MACAU BUSINESS Half-year impact
In light of the virus outbreak, public bodies have halted many of the services catered for the public, apart from emergency services. The Macau Association of Banks also noted at least half of the branches of each bank here have been closed until further notice; while the opening hours of the remainder have been shortened. The city’s largest telecommunications operator, Companhia de Telecomunicações de Macau (CTM), also announced its five outlets have been temporarily closed while the other three outlets have shorter opening hours. Not only large corporations, but the small and medium- sized enterprises (SMEs) — which make up over 90 per cent of companies here — have also been dealt a huge blow amid this turmoil.
“The high operating cost in Macau has made the
operation of SMEs extremely difficult during this predicament,” said Fong Kin Fu, president of the Federal General Commercial Association of Macau Small and Medium sized Enterprises. For instance, the food and beverage SMEs have been greatly affected by the plunge in the visitations and the lower expenditure of local residents since the onset of the epidemic, with “some seeing their business drop by 90 per cent or more”, he illustrated. As the administration has waived the rents for three months for the tenants at government-owned properties, Mr. Fong remarked: “Some SMEs have already been in talks with their landlords to ask for lower rents in this time period, and I hope some prominent groups and figures here could come out and lead by example in lowering or waiving the rents.” The Macau SME Association also remarked in a statement that some of its members have reported a decrease of over 50 per cent in their business volume. “Given the continuous spread of the novel Coronavirus, the number of visitors to Macau is expected to continue declining while the local economy will keep shrinking,” the Association said. “The bleak business climate for local SMEs might last for half a year or more.” The group also urges landlords to cut rents for the local SMEs and hopes the government could roll out supportive measures as soon as possible; for instance, waiving the electricity and water bills for businesses.
Under great pressure
The city’s economy has been lacklustre since last year. The latest official figures show the Macau economy has dipped for three consecutive quarters with a 4.5-per cent decline in the July to September period of 2019, the worst performance since the April to June period of 2016. Before the virus outbreak, the Department of Economics and the Centre for Macau Studies at the University of Macau predicted the city’s GDP will fall by another 3.7 per cent this year, over the debt accumulation and possible real estate bubble in the mainland, the expected ongoing disputes amid the trade war, and other external economic factors. Kwan Fung, an assistant professor of economics at the
University of Macau, noted the GDP of Macau would be subjected to great pressure in the first quarter with the drastic decline in the visitations. “I believe this adjustment period will only be provisional and local businesses could make it through this hardship,” the scholar added. “However, should the epidemic continue to escalate, it will then be difficult to pinpoint how large the economic impact will be.”
Investment bank Morgan Stanley has also explained lately
in a research report that assuming the Wuhan Coronavirus peaks in February or March, the economic growth of the mainland could be reduced by 0.5 to 1 percentage points in the first quarter and 0.15 to 0.3 percentage points for the global economy.
Should the virus persist and only peak in three to four months, the GDP of the mainland would be dragged down by 0.6 to 1.1 percentage points in the first half, and 0.2 to 0.4 percentage points for the global economy in the second quarter, Morgan Stanley remarked; adding the negative economic impact could be partly offset by stronger policy support.
“Unprecedented”
In the press conference announcing the 15-day shutdown of casinos, Secretary for Economy and Finance Lei Wai Nong reassured the businesses in the city to remain “unswervingly confident” towards the economic prospect of the city amid hardship. “The government will systematically roll out an array of measures in different stages to stabilise the economy,” the official said. Not disclosing any forecasted figures for the local economic loss during this epidemic, Mr. Lei only said: “It’s unprecedented in terms of the scale of this economic hardship faced by all industries in Macau, given the absence of travellers and domestic demand.” He stressed the government will “without any hesitation” launch various measures, including income tax and tourism tax relief programmes, enhancing the public investment to create more jobs, and policies to stimulate the local consumption.
MARCH 2020 27
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