espite impressive GDP growth of 26% in the first half of 2008, tighter visa restrictions on mainland visitors have seen gaming revenues fall 10% in the third quarter after four years of spectacular growth.
Combined with dismal credit conditions in the US where many of the operators are trying to finance enormous expansion plans in the southern Chinese city, the climate has put Ho under severe pressure to offer tax breaks.
"Macau’s casino gaming revenue is poised to significantly moderate in 2009 due to a combination of increased economic volatility" and mainland visa issues, Jonathan Galaviz, a leisure industry consultant at Nevada-based Globalysis, said. "Macau’s tourism industry remains a vital component of Macau’s economic future and the casino gaming industry is at the very core of that sector’s future success."
Although government coffers were swelled by a 101% increase in casino revenues between 2004 - when the first foreign resort was opened - and 2007, Ho is being lobbied to cut taxes on casino revenues from their current level of around 39%.
Most under pressure among the foreign operators is US-based Las Vegas Sands, which last year opened the gargantuan Venetian casino in Macau, costing us$ 2.4 billion. In the past few months, the Sands share price has been in freefall and last week it told the US exchange authorities it may have to stop or ease up the pace of its global projects should it fail to secure the necessary funding or obtain favorable credit terms.
But despite the pressure, some doubt whether Ho, who will step down next year, has the authority from Beijing to impose many changes. "There will certainly be some stimulus measures but big surprises, whether pleasant or unpleasant, are unlikely," Larry So, a political commentator told the South China Morning Post. "The chief executive clearly doesn’t want to offend his boss."
Macau - formerly an enclave of Portugal and now a special administrative region of China - has attracted a flood of foreign investment since it liberalized its gaming market, ending local tycoon Stanley Ho’s monopoly. Despite the us$ 10.5 billion in gaming revenues last year, its citizens complain they haven’t benefited from the boom.
Edmund Ho earlier this year announced a moratorium on new casinos, amid worries that expansion in the city of 550,000 people was putting too much pressure on its infrastructure and widening the wealth gap. He is also unlikely to be able to reverse tougher restrictions on mainland gamblers, who have flooded into the city in recent years.
A string of curbs have been imposed by Chinese authorities in the past few months on worries about the outflow of cash to US companies, problem gambling and money laundering.
Antonio Ng, a pro-democracy legislator, said he didn’t expect Ho to provide help for the poorest people in the city. "We have economic problems, employment problems, housing problems, our social security fund needs help - but everything will carry on as usual," Ng said, adding corruption remained a huge problem.