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Macao core to realising Greater Bay Area

Sat, 23rd Mar 2019

The Macao government and business community welcomed the Central Government’s Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) – known simply as the Plan – on 18 February, praising it as creating new opportunities for Macao’s people and economy.

To take advantage of them, the Macao government, private companies, and the public must work hard to hone the city’s competitive advantages and improve its education and economic system, they said.

The Plan outlined ambitious goals to be achieved over the next 16 years.

By 2022, the end of the immediate term, “the framework should essentially be formed for an international first-class bay area and world-class city cluster that is vibrant and highly innovative, with an optimised industrial structure, a smooth flow of various factors of production and a pleasant ecological environment.”

By 2035, the end of the long term, the GBA should be fully formed into “an international first-class bay area for living, working, and travelling” with a highly competitive economic system driven by innovation. From the efficient flow of resources and factors of production to strong regional cooperation and cultural integration, high connectivity will serve to strengthen the region.

The GBA consists of the Macao and Hong Kong SARs and nine cities in Guangdong – Guangzhou, Shenzhen, Foshan, Dongguan, Zhaoqing, Jiangmen, Zhongshan, Zhuhai, and Huizhou. They cover a combined area of 56,000 sq km with a population of around 70 million in 2017.

In 2017, their combined GDP reached US$1.5 trillion. Already the most developed area of China with the highest levels of foreign investment and per capita income, Morgan Stanley Asia estimates that, by 2030, its economic output will reach between US$3.2 trillion and US$4.1 trillion. At present, that would make the GBA one of the top five economies in the world; it already ranks in the top 15. Macao is one of four ‘core cities’ in the GBA, together with Hong Kong, Guangzhou and Shenzhen, serving as anchors for the city clusters and the primary engines driving economic growth forward.

 

Commitment to progress

 

The third chapter of the 11-chapter document outlines broad objectives for Macao going forward: development into “a world-class tourism and leisure centre, and a commerce and trade cooperation service platform” between China and the Portuguese-speaking countries (PSC); promotion of “an appropriate level of diversified economic development”; and becoming a “base for exchange and cooperation where Chinese culture is the mainstream and diverse cultures coexist.”

For the finance sector, the Plan calls for cooperation between the financial institutions of Guangdong, Hong Kong, and Macao, and the joint development of offshore financial business.

Under the Plan, Macao is to work closely with the neighbouring city of Zhuhai to develop the special zone of Hengqin, in entrepreneurship, industry, and information. Macao should also cooperate with cities on the west side of the Pearl River Delta, including Foshan, Zhongshan and Jiangmen, to deepen reform and improve their respective strengths.

Chief Executive Chui Sai On gave his first detailed response to the Plan on 21 February, speaking to a symposium in Hong Kong that was jointly hosted by the governments of Guangdong, Hong Kong, and Macao.

Chui said the Plan “provided clear directions and content” on the joint development of the GBA. “The GBA initiative will help inject new impetus into Macao’s economic development.”

“Macao – as a core city leading Greater Bay Area development – is committed to, and proactively deploying resources for, the efforts to accommodate the city-cluster initiative. The ‘one country, two systems’ principle – implemented in Hong Kong and Macao – is a significant advantage for the city-cluster initiative, differentiating it from other coastal bay-based urban areas in other parts of the world,” he said.

Chui noted that each of the GBA cities have distinctive industries and different specified roles under the plan. Macao’s coordinated cooperation with the other cities, making use of its own unique advantages, will pave the way for wider development opportunities for the SAR in realising its goal of adequate economic diversification.

“Macao will double its efforts in supporting development of the science and technology sectors as well as other innovation-focused industries, in a bid to pursue a goal outlined in the plan to develop the city cluster as an international science and technology innovation centre,” he vowed.

He added that the SAR would “spare no effort” in advancing a Guangdong-Shenzhen-Hong Kong-Macao innovation and technology corridor, encouraging local education institutions to strengthen research on science and technology, and promoting close partnership between educational institutions within the GBA.

On 1 March, the central government announced eight measures to accelerate the development of the GBA. One measure supports the open recruitment of Hong Kong and Macao residents by public institutions in the bay area while two others address potential tax issues for those working in the mainland. Stays of less than 24 hours will not count as a day when calculating ‘183 days’ for paying individual income tax in the mainland, and certain non-mainland individuals – high-end talents and talents in short supply – will receive relief to offset the income tax differential between jurisdictions.

Three measures focused on easing the flow of people moving throughout the GBA: introducing immigration facilitation reform pilot schemes, facilitating vehicles from the SARs entering and exiting mainland ports, and expanding the implementation scope of the connection with speedy customs clearance between customs administrations.

There were also measures to support higher education institutions and scientific research institutes from the SARs participating in projects under Guangdong technology programmes, and to encourage innovation and entrepreneurship in the nine mainland cities by youth from the SARs.

 

Pillar of strength

 

The plan designates Macao, along with Hong Kong, Shenzhen and Guangzhou, as the four “key cities” and “core engines for regional development.”

The plan promises to “consolidate and enhance Hong Kong’s status as an international financial, transportation, and trade centre, as well as an international aviation hub.” Meanwhile, Guangzhou will take a leading role as a provincial capital and national central city. Shenzhen’s role will be as a special economic zone and home of China’s innovation and technology giants.

The feature that distinguishes Macao from other GBA cities is its ties with Portuguese-speaking, or Lusophone, countries.

The Plan gives full recognition to the organisations promoting Macao’s ties with Lusophone countries, and calls for the strengthening of the fund dedicated to cooperation and development between China and the PSC. 

It also supports efforts to capitalise on the existing services platforms, which offers finance, law, trade and investment information, industry and regional cooperation, all contributing to the promotion of exchanges between Lusophone countries and the GBA.

Of these, financial services stand out: the Plan supports Macao in developing a China-Lusophone countries platform to provide financial services, an export credit insurance system, and an RMB clearing centre for Lusophone countries.

Rodrigo Brum, deputy secretary general of Forum Macau, believes that the Plan will be extremely important for the Lusophone countries. A significant number of objectives do make explicit reference to the role of Macao in relation to the PSC, namely as a platform for cooperation between China – and in this case, the GBA – and Lusophone countries.

“Any observer with a minimum of knowledge of the context of this initiative will make no mistake between the depth and concrete objectives now put forward and the long-announced role of the Macao SAR as a platform.”

The Plan also includes a detailed outline of how different areas and development objectives will lead “to an in-depth concrete building of a globally competitive modern industrial system, in which Macao is very much present,” he said.

“For the PSC, this could be the key to accessing one of the most open and economically vibrant regions of China, with 70 million people with higher and growing buying power,” Brum argued.

Brum believes awareness of the measures among the PSC and their entrepreneurs is high, adding that “the Chinese authorities will most surely reward the early birds” taking advantage of the various opportunities outlined in the Plan.

While the Plan calls for cultivating bilingual talents in the SAR, Brum expects there will also be Chinese government support for “professional services and all those with knowledge of the environment of the PSC that will contribute to the success of implementing these government-approved initiatives.”

Jacky Yuk-chow So, chair professor in Finance at the University of Macau, was particularly struck by the strong emphasis on financial services. “As in the past, Macao will perform the leadership role as an international integrated resort and platform for the PSC. Unlike in the past, the blueprint allows Macao to focus on finance-related business and services.”

More importantly, he argued, Macao will be “allowed to study the possibility of RMB-based stock markets, green finance, and other investments related to the Belt and Road.”

As the SAR develops its financial services in the immediate and long term, So believes “the Macao government must assume its leadership role to review existing regulations and laws to allow the development of financial products and markets in Macao.”

He described the new document as an “action plan, much more specific and results-oriented” than the 13th Five-Year Plan (2016–2020) which is “very broad, conceptual, and directional.”

António Trindade, president and CEO of CESL Asia, Investments and Services Ltd, said that the Plan put a clear emphasis on efforts for the development of key areas of professional and service excellence, with Macao the regional platform for the PSC.

Trindade said that the Plan must mean that the future development of Macao should be based on the platform for the cooperation between China, the GBA and the PSC, and that it is important for the long-term development of Macao, as its role was already well established.

 

Deepening cultural identity, broadening tourism

 

Improving and diversifying Macao’s tourism industry is an important part of the Plan.

To complement Macao’s development into a world tourism and leisure centre, Hengqin is set to be “a high-standard international leisure and tourism island.” In line with this goal, the Plan proposes a study on facilitation measures for visitors travelling between the two cities and allowing Macao tourism practitioners to provide relevant services in Hengqin.

Other measures focus on tourism in the GBA more broadly and cooperative efforts, from sharing regional tourism resources to establishing a distinct GBA tourism brand.

Macao’s own brand as the crossroads of East and West, and all of the rich cultural heritage that comes with it, will be leveraged with the development of cultural industries and tourism, as well as a cultural exchange centre between China and Lusophone countries.

Gary Ngai, president of the Macao Association for the Promotion of Exchange between Asia-Pacific and Latin America, agreed that Macao has its own cultural identity, including a continental legal system and Latin-based languages – Spanish, Italian, French, and Romanian, in addition to Portuguese – that account for around one-eighth of the world’s population.

“This kind of cultural heritage is still far from being fully utilised and developed,” he noted. “It could increase Macao’s bridging role in the GBA in the years to come. People have been talking a lot about forming an arbitration centre for legal disputes between China and the Latin-speaking community. The problem is how to train more expertise in this area, which at this moment is still very weak in professional terms.”

Ngai believes that developing Macao’s cultural identity could offer a unique contribution to the GBA. “We need to concentrate more resources to make a deeper study of this subject, by creating, enlarging, and improving concrete studies in specific centres of the local universities, which at this moment, have still not been finally established, due to lack of funding and expertise.”

He argues that “Macao has more to offer in attracting tourists from different parts of the world, to see, taste, and explore the uniqueness of its culture,” but that will require investment. Infrastructure, including ports and airports, needs to be modernised and enlarged. More tour guides in different languages need to trained and new offices opened abroad to “attract and diversify the tourists coming from different countries, as far as Latin America, where many people still do not know where Macao is.”

 

Opportunities and challenges

 

For all of the ambitions encapsulated in the Plan, it acknowledges that there remain many challenges – both external and internal – to fully realising the Greater Bay Area.

José Luis de Sales Marques, president of the Institute of European Studies of Macau, believes that Macao has a lot of work to do. “It will require the joint efforts of government, private companies, and society to build upon its competitive advantages, upgrade the whole economic system, education, competitiveness, and overall capabilities.”

But he also pointed to opportunities, particularly for “mobility of young people and professionals in the GBA; the financial sector’s participation in several platforms envisaging the development of GBA’s integrated market; the China-Lusophone connection and BRI-related financing; and the building of infrastructure.” These, he said, were the most relevant measures for the SAR, touting infrastructure specifically as helping Macao to connect to the GBA and “go global.”

He agreed with Prof So that the Plan is more complex than the Five-Year Plan, connecting the GBA with the BRI in a very precise way. “It gives direction to the development of Macao’s financial services, including the internationalisation and participation in Chinese development funds and the Asian Infrastructure Investment Bank,” he noted. “The Plan is a tool for deepening reform and opening up the Chinese economy.”

 

Text Ou Nian Lei  

Photos Xinhua News Agency