Weaker Macau economy softens government policies

Monday 13th of July 2015

Macau's deteriorating economy has been a nudge for the government to think more constructively on its agenda to balance economic diversification and full employment, Bernstein Research analysts say.

The city’s economy, which saw GDP decline 24.5 percent year-on-year in 15Q1 and government fiscal surplus decline by 58.3 percent in 15H1, has led to government policy turning more accommodative.

Bernstein says indicators of the government’s softening can be seen in the transit visa policy being reversed to permit Chinese passport holders entering Macau for the purpose of onward travel to stay for seven days as opposed to five.

“This policy reverses the tightened transit visa policy implemented one year ago. We believe this relaxed rule is positive for Premium Mass and VIP.”

Other policy changes include abandoning the cap on Chinese visitors at 21 million for 2015.

On July 9 when addressing to the Legislative Assembly, Macau's Secretary of Social Affairs and Culture effectively reversed his stance, saying he has become "confident in… promoting Macau and increasing the number of tourists".

“We believe the proposed measure is largely optical in nature so as to placate certain elements within the Macau polity who are concerned about unfettered Chinese visitation impacting local quality of life.”

The last point mentioned is a softening stance on the smoking ban. If smoking lounges - or another form of compromise - are allowed during the committee stage of the smoking ban bill, “we would view this as an upside catalyst.”

“It would remove a key policy risk overhang on the sector for which we forecast a fundamental bottom towards the latter part of this year.”