March 19, 2010

CHINA: Handouts won't solve Macau's problems

. HONG KONG / The South China Morning Post / China News / March 19, 2010 LEADER Casinos are not recession-proof, as shown by a slump in Macau's gaming revenues after the financial crisis struck in September 2008. But the wheel of fortune has turned quickly. Last year, the city's gross domestic product grew by more than 8 per cent on the back of a near-10 per cent increase in casino revenue. With a budget surplus of nearly 24 billion patacas, new chief executive Fernando Chui Sai-on has maintained his predecessor's policy of cash handouts to everyone. He says bonuses of 6,000 patacas for permanent residents, 3,600 for non-permanents and a subsidy of 5,000 for the elderly enable people to share the fruits of economic growth. In fact, they were introduced two years ago to ease resentment that most Macanese have not shared fairly in the wealth the casinos have created for the better-off and for foreign investors. The same year, the government also announced a raft of benefits including tax breaks, subsidies for housing, electricity and low-income earners, student cash handouts and business loan guarantees. And in January this year it injected 10,000 patacas into the central provident fund accounts of 330,000 residents aged over 22. If surpluses continue to be pumped into retirement accounts - and Chui has held out this prospect - they will be of lasting social value. The other goodies restore a measure of social equity. But handouts in cash and kind are not the long-term solution to the social side effects of a gaming economy, including the wealth gap, inflation, high housing prices and illegal workers. The financial crisis was a reminder that Macau must rethink its social priorities and develop a broader economic strategy. Focusing on the development of education and tourism infrastructure would do a lot to improve skills and create jobs. The city is still suffering from a brain drain to Hong Kong and elsewhere. Now the casinos lure young people away from school with high pay and low entrance requirements. Raising education standards would therefore be a more sustainable strategy in the longer term than handouts. Indeed, tourism and education could form pillars of a fairer and more stable society. [rc] Copyright © 2010 South China Morning Post Publishers Ltd.