Ming K. Chang on TDM Talk Show: MSAR faces ‘overdevelopment crisis’

The gaming boom in Macau came “too soon, too much and all at once, upsetting the traditional quality of life,” Stanford University professor Ming K. Chang said. Unless Chief Executive Fernando Chui Sai On manages to better distribute the gains, soon “people won’t see a future for themselves” in the territory, he warned.
On last weekend’s TDM Talk Show, the Hong Kong-born scholar praised the handover and said former Chief Executive Edmund Ho Hau Wah “revived the Macau economy and returned some sense of optimism”.
“He restored law and order, cut down on the gang violence and by opening up the gaming market and inviting new investors, led to a construction boom.”
However, Ming said, Ho’s second term had a mixed record. “American casino capitalism created a lot of jobs” and reduced the unemployment rate to a “very comfortable” level, he explained. “Any prime minister anywhere in the world would be delighted with less than 3 percent unemployment.”
However, the other side of the coin was the “runaway” property prices, “which means high rents and inflation,” the scholar said.
“The economic development imbalance towards one sector due to extremely large scale foreign investment could not be balanced with undeveloped social infrastructures and legal system.”

‘Digest growth’

For Ming, who has authored several books about Macau, the “very unseemly case” of corruption that brought down former secretary Ao Man Long was “a warning, for anybody in a leadership position”.
“Edmund Ho was very lucky because unlike Hong Kong he was able to finish his second term,” he said. Unlike in the HKSAR, where economic problems eventually led former Chief Executive Tung Chee Wa to resign only three years into his second term.
Political leaders, the Stanford University professor said, “should be vigorous not only in looking for opportunities of growth but also in how to digest the growth, how to make use of the opportunities”.
The priority, he added, should be to “make sure the gains from that growth are distributed fairly,” particularly to the poorer classes.
Just last week, Chinese prime minister Wen Jiabao said Macau should attach more importance to social affairs. Ming agrees: “too much, too soon produces a crisis of overdevelopment, with very interesting and even dangerous international implications.”

‘This kind of inflation, full employment fuelled by casinos has lots of social costs. […] It’s a matter of absolute urgency to do a wholesale and effective social reengineering’

The Central Government, he explained, “hopes that Macau is able to retain its capitalist open market system, but not at the expense of creating social vices that are harmful to Macau and its neighbours – Hong Kong, Guangdong and the rest of Southeast Asia”.
“This kind of inflation, full employment fuelled by casinos has lots of social costs,” the scholar said. For instance, “young people, after high school, they never care about college or university because there is an easy, quick job in a casino.”
“It’s a matter of absolute urgency to do a wholesale and effective social reengineering.”
The Government must “take care of the poor but also make sure people can enjoy good standards of living,” Ming said.
“High salaries won’t help unless you keep inflation under check so that people can afford to rent or to purchase decent accommodation, or else they won’t see a future for themselves in Macau.”
“If Macau is no longer home but just a casino place, then this would make it live up to the worst stereotype image,” the California-based scholar bemoaned. “Macau is much more than an oriental Monte Carlo or Las Vegas and should not be regarded as a footnote to Hong Kong.”
Furthermore, the territory should be “available and welcoming or else it will happen the same as in Hong Kong or Tokyo, you will price yourself off the market,” he said. The way forward, Ming added, should be “better regulated casinos” and a “Las Vegas-style” mix of gaming, exhibitions and convention, family fun, entertainment resorts and healthcare.

‘Strategic threat’

What the mainland Government wants from Macau is “stability and prosperity, in that order,” he said. In the first quarter of 2010, the territory’s gross domestic product – total wealth created – grew by 31.4 percent year-on-year. But more than a boom, “economic growth has to be steady,” the professor emphasised.
“Secondly, Beijing wants to make sure the SAR model is implemented in Macau to a very high level of success, by world standards.”
The ultimate prize for this success, Ming said, could be the return of Taiwan to Chinese administration. The MSAR has become particularly important because “Hong Kong has been a very problematic experience under the SAR system,” he added.
Although the number of foreign-controlled casinos in the territory is small, “they account for 52 percent of the revenue”. This figure “is unsettling to Beijing and they want to put a cap,” the Stanford University scholar stated.
“That’s why Beijing instructed Edmund Ho to put a moratorium on casino construction, while no more casinos are allowed in the peninsula and visas for individual tourists were tightened up.”
The aim, he said, is to “cut down the outflow of money from mainland China to foreign offices, through the Macau casinos.” The Chinese Government views this phenomenon as “a strategic threat,” Ming underlined.