MACAU BUSINESS A broader question concerns the way the new concession
contracts and the operators’ commitments will be encompassed in China’s national development plans, namely those designated for Macau: One Centre (of world tourism and leisure), One Platform (for economic relations with Portuguese- speaking countries), and One Base (for cultural exchange among different cultures, with Chinese culture being the mainstream), as explained in the Greater Bay Area (GBA) regional integration plan. Within this framework, what can be assigned to gaming operators? Each operator “can contribute to these goals, namely by carrying out investments and developing MICE, and supporting more cultural events” or by investing internationally, with Macau as a base. Since Ho Iat Seng has set his sights on Hengqin as a “Second
Macau”, it is likely that gaming companies will be encouraged or required to invest in the neighbouring island with gains obtained in Macau, Ramirez suggests. The investment requirements put forth at large by the
Government will be interwoven with the length of the future concessions. In 2001, the gaming law set a maximum duration of 20 years. Will this be replicated this time around? Some analysts are floating the idea of halving the concessions’ length. Wang Changbin, director of the Centre for Gaming and Tourism Studies at the Macao Polytechnic Institute (IPM), made the case for 10-year-long licenses in an article published in the Las Vegas Gaming Law Journal. “A 10-year concession should generally be long enough for an operator to develop a large-scale project, while a review and a renewal every five years extends the government’s flexibility to make some changes if necessary”, Wang elaborated. The scholar
argued that, while the 20-year period served the interests of the operators well, making sure that “the concessionaires make a profit from the concession”, it made it “difficult for the government to replace a possibly unsatisfied concessionaire or introduce more operators to the market in a timely manner”. Alidad Tash also contemplates the possibility of the 20-year span being reduced. “If so, ten years should be the minimum. Anything shorter makes the entire re-bidding process a perpetual one”, he argues. Carlos Siu Lam establishes a clear link between the amount and the type of investment which gaming companies will engage in and the contracts’ length. “I think the contract duration depends on what Macao wants to achieve, and what roles and amount of investments are expected from the concessionaires. If there are substantial investment requirements, the contract needs to last for some time to justify their investment”, he stresses. Ben Lee also highlights the same kind of connection. For
instance, “if an emphasis was to be placed on non-gaming investment, such as theme parks or other large-scale entertainment facilities, it would be extremely difficult to justify those sorts of investments on a ten-year horizon, thus rendering a continuation of the 20 years’ concession a likelihood.” If we do witness a repeat of a maximum 20-year period, it
would take us to 2042, just seven years short of the special 50-year period agreed in the Sino-Portuguese Joint Declaration on the Macau Question. Why not stretching a few more years? Jorge Oliveira points out that the length of the concessions is a political decision, not a technical one. “If the final term of the new concessions is [up to] twenty years, they will end in June 2042; perhaps it is wiser to consider 19 December 2049 as a final term”, concludes Oliveira, who heads the JCO consultancy and served as Portugal’s vice-minister for foreign trade and investment between 2015 and 2017. Meanwhile, as authorities remain tight-lipped and keep the
cards very close to their chest on the gaming law review and the future public tender, and amid the uncertainties resulting from the economic downturn and an unpredictable external environment - what should casino operators do? Alidad Tash recommends “behaving like a good corporate citizen”, by embracing or enhancing “more non-gaming elements in your integrated resorts (even if they lose money)”, placing more locals in upper senior management, holding more charitable activities around Macau and, never forget, “praising the wisdom and generosity of the central and local governments at every opportunity”.
24 OCTOBER 2020
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