The 2018 outlook for Macau is positive, with gaming revenues likely to continue their recovery, though risks remain including the looming end of casino concessions and organized crime, according to risk consultancy Steve Vickers Associates.
In its annual Asia Risk Assessment, the firm says that politically the outlook for the year is stable, despite rising speculation about who will replace Chief Executive Fernando Chui Sai On in 2019. The economy is also likely to remain on solid footing, after gross gaming revenue rose more than 19 percent in 2017, recovering after three years of declines, to almost $33 billion.
However, there are risks, including China’s efforts to clamp down on corruption and to control capital outflows, as well as uncertainty over upcoming concession renewals in 2020 and 2022.
“Each applicant must submit to a formal tender, meaning American companies’ interests may possibly become hostage to volatile Sino-US relations,” it said.
The firm also repeated its assertion, which it also made last year, that Macau’s casinos could be the subject of attacks.
“Macau’s close ties to mainland China should ensure security. However, large casinos remain vulnerable to terrorist attack despite recent efforts to improve readiness, and the general difficulty of securing firearms and explosives in Macau,” the report said.
“The involvement of Triad Societies and organised crime in the gaming sector shows no sign of diminishing – rather, it is institutionalized.”
In the Philippines, the firm said the weakening security situation and hardline politics of President Rodrigo Duterte have not yet harmed the economy, which was one of the strongest in Asia last year, expanding by 6.7 percent. The World Bank expects a slight softening to 6.6 percent in 2018.
“The political and security situations in the Philippines pose significant risks to investors, but have yet to unbalance the economy. Investors should monitor the situation closely – and be ready to respond,” the report found.