the Macau Government is exerting a lot of effort in order to develop better infrastructure, better hotels. For instance, we know that the Zhuhai-Macau- Hong Kong [Bridge] will be finished at the end of next year, perhaps with some delays, which is also very important for the development of Macau’s tourism.
Developing integrity and quality of the industry
MB: You were recently appointed to this position and the government now has a different approach to the development of gaming. What is the government’s strategy for this industry? P.M.C.: In future, we’re going to develop the
integrity and quality of our gaming industry more and regulate it more. In the past, the development was very fast and revenues grew enormously. We’re now facing an adjustment period, already for 25 months, so it’s time to think of what we should do, and to better regulate the industry, which will be advantageous to all parties concerned.
MB: The market slowdown is also cleansing the industry of a huge number of junkets. These elements were also seen as a ‘necessary evil’, if you want to put it that way, to the local industry. Is the slowdown
helping the market become more transparent? P.M.C.: We have to recognise the contribution of the junkets over the years because they were a mainstay of gaming revenue. They worked very hard in the past and still have a huge value in our sector. So, I wouldn’t say they had any negative impact upon the government. Of course, during the operation there are things that can be improved, but that doesn’t mean they are bad. Secondly, as we’re in a market economy, things have evolved as you mentioned. All the participants in the economic activity have to adjust to the market. Some changes in the junkets is normal; maybe they have to join together, become more powerful or financially stronger.
MB: Is this the message you are passing to the junket industry? P.M.C.: We’re looking for stronger junkets.
Financially. Because we’re revising the law and the orientation is stronger financial requirements; and also some roots in Macau, which means that a certain percentage of the shares should belong to Macau residents.
MB: You’ve been talking about reinforcing
regulations, which is one of the main tasks of DICJ. What draft bills can we expect in the near future from this office? P.M.C.: We’re working very hard on the bill for the junkets and several other legal documents such as the conditions for entering a casino, and are also thinking about the restructuring of DICJ.
Reinforcements for DICJ MB: What kind of restructuring can we
expect? P.M.C.: It isn’t the right time to talk about it but the idea is to make [the Bureau] more functional by adjusting it to the development. We haven’t hired personnel for a long time; we have a very small structure, so I think it’s necessary to change in order to adjust to the sector’s development.
MB: The government has announced that
it’s revising the existing regulations for electronic table games. What’s the primary objective? P.M.C.: Technology is developing a lot; we
have to change some standards in order to make it fairer for the players. On the other hand, we’ve upgraded our version of the slot machines, so some technical adjustments are necessary. Again, just to make sure the games will be fair for the players.
MB: Any caps on electronic table games?
Cutting, for instance, the number of seats (currently 50-60) per gaming table to fewer seats? P.M.C.: Electronic table games are counted as
table games, subject to the 3 per cent annual compound growth limit for 10 years until 2022.
MB: Any caps on slot machines? P.M.C.: No cap on the number of slot machines at this moment.
MB: New mega resorts in Cotai are anxious, to say the least, on how many gaming tables they will get. The number of tables might affect the type of loans they get from syndicated banks, their return on investment, the way their stocks perform. Shouldn’t the government make these numbers available way before operators start to invest billions of US dollars in their new properties? P.M.C.: A few years ago the government
already set up the policy for the allocation of tables, especially the increase in number of tables until 2022 with an average of 3 per cent increase per year. So, I think this picture was quite clear for everyone since this policy was announced. Of course, the complete number depends upon many factors within the macro economy or the economy of Macau, so the government decides under those circumstances and regulations.
MB: Nevertheless, that 3 per cent, that seems very clear, isn’t exactly per year. As an average allows the government to give more in one year [and different numbers to different operators] than in another. So, people still don’t know exactly. P.M.C.: As you mentioned, it’s an average.
This year, we have two resorts being inaugurated and next year one or two, so the policy allows some flexibility in allocating tables. Maybe in the last years there will be no resorts opening so the policy has this advantage.
MB: 100 tables to Wynn Palace to start with. Why this number? P.M.C.: The decision was made based upon a
number of factors, including but not limited to whether the projects will enrich the tourism elements of Macau, stimulate the development and growth of local small and medium enterprises, stay in line with the government’s policy of limiting the number of gaming tables to 3 per cent annual compound growth rate and assist Macau in establishing itself as the World Centre of Tourism and Leisure.
SEPTEMBER 2016 21
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