Macau

Bureau of Economic and Business Affairs
Report
July 5, 2016

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Executive SummaryShare    

Macau became a Special Administrative Region (SAR) of the People's Republic of China (PRC) on December 20, 1999. Macau's status since reverting to Chinese sovereignty is defined in the Sino-Portuguese Joint Declaration (1987) and the Basic Law. Under the concept of “one country, two systems” articulated in these documents, Macau enjoys a high degree of autonomy in economic matters, and its economic system is to remain unchanged for 50 years. The Government of Macau (GOM) maintains a transparent, non-discriminatory, and free-market economy. The GOM is committed to maintaining an investor-friendly environment.

In 2002, the GOM ended a long-standing gaming monopoly, awarding two gaming concessions to consortia with U.S. interests. This opening has encouraged substantial U.S. investment in casinos and hotels, and has spurred exceptionally rapid economic growth over the last few years.

Macau is today the undisputed gaming capital of the world, having surpassed Las Vegas in terms of gambling revenue. U.S. investment over the past decade is estimated to exceed USD 12 billion. In addition to gaming, Macau is positioning itself to be a regional center for incentive travel, conventions, and tourism. The American business community in Macau has continued to grow. In 2007, business leaders founded the American Chamber of Commerce of Macau

Macau seeks to speed up its economic diversification to transform the city into a world center of tourism and leisure as well as a “commercial and trade cooperation service platform” between the Mainland China and Portuguese-speaking countries. The GOM has started various policies to promote economic diversification and sustainable development and create business opportunities for domestic and foreign investors.

Table 1

Measure

Year

Index or Rank

Website Address

TI Corruption Perceptions index

2015

N/A

transparency.org/cpi2015#results-table

World Bank’s Doing Business Report “Ease of Doing Business”

2016

N/A

doingbusiness.org/rankings

Global Innovation Index

2015

N/A

globalinnovationindex.org/content/page/data-analysis

U.S. FDI in partner country ($M USD, stock positions)

2014

295

dsec.gov.mo/Statistic.aspx?NodeGuid=32c3aaa0-214e-4130-b2d8-165ca32ea0f2

World Bank GNI per capita

2014

76,270

data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

Under the concept of “one country, two systems”, Macau enjoys a high degree of autonomy in economic matters, and its economic system is to remain unchanged for at least fifty years. The GOM maintains a transparent, non-discriminatory, and free-market economy. Macau has separate membership in the World Trade Organization (WTO).

Macau is heavily dependent on the gaming sector and tourism industries. The GOM aims to diversify Macau's economy by attracting foreign investment and is committed to maintaining an investor-friendly environment. Corporate taxes are low with a tax rate of 12 percent for companies whose net profits exceed USD 37,500 (300,000 Patacas). For net profits less than USD 37,500, the tax ranges from three percent to 12 percent. The top personal tax rate is 12 percent; however, the tax rate of casino concessionaries is 35 percent on gross gaming revenue, plus a four percent contribution for culture, infrastructure, tourism, and a social security fund.

In 2002, the GOM ended a long-standing gaming monopoly, awarding two gaming concessions to consortia with U.S. interests. This opening has encouraged substantial U.S. investment in casinos and hotels, and has spurred exceptionally rapid economic growth over the last few years. Macau is positioning itself to be a regional center for gaming, incentive travel, conventions, and tourism.

In 2004, Macau and the PRC implemented a free trade agreement, the Closer Economic Partnership Arrangement (CEPA). The agreement is similar to the Hong Kong-PRC CEPA. Macau’s CEPA currently provides tariff-free access to Mainland China for all Macau-origin products and preferential treatment for 48 service sectors. Since March 2015, Macau and China’s Guangdong Province have implemented an agreement on achieving basic liberalization of trade in services. The agreement has introduced the use of negative list under the CEPA framework that covers 134 service sectors and grants national treatment to Macau’s 58 service industries. In addition, this agreement has offered Macau most-favored treatment -- any CEPA-plus liberalization measures included in the free trade agreements signed by the Mainland China with other countries will be automatically extended to Macau. The framework and content of the agreement serves as a model for basic liberalization of trade in services between Macau and all of Mainland China. With the PRC’s launch of Guangdong Free Trade Zone in March 2015, industry observers mentioned that Macau has strengthened further its cross-border collaboration with Guangdong.

Foreign firms and individuals are free to establish companies, branches, and representative offices without discrimination or undue regulation in Macau. There are no restrictions on the ownership of such establishments. Company directors are not required to be citizens of, or resident in, Macau.

Other Investment Policy Reviews

Macau conducted the Trade Policy Review in May 2013 through WTO.

https://www.wto.org/english/tratop_e/tpr_e/g281_e.pdf

Laws/Regulations on Foreign Direct Investment

Macau's legal system is based on the rule of law and the independence of the judiciary. Foreign and domestic companies register under the same rules and are subject to the same set of commercial and bankruptcy laws (Decree 40/99/M).

Business Registration

Macau Trade and Investment Promotion Institute (IPIM) is an agency of the GOM with responsibilities of promoting trade and investment activities. IPIM provides one-stop service and notary service for business registration, and it applies all legal and administrative procedures to all local and foreign individuals or organizations interested in setting-up a company in Macau. http://www.ipim.gov.mo/en/services/one-stop-service/handle-company-registration-procedures/

The GOM defines a Small- and Medium-Enterprise (SME) as a company with less than 100 employees. The GOM has tailored-made several financial schemes for SMEs in order to boost their growth. One of the criteria of the schemes is at least 50 percent of company’s capital are owned by Macau residents.

Industrial Promotion

Macau seeks to speed up its economic diversification to transform the city into a world center of tourism and leisure, equipped with convention and exhibition facilities and a service platform for economic and trade co-operation between China and Portuguese-speaking countries. These policies are expected to create business opportunities for domestic and foreign investors.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors and domestic private entities in Macau have the right to establish and own business enterprises and engage in all forms of remunerative activities.

Since 2001, the GOM has been steadily liberalizing its telecommunications sector. The GOM has already liberalized the mobile phone and internet service markets. In November 2011, Macau Chief Executive Fernando Chui announced plans to liberalize the fixed-line public telecommunications network, which is monopolized by Companhia de Telecomunicações de Macau (CTM) under a concessionary contract which expired at the end of 2011. In June 2013, the GOM granted two licenses to CTM and to MTel Communications Co Ltd (MTel), ending Macau’s 32-year-old fixed-line telephone monopoly. In March 2015, the GOM granted four 4G licenses after six companies submitted bids in November 2014. The licenses are valid for eight years.

Certain residency requirements are imposed on three professional services sectors as described below:

Education - an individual applying to establish a school must have a Macau Certificate of Identity or have the right to reside in Macau. The principal of a school must be a Macau resident.

Newspapers and magazines - applicants must first apply for business registration and register with the Government Information Bureau as an organization or an individual. The publisher of a newspaper or magazine must be a Macau resident or have the right to reside in Macau.

Legal services - lawyers from foreign jurisdictions who seek to practice Macau law must first obtain residency in Macau. Foreign lawyers must also pass an examination before they can register with the Lawyer's Association, a self-regulatory body. The examination is given in Chinese or Portuguese. After passing the examination, foreign lawyers are required to serve an 18-month internship before they are able to practice law in Macau.

Privatization Program

The GOM has not mentioned any considerations of privatization programs in recent years.

Screening of FDI

Apart from several economic sectors such as gaming, water supply, electricity supply, cable TV, and public bus services run by private companies under concession contracts from the GOM, Macau has no investment approval procedure for both domestic and foreign investors.

Competition Law

Macau has no agency that reviews transactions for competition-related concerns, nor a competition law. The Commercial Code (Law No. 16/2009) contains basic elements of a competition policy with regard to commercial practices that can distort the proper functioning of markets. The GOM states that the existing provisions are adequate and appropriate given the scale and scope of local economy.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

Profits and other funds associated with an investment, including investment capital, earnings, loan repayments, lease payments, and capital gains, can be freely converted and remitted. The domestic currency, Macau Official Pataca (MOP), is pegged to the Hong Kong Dollar at 1.03 and indirectly to the U.S. Dollar at an exchange rate of approximately MOP 7.99 = USD 1. The Monetary Authority of Macau, the de facto central bank, is committed to exchange rate stability through maintenance of the peg to the Hong Kong Dollar.

Although Macau imposes no restrictions on capital flows and foreign exchange operations, exporters are required to convert 40 percent of foreign currency earnings into MOP. This legal requirement is not applied to tourism services.

Remittance Policies

Macau does not restrict the remittance of profits and dividends derived from investment, nor does it require reporting on cross-border remittances. Foreign investors can bring capital into Macau and remit it freely.

Macau has anti-money laundering and counter-terrorist financing legislations in place. In addition, Macau is not on the Financial Action Task Force (FATF) List of Countries identified as having strategic AML deficiencies. FATF, however, has recommended that the GOM continue making efforts to develop an AML/CFT framework that meets international standards, including an effective cross-border cash declaration system.

In terms of currency transactions involving significant amount of proceeds laundered, Macau was identified as a “Jurisdiction of Primary Concern” among “major money laundering countries” by the U.S. Department of State 2015 International Narcotics Control Strategy Report, although the GOM had taken significant AML measures.

In August 2015, Macau Monetary Authority (MMA), the city’s de facto central bank, signed a Memorandum of Understanding (MOU) on anti-money laundering actions with the People’s Bank of China. The MOU covers actions such as information exchange and cooperation on onsite inspections of casino operations. Furthermore, the Legislative Assembly approved unanimously in March 2016 Macau’s first terrorist asset-freezing bill, which is based on compliance with the United Nations Security Council resolutions. The legislators will debate the bill clause-by-clause before giving it a final vote.

3. Expropriation and CompensationShare    

The U.S. Consulate General is not aware of any direct or indirect actions to expropriate. Legal expropriations of private property may occur if it is in the public interest. In such cases, the Macau SAR Government will exchange the private property with an equivalent public property based on the fair market value and conditions of the property. The exchange of property is in accordance with established principles of international law. There is no remunerative compensation.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Under the principle of “One country, two systems”, Macau maintains Continental European law as the foundation of its legal system, which is based on the rule of law and the independence of the judiciary. Macau has a written commercial law and contract law. The Commercial Code is a comprehensive source of commercial law, while the Civil Code contains a fundamental source of contractual law. Courts in Macau include the Court of Final Appeal, Intermediate Courts, and Primary Courts. There is also an Administrative Court, which has jurisdiction over administrative and tax cases. These provide an effective means for enforcing property and contractual rights. Macau's dramatic economic expansion in the last few years, combined with a shortage of qualified jurists, have put a strain on the operations of the judicial system, leading in some cases to delays in case resolution of over two years. In response, the GOM has increased the number of judge and judicial clerk training programs. At present, the Court of Final Appeal has three judges; the Intermediate Courts have 10 judges; and the Primary Courts have 29 judges. The Public Prosecutions Office has 41 prosecutors.

Foreign judgments in civil and commercial matters may be enforced in Macau. The enforcement of foreign judgments is stipulated in Articles 1199 and 1200 of the Civil Procedure Code. A foreign court decision will be recognized and enforced in Macau, provided it qualifies as a final decision supported by authentic documentation and its enforcement will not breach Macau’s public policy.

Bankruptcy

Commercial and bankruptcy laws are written under the Macau Commercial Code, the Civil Procedure Code and the Penal Code. The bankruptcy proceedings can be invoked by an application from the bankrupt business, or by petition of the creditor, or by the Public Prosecutor. There are four methods that are used commonly to prevent the occurrence of bankruptcy: the creditors meeting, the audit of the company’s assets, the amicable settlement, and the creditor agreement. According to Articles 615-618 of the Civil Code and Article 351-353 of the Civil Procedure Code, a creditor having a justified fear of losing the guarantee of his credits may request the seizure of the assets of the debtor. Bankruptcy offences are subject to criminal liability.

Investment Disputes

The U.S. Consulate General is aware of one investor-state dispute involving U.S. or other foreign investors or contractors and the Macau SAR government. In March 2010, a low cost airline carrier was reportedly forced to cancel flight services because of a credit dispute with its fuel provider, triggering events which led to the airline’s de-licensing. Macau courts declared the airline bankrupt in September 2010. The airlines major shareholder, a U.S. private investment company, filed a case in the Macau courts seeking a judgment whether a GOM administrative act led to the airline's demise. The Court of Second Instance held hearings on May and June 2012. In November 2013, the Court of Second Instance rejected the appeal. Private investment disputes are normally handled in the courts or via private negotiation. Alternatively, disputes may be referred to the Hong Kong International Arbitration Center or the World Trade Center Macau Arbitration Center.

International Arbitration

Macau established the World Trade Center Macau Arbitration Center in June 1998. The objective of the Center is to promote the resolution of disputes through arbitration and conciliation, providing the disputes parties with alternative resolutions other than judicial litigation.

ICSID Convention and New York Convention

Macau has an arbitration law (Decree 55/98/M), which adopts the United Nations Commission on International Trade Law (UNCITRAL) model law for international commercial arbitration. The Macau SAR government accepts international arbitration of investment disputes between itself and investors.

Duration of Dispute Resolution – Local Courts

The GOM does not publish the figures on duration of dispute resolution.

5. Performance Requirements and Investment IncentivesShare    

WTO/TRIMS

Macau has been a World Trade Organization (WTO) member since 1995 and a member of the General Agreement on Tariffs and Trade (GATT) since 1991. The U.S. Consulate General is not aware of any measures that are inconsistent with Trade Related Investment Measures (TRIMs) requirements.

Investment Incentives

To attract foreign investment, the Macau SAR government offers investment incentives to investors on a national treatment basis. These incentives are contained in Decrees 23/98/M and 49/85/M and are provided so long as companies can prove they are doing one of the following: promoting economic diversification, contributing to promotion of exports to new unrestricted markets, promoting added value within their activity’s value chain, or contributing to technical modernization. There is no requirement that nationals own shares. These incentives are categorized as fiscal incentives, financial incentives, and export diversification incentives.

Fiscal incentives include full or partial exemption from profit/corporate tax, industrial tax, property tax, stamp duty for transfer of properties, and consumption tax. The tax incentives are consistent with the WTO Agreement on Subsidies and Countervailing Measures as they are neither export subsidies nor import substitution subsidies as defined in the WTO Agreement. Financial incentives include government-funded interest subsidies. Export diversification incentives include subsidies given to companies and trade associations attending trade promotion activities organized by the Macau Trade and Investment Promotion Institute. Only companies registered with Macau Economic Services may receive subsidies for costs such as space rental or audio-visual material production. Macau also provides other subsidies for the installation of anti-pollution equipment.

Research and Development

The GOM has set up the Science and Technology Development Fund to provide funding for education, research and project development. The fund targets 1) local universities, colleges and their research centers; 2) laboratories or entities engaging in research in Macau; 3) local private non-profit organizations; 4) commercial enterprises registered in Macau; 5) individuals engaging in research in Macau, including foreigners working legally.

Performance Requirements

Macau does not follow a forced localization policy in which foreign investors must use domestic content in goods or technology. However, both local and foreign casino operators in Macau are required by law to employ only Macau residents as croupiers. There is no such restriction imposed on any other sector of the economy. In order to promote economic diversification away from gaming revenue, the GOM states that one of the criteria it will consider to renew the licenses of local and foreign casino operators when their concessions expire between 2020 and 2022 is the total amount of investments in non-gaming sectors.

Data Storage

There are no requirements by the GOM for foreign IT providers to turn over source code and/or provide access to surveillance.

6. Protection of Property RightsShare    

Real Property

Private ownership of property is enshrined in the Basic Law. There are no restrictions on foreign property ownership. Macau has a sound banking mortgage system, which is under supervision of the MMA. There are only a small number of freehold property interests in the older part of Macau.

According to the Cartography and Cadaster Bureau, 22 percent of land parcels in Macau do not have clear title for unknown reasons. Industry observers commented that no one knows whether these land parcels will be privately or publicly owned in the future.

Macau has no specific regulations regarding land lease or acquisition by foreign and/or non-resident investors.

Intellectual Property Rights

Macau is a member of the World Intellectual Property Organization. Macau has acceded to the Bern Convention for the Protection of Literary and Artistic Works. Patents and trademarks are registered under Decree 97/99/M. Macau’s copyright laws are compatible with the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and government offices are required to use only licensed software. The Macau SAR government devotes considerable attention to intellectual property rights enforcement and coordinates with copyright holders. Source Identification Codes are stamped on all optical discs produced in Macau. Macau Economic Services uses an expedited prosecution arrangement to speed up punishment of accused retailers of pirated products.

Macau Customs has worked to combat optical disc piracy in recent years, resulting in the closure of all illicit optical disc production lines in Macau. Macau Customs also maintains an enforcement department to investigate incidents of intellectual property (IP) theft. In 2015, Macau had no reported cases of optical disc piracy. Macau Customs works closely with Mainland Chinese authorities, foreign customs agencies, and the World Customs Organization to share best practices to address criminal organizations engaging in IP theft.

Since 2010, Macau has accelerated the registration processes for trademarks and patents by doubling the publication frequency of applications. In February 2012, the Legislative Assembly passed a bill to “Modify the Copyright System and Related Rights,” which revised the existing copyright law by extending protections to Internet and digital technology. Today, copyright infringement for trade or business purposes is subject to a fine or a maximum imprisonment of four years. Since the enactment of the law, signal piracy (including U.S. origin program content) has been reduced.

The number of applications for trademark registrations grew by double-digit over the past five years. In 2015, the Macau Economic Services (MES) filed a total of 13,140 applications for trademark registrations, a new record high. Among major users, applicants in China, the U.S. and Macau ranked the top three. According to the MES satisfaction survey conducted in 2014, all its services relating to copyrights, trademarks, patents and layout designs, reached the performance standards under the Performance Pledge Scheme.

Resources for Rights Holders

Danielle Zheng
U.S. Patent and Trademark Office for South China, Hong Kong, and Macau
U.S. Consulate General
43 Hua Jiu Road, Zhujiang New Town
Tianhe District
Guangzhou, China
510623
+86 (20) 3814-5533
Danielle.Zheng@trade.gov

American Chamber of Commerce Macau
Alameda Dr. Carlos d’ Assumpcao No 263
Edif China Civil Plaza, 20 Andar
Macau
+853-2857-5059
info@amcham.org.mo

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Local lawyers list: http://hongkong.usconsulate.gov/acs_attorneys.html

7. Transparency of the Regulatory SystemShare    

The GOM has transparent policies and laws that establish clear rules and do not unnecessarily impede investment. The basic elements of a competition policy are set out in Macau's 1999 Commercial Code.

The GOM will normally conduct a three-month public consultation when amending or making any legislation, including investment laws, and will write up a draft bill based on the results of the public consultation. The lawmakers will discuss the draft bill and finally put it to a final vote. All the processes are transparent and consistent with international norm.

Macau’s accounting systems is transparent as well. Macau has selectively adopted individual International Financial Reporting Standards (IFRS) into its accounting framework as Macau Accounting Standards (MASs), which has become compulsory since January 2007. The application of MASs is mandatory for all establishments that have been granted concessionary status by the GOM, as well as for financial institutions and companies limited by shares in Macau.

8. Efficient Capital Markets and Portfolio InvestmentShare    

Macau allows free flows of financial resources. Foreign investors can obtain credit in the local financial market.

In December 2009, the MMA signed a memorandum with the People’s Bank of China to develop the Renminbi (RMB) settlement mechanism for cross-border trade. According to the memorandum, the quota on the value of RMB exchanged for each individual transaction increased from RMB 6,000 (USD 878) to RMB 20,000 (USD 2,928). The list of designated merchants who are allowed to exchange RMB for Patacas from Macau banks was expanded to include institutions that provide telecommunications, education, and exhibition/convention services. In addition, Macau residents are allowed to use RMB checks to pay for consumer spending in Guangdong Province up to RMB 50,000 (USD 7,320) per account per day. Since 2010, the People’s Bank of China has been providing cross-border settlement of funds for Macau residents and institutions involved in transactions for RMB bonds issued in Hong Kong. Macau residents and institutions can purchase or sell, through Macau RMB participating banks, the RMB bonds issued in Hong Kong. In March 2012, in an effort to diversify its asset portfolio, the MMA signed an agreement with the People’s Bank of China to acquire up to RMB 10 billion in RMB bonds. In December 2013, China doubled the quota for investment in the mainland bond market to RMB 20 billion. Since March 2016, the Macau RMB Real Time Gross Settlements (RMB RTGS) System has been put into operation, providing real-time settlement services for RMB remittances and interbank transfer of RMB funds. The RMB RTGS System will not only help improve risk management and clearing efficiency of RMB funds, but also foster Macau’s development into a RMB clearing platform for trade settlement between China and Portuguese-speaking countries.

Macau has no stock market, but companies can seek a listing in Hong Kong’s stock market. Macau and Hong Kong financial regulatory authorities also cooperate on issues of mutual concern. Under the Macau Insurance Ordinance, the Monetary Authority authorizes and monitors insurance companies. There are 11 life insurance companies and 12 non-life insurance companies in Macau. Total gross premium income from insurance services amounted to USD 1.5 billion in 2015.

Offshore finance businesses, including credit institutions, insurers, underwriters, and offshore trust management companies, are regulated and supervised by the MMA. Profits derived from offshore activities are fully exempted from all form of taxes. In June 2012, the Legislative Assembly passed a draft bill for a deposit protection scheme. The new law (Law 9/2012), which has been in effect since October 2012, stipulates that banks compensate depositors up to a maximum of MOP 500,000 (USD 62,500) in case of a bank failure. To finance the deposit protection scheme, the GOM has injected MOP 150 million (USD 18.75 million) into the deposit protection fund, while banks need to pay an annual contribution of 0.05 percent of the amount of protected deposits held.

Money and Banking System, Hostile Takeovers

The Macau Monetary Authority (MMA) functions as a de facto central bank. It is responsible for maintaining the stability of the financial system and managing the currency reserves and foreign assets. At present, there are twenty-nine financial institutions in Macau, including ten local banks and 19 branches of banks incorporated outside Macau. In addition, there are eleven moneychangers, two cash remittance companies, two financial intermediaries, six exchange counters, and one representative office of a financial institution. These institutions provide a range of credit instruments. In 2014, Bank of China and Industrial and Commercial Bank of China were the largest two banks in Macau, with a total assets of USD 62.2 billion and USD 22.1 billion, respectively. Banks with capital originally from Mainland China and Portugal had a combined market share of about 89 percent of total deposits in the banking system at the end of 2015. Total deposits amounted to USD 57.6 billion in January 2016. In September 2015, banks in Macau maintained a capital adequacy ratio of 14.64 percent, well above the minimum eight percent recommended by the Bank for International Settlements. Accounting systems in Macau are consistent with international norms.

The six gaming operators in Macau are listed on the Hong Kong Stock Exchange. These stocks are controlled by small groups of shareholders with controlling stakes which make it difficult for hostile takeover bids to succeed.

9. Competition from State-Owned EnterprisesShare    

Macau’s gaming sector accounts for over 70 percent of the local economy, though the GOM has no ownership in any gaming companies. Macau does not have State-owned Enterprises (SOEs). Several economic sectors – including cable television, telecommunications, electricity, and airport/port management are run by private companies under concession contracts from the GOM. The GOM holds a small percentage of shares (ranging from one to ten percent) in these government-affiliated enterprises. The government set out in its 1999 Commercial Code the basic elements of a competition policy with regard to commercial practices that can distort the proper functioning of markets. Court cases related to anti-competitive behavior remain rare.

Macau is not party to the WTO’s Government Procurement Agreement (GPA). The media reports that the Joint Committee set up under the EU-Macau Bilateral Agreement is engaging with Macau on adopting the GPA.

OECD Guidelines on Corporate Governance of SOEs

Macau is not a member of the Organization for Economic Cooperation and Development (OECD) and does not adhere to the Guidelines for Multinational Enterprises.

Sovereign Wealth Funds

The IMF suggested in July 2014 that the GOM invest its large fiscal reserves in setting up a sovereign wealth fund to protect the city’s economy from future headwinds like slowing gaming revenues, increased social spending arising from the ageing population, and structural reforms in Mainland China. In response, Chief Executive Fernando Chui stated in his policy address in March 2015 that the GOM will study the establishment of Investment Development Fund within 2015. In November 2015, the GOM decided to establish a sovereign wealth fund, named the MSAR Investment and Development Fund, through a substantial allocation from the city’s ample fiscal reserves.

10. Responsible Business ConductShare    

The six gaming concessionaires that dominate Macau’s economy pay four percent of gross gaming revenues to the government to fund cultural and social programs in the SAR. Several operators also directly fund gaming addiction rehabilitation programs. Some government-affiliated entities maintain active CSR programs. For example, Companhia de Electricidad de Macau, an electric utility, sponsored Macau’s regional Special Olympics program in January 2010, and the company’s volunteer programs include education programs and repair services provided free-of-charge to underprivileged residents. Since 2007, the Junior Chamber International Macau (JCIM) has held an annual Corporate Social Responsibility International Forum to promote CSR programs. At the 2014 forum, the JCIM Chairman said that his organization wanted to introduce to Macau companies and young people the concept of and case studies on corporate social responsibility so as to let the businesses and communities make win-win development. In August 2015, the JCIM held a campaign "Unite to Create a Wall-Less City," sharing opinions on how to destroy the “wall” among people with differences to create a harmonized society.

OECD Guidelines for Multinational Enterprises

Macau is not a member of the OECD and hence the OECD Guidelines for Multinational Enterprises is not applicable to Macau companies.

The GOM will conduct an interim assessment of the gaming sector in 2015/16. One of the nine aspects that the GOM will consider for the renewal of gaming licenses, which will expires in 2020-2022, is casino operators’ social responsibility. The interim report will be released by the end of 2016. The industry observers expected the GOM will follow generally accepted CSR principles in the review.

11. Political ViolenceShare    

Macau is politically stable. The U.S. Consulate General is not aware of any incidents in recent years involving politically motivated damage to projects or installations.

12. CorruptionShare    

In December 2014, the Legislative Assembly passed a bill on preventing and curbing bribery in external trade. The bill, which is based on with the United Nations Convention against Corruption, came into effect January 2015. The law stipulates that anyone who offers a bribe to foreign public officials (including officials of China Mainland, Hong Kong and Taiwan) and officials of public international organizations in exchange for a trade deal could receive a jail term up to three years or fines.

Macau's anti-corruption agency is the Commission Against Corruption (known by its Portuguese acronym CCAC). The CCAC’s highest profile case was Macau Transport and Public Works Secretary Ao Man Long’s 27-year prison sentence in 2008. Ao was convicted of accepting bribes from real estate and construction companies in exchange for contract approvals in 20 public works projects. Until 2009, the CCAC's overall effectiveness remained constrained by legislation limiting the scope of its authority to government-sector corruption. In August 2009, the Legislative Assembly passed an amendment that empowered the CCAC to also investigate private-sector corruption. In February 2016, former head of the Public Prosecutions Office Ho Chio-meng was arrested by local graft watchdog. Ho, who has been an executive of the anti-graft agency before the SAR retrocession to China, together with his main officers were accused of receiving USD 5.5 million of kickbacks during 2004-14 from public works contracts worth a total of USD 21 million.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Macau is not a party to the UN Anticorruption Convention, nor a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

CHEONG Weng-chon, Commissioner
Commission Against Corruption
105, Avenida Xian Xing Hai, 17/F, Centro Golden Dragon, Macau
+853- 2832-6300
ccac@ccac.org.mo

13. Bilateral Investment AgreementsShare    

Bilateral Taxation Treaties

Macau has signed investment protection agreements with Portugal and the Netherlands. Macau does not have a bilateral taxation treaty with the United States.

14. OPIC and Other Investment Insurance ProgramsShare    

Overseas Private Investment Corporation (OPIC) coverage is not available in Macau.

15. LaborShare    

Macau's unemployment rate in January 2016 was 1.9 percent, down from a high of 6.1 percent in 2003, primarily due to the increase in gaming facilities, retail trade, construction, and hotels. Foreign businesses cite the constant shortage of skilled workers – a result of the past decade’s boom in entertainment facilities – as a top constraint on their operations and future expansion. The government is studying proposals to resolve the human resources problem. For example, Macau has labor importation schemes for unskilled and skilled workers who cannot be recruited locally. In November 2012, Macau Chief Executive Fernando Chui announced that the GOM has approved the importation of domestic helpers from Mainland China. As a pilot scheme, the GOM imported 88 and 15 domestic helpers from the provinces of Guangdong and Fujian in April 2015, respectively.

Macau does not have policy that waives any labor laws in order to attract or retain investment. The rights for workers to form trade unions and to strike are both enshrined in the Basic Law, but there are no laws in Macau that specifically deal with those rights. The law does not provide that workers can collectively bargain, and while workers have the right to strike, there is no specific protection in the law from retribution if workers exercise this right. The labor unions are independent of the government and employers, by law and in practice.

According to the Labor Relations Law, a female worker cannot be dismissed, except with just cause (e.g. willful disobedience to orders given by superiors, or violation of regulations on occupational hygiene and safety), during her pregnancy or within the three months after childbirth. In practice, either the employer or the employee may rescind the labor contract with or without just cause. In general, any circumstance that makes it impossible to continue the labor relation can constitute just cause for rescission of the contract. If the employer terminates the contract with the worker without just cause, the employer must pay the employee severance pay. In addition, Macau’s social security system, which is regulated by Decree-Law No. 84/89/M, provides local workers with economic aid when they are old, unemployed, or sick.

Workers who believe they were dismissed unlawfully can bring a case to court or lodge a complaint with the Labor Affairs Bureau. Even without formal collective bargaining rights, companies often negotiate with unions, although the government may act as an intermediary. There is no indication that past disputes or appeals were subject to lengthy delays.

The GOM has put measures in place to replace some foreign workers with Macau residents. In 2009, the Legislative Assembly passed a bill that established criminal penalties for employers of illegal migrants and prevented foreign workers from changing employers in Macau. The government has used the proceeds of a tax on the import of temporary workers for retraining local unemployed people.

In June 2014, the GOM introduced to the Legislative Assembly a bill setting Macau’s first statutory minimum hourly wage at USD 3.8 for security guards and cleaners employed by the property management companies. The bill, which was passed by the legislators in July 2015, came into effect January 1, 2016.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

Macau is a free port; however, there are four types of dutiable commodities: liquors, tobacco, vehicles, and petrol (gasoline.) Licenses must be obtained from the Economic Service Bureau prior to importation of these commodities.

There are a number of significant infrastructure projects in Macau, including:

  • Light Rail Transit (LTR) System: In 2003, an in effort to relieve traffic congestion, the Macau Government proposed to build a 21-km LTR, which will connect Macau Peninsula, Taipa, and Cotai with 21 stations. After years of research, the GOM commenced the first phase in November 2011. The GOM expects to complete the LTR by 2018/19 and to increase the number of passengers from 8,000 in the early stage of operation to 14,200 by 2020.
  • Hong Kong-Zhuhai-Macau Bridge: The construction of the Macau section of the 29-km bridge started in December 2009. The bridge is expected to better link Hong Kong, Zhuhai, and Macau with the less developed western part of the Pearl River Delta region. The bridge is scheduled for completion by the end of 2017.
  • Pac On Ferry Terminal: A new ferry terminal at Taipa is due for completion in mid-2016. It will become Macau’s main maritime border crossing with a capacity for 15 million passengers a year.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

 

Host Country Statistical source

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data

Year

Amount

Year

Amount

 

Host Country Gross Domestic Product (GDP) ($M USD)

2014

55,412

2014

55,500

http://data.worldbank.org/country/macao-sar-china

 

Foreign Direct Investment

Host Country Statistical source

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)

2014

295

2014

(D)

BEA data available at
http://bea.gov/international/
factsheet/factsheet.cfm?Area=616

Host country’s FDI in the United States ($M USD, stock positions)

2014

N.A.

2014

261

BEA data available at
http://bea.gov/international/f
actsheet/factsheet.cfm?Area=616

Total inbound stock of FDI as % host GDP

2014

49.4

2014

49.4

N/A

Note: (D) indicates that the data in the cell have been suppressed to avoid disclosure of data of individual companies.


Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward

27,393

100%

Total Outward

3,935

100%

Cayman Islands

9,055

33%

Virgin Islands, British

772

20%

China, P.R.: Hong Kong

6,846

25%

China, P.R.: Hong Kong

698

18%

Virgin Islands, British

6,292

23%

China, P.R.: Mainland

654

17%

China, P.R.: Mainland

3,291

12%

     

Portugal

1,026

4%

     

"0" reflects amounts rounded to +/- USD 500,000.


Table 4: Sources of Portfolio Investment

Portfolio Investment Assets

Top Five Partners (Millions, US Dollars)

Total

Equity Securities

Total Debt Securities

All Countries

54,977

100%

All Countries

21,632

100%

All Countries

33,345

100%

China, P.R.: Mainland

24,369

44%

China, P.R.: Hong Kong

5,971

28%

China, P.R.: Mainland

18,828

56%

China, P.R.: Hong Kong

10,093

18%

China, P.R.: Mainland

5,541

26%

China, P.R.: Hong Kong

4,122

12%

United States

4,021

7%

Cayman Islands

2,472

11%

United States

2,231

7%

Cayman Islands

3,856

7%

United States

1,790

8%

Singapore

1,430

4%

Luxembourg

1,774

3%

Luxembourg

1,700

8%

Cayman Islands

1,384

4%

 

18. Contact for More InformationShare    

Brian Bedell
Consul, Economic Affairs
U.S. Consulate General Hong Kong
26 Garden Road, Central
Hong Kong SAR, PRC
+852-2841-2489
information_resource_center_hk@yahoo.com