Macau’s economic diversification has long been a topic of discussion, but recent remarks by Chief Executive candidate Sam Hou Fai, who described the development of Macau’s gaming industry as a “barbaric expansion” with a “large, negative impact” on the city, have reignited the debate.
Speaking to AGB, Billy Song, president of the Macau Responsible Gaming Association (MRGA), notes that the key to successful diversification lies in ensuring it brings tangible benefits, particularly in employment and improving the quality of life for Macau’s residents.
He remarked, “In promoting diversification, we must ensure real benefits, especially in employment and the well-being of residents. At the very least, Macau residents should benefit from improved economic conditions and a better quality of life.”
“On the other hand, we must also ensure that public resources are used effectively and avoid a reduction in fiscal revenue due to a lower proportion of the gaming industry, which could ultimately impact government resources and residents’ lives.”
Song underscored the importance of maintaining fiscal stability while promoting diversified industries.
“We cannot simply reduce the proportion of the gaming industry.”
“Instead, while developing diversified industries, we need to maintain stable fiscal revenue to ensure that Macau’s overall economy and residents’ benefits are not negatively affected.”
Billy Song
As Macau moves forward with its diversification efforts, Song believes that the challenge will be to balance the growth of new industries with the need to maintain stable fiscal revenue. This underscores the importance of careful planning and effective policy implementation to ensure that Macau’s economy continues to grow sustainably, benefiting both the government and its residents.
Not new
The city’s Chief Executive candidate, former top court judge Sam Hou Fai, emphasized during his candidacy announcement that a path toward “moderate economic diversification” is essential. This message echoes a key point made by Xia Baolong, Director of the Hong Kong and Macau Affairs Office of the State Council.
Billy Song highlighted that the discussion around economic diversification is not new, particularly concerning the impact of the gaming industry’s growth on other sectors. He remarked, “This problem has always existed. The development of the gaming industry has had clear effects on other industries. As for the future, there is no doubt that the gaming industry broadly supports the goal of diversification.”
He continued, “The key is how we can contribute to non-gaming elements under government guidance and policy support to further promote diversification. While the value of the gaming industry over the years cannot be overlooked, we need to consider how to use its strength to promote other industries moving forward.”
Government’s economic diversification plan
In November last year, the Macau government unveiled its first official economic diversification plan, marking a new approach to the traditional five-year plan.
Covering the 2024 to 2028 period, the plan centers on tourism as a primary pillar, supported by four emerging industries: healthcare, finance, technology, and large-scale sporting, cultural, and business events. This “1+4 model” is seen as crucial for reducing Macau’s dependence on casinos for employment and tax revenues.
Macau’s historic reliance on gaming presents a challenge. In 2019, the gaming industry accounted for about 85 percent of Macau’s regular income. However, this figure dropped to 50.5 percent in 2022, the year when COVID-19 severely impacted the city and led to temporary casino closures to curb the virus.
While the plan does not specify a concrete target for achievement by the end of 2028, it mandates that Macau reduce its dependence on gaming revenue to below the levels recorded in 2019. Meanwhile, the Secretary for Economy and Finance, Lei Wai Non, stated that many of the plan’s objectives will be propelled by market forces, with the government taking on a guiding role.
Challenges ahead
The plan aims for the non-gaming sector to account for around 60 percent of Macau’s total gross domestic product (GDP) by 2028.
However, Billy Song pointed out that while the gaming industry may contribute a reduced portion to the city’s GDP, Macau’s financial reserves remain heavily dependent on gaming tax revenue.
“The issue is that our current public finances rely heavily on the gaming industry, with about 70 to 80 percent of fiscal revenue coming from this sector. The challenge is how the city can achieve greater effectiveness in promoting diversified industries alongside the gaming sector,” Song concluded.
