Economic Facts

• MACAU HAS NO FOREIGN DEBT; PUBLIC ACCOUNTS ARE BALANCED; NO CUSTOMS DUTIES AND NO CURRENCY CONTROLS ARE IMPOSED.

• MACAU IS FINANCIALLY INDEPENDENT OF PORTUGAL AND ITS BUDGET IS PLANNED AND FINALISED LOCALLY.

• The local currency, the pataca, is stable and remains tied to the Hong Kong dollar, and therefore is indirectly pegged to the US dollar. The pataca (MOP) is pegged to the HKD at the fixed rate of MOP$ 1.03 to one HK dollar, which equally is pegged to the USD at the central rate of HKD$ 7.8 to one US dollar.

• About 60% of gross domestic product is attained through exports. However, with manufacturing declining in importance due to competition from mainland China's neighbouring Special Economic Zones and nearby countries, tourism (particularly gambling) has become increasingly important, contributing over a third of government revenues.

Pearl River Delta Economic Integration

• Portugal will leave Macau with an open economy integrated with the whole Pearl River Delta area. Macau, along with Guangzhou (Canton) and Hong Kong, is one of the points on a triangle which demarcates the delta area. Despite a downturn in the local economy due to the Asian crisis in the late '90s, the Pearl River delta has registered high growth for the past 10 years.

• Economic growth in mainland China's Special Economic Zones in neighbouring Guangdong Province has been influenced and directed by the predominance of capital from Hong Kong and Macau. In 1997, Macau companies invested over US$ 10 billion, split between 6,333 projects, in the mainland. Investment has not only flowed in one direction. Chinese investment in Macau has been considerable in the past decade spanning a wide range of industries and sectors, from infrastructure projects to real-estate investment, hotels, restaurants, and import-export services, thereby strengthening economic interdependence.

• The mainland has overtaken Macau in many of the labour-intensive industries in which the territory previously dominated, such as the manufacture of toys, artificial flowers, ceramics and furniture. This has led to the development of a complementary relationship whereby Macau no longer produces but continues to offer, either alone or in conjunction with Hong Kong, a number of services which complement production or export; quality control, packaging, client negotiation, marketing, research and development, design, commercialisation and export financing.

• A complementary relationship also exists in the production of goods which, subject to international quotas, are temporarily exported to China for part manufacture. Macau also plays an intermediary role in what could be called 'triangular trade' where goods do not even cross the border into Macau but are exported directly from China or re-exported from Hong-Kong.

Importance of Tourism to the Economy

• Since the decline of Macau's manufacturing sector in face of neighbouring competition, tourism and the service industry have boomed in Macau. Revenue from tourism since 1992 has exceeded the value of exported goods. The industrial sector, which at the beginning of the 1980s employed half of the working population, now only employs a third. The tourism industry is now the largest employer of human resources in the territory.

Combating the Asian Economic Crisis

• Almost all the region's economies have been affected by a deep financial crisis in Asia. The government of Macau has undertaken a series of measures to combat and limit the effects of the economic crisis, the more negative effects of which became noticeable from 1997 onwards. The most notable of these are: the provision of MOP$ 50 million for training initiatives aimed at lessening the effects of unemployment; a reduction in public expenditure; a reduction in the landing tax at Macau International Airport; exemption from departure tax for short stay visitors; a drop in the charge on the export of quota goods from 0.7% to 0.5%; the implementation of a programme to encourage the emergence of new entrepreneurs.

• Macau's administration has underlined the special importance it places on economic issues by endowing the territory with the infrastructure and economic agents necessary for it to succeed at the regional and global levels. In February, 1996, the Centre for Production and Technology Transfer was founded, aimed at the total restructuring of the territory's management and economic development bodies. Also, to maximise local investment opportunities, the Institute for the Promotion of Investment in Macau (IPIM) and the Macau branch of the World Trade Centre developed a variety of activities aimed at making Macau a dynamic business centre. High and medium-technology industrial units have been planned for the Concordia Industrial Park on the island of Coloane.

Financial Facts

• There are currently 22 banks operating in Macau, the majority of which are from overseas, including several with an international branch network. Since 1987, the volume of currency in circulation has more than tripled. There are also a further three financial companies and 21 insurance companies operating in the territory.

• Macau's monetary and exchange policy is ideally suited to the demands of the transition. Within this context, the Bank of China has been awarded the role of money-issuing bank, a position it will share with the Banco Nacional Ultramarino (BNU). BNU, which was sole issuing bank from 1905 to the end of 1995, will, by agreement with the Chinese authorities, continue to exercise this function jointly.

• Currency, finance, exchange and insurance are controlled by the Currency and Exchange Authorities which function almost in the same manner as a central bank in the territory governed by Portugal. The institution is responsible for the stability of the financial system. The 1990s has brought stability to Macau's banking system through the development of modernisation measures and a broadening of the regulation system.

Providing Investment Opportunities

• Macau not only offers the interested investor a strategic location, it also offers a low rate of taxation on company profits (no more than 15 percent in some cases and large reductions and exemptions are common); an annual fixed rate of industrial contribution amounting, normally, to US$ 37.50; a total absence of import duties, benefiting importers of raw materials and industrial equipment, a conveyance tax which does not exceed 6 percent, and an urban building tax of 10 percent, from which many are exempted. There is no limit on the repatriation of profits.

• Macau is an ideal base for a range of varied and diverse services. It is a perfect location for mid-sized and medium-technology industries which are non-labour intensive, export-led and whose main markets lie in the Asia-Pacific region.

• Macau will maintain its autonomy, including its free-port status and independent taxation policies, after 1999.