Macau Business magazine l July 2024
By José Carlos Matias – Director
We often hear the saying: you can’t have your cake and eat it too. Regional integration is indeed a two-way street, or perhaps more aptly, a multiple-entry boulevard. Just as globalization brings broader economic and societal benefits through the increased mobility of people, goods, services, and capital, it also creates winners and losers. Successful integration hinges on a gradual approach, supported by measures to cushion its side effects.
In recent weeks, mainland authorities have implemented several measures to address this balance. These include extending the stay for mainland Chinese individuals holding business visas for Macau, introducing a new multiple-entry visa arrangement for package tours between Macau and Hengqin, adding eight mainland cities to the individual visit scheme for the SARs, and increasing the duty-free allowance for arrivals from Hong Kong and Macau.
In a further step towards enhanced northbound mobility, non-Chinese permanent residents of Macau and Hong Kong will now enjoy a multi-entry travel permit of up to five years for mainland entry—a much-welcome development.
While these gifts from the central government are significant steps to support the city’s business development, is the SAR government doing enough locally to counter the impact of domestic consumption outflows and address the socio-economic challenges faced by numerous SMEs?
Some measures have been adopted. For instance, in mid-June, the SAR announced an extension of the repayment period for interest-free financial assistance provided to local small and medium-sized enterprises (SMEs) and young entrepreneurs. This was an absolutely necessary move.
However, the lifeline needs to be extended further for these companies. Despite encouraging tourism and gaming figures (though the latter have seen some recent slowdown), data, business surveys, and naked-eye observation are crystal clear: you can’t sweep it under the rug. Food and beverage establishments, especially those outside integrated resorts and tourist hotspots, various types of retailers, particularly supermarkets, and watch-clock-and-jewellery shops, have seen year-on-year double-digit declines, sometimes by as much as one-third. A number of these businesses are being left with no option other than closing for good.
Local consumers have cited as significant advantages the better value for money and superior customer service obtainable across the border, which may seal the fate of many small businesses here. Who can blame them?
A handful of pressing questions arise: How do we cope with this? How can we increase competitiveness? How do we lower fixed costs, such as commercial property rentals and labour, and improve service quality to stem the outflow of local consumption and attract visitors, especially to residential areas?
Any suggestions? How about rolling out an e-consumption voucher scheme modelled on those used during the pandemic? Or perhaps, even bolder, consider transferring part of the cash handout to a local consumption voucher plan? True, giving a man a fish will feed him for a day, while teaching him to fish feeds him for a lifetime, but the clock is ticking, and there is a need to do both at the same time at this stage.
We often hear the Government say: there’s only so much we can do. Is that really the case? Besides policymaking, is there a deeper issue—one related to the mindset in the local business sphere?
In any case, it seems clear that while a number of local companies and businesspeople are venturing into Hengqin or other areas of the Greater Bay Area, encouraged by existing incentives, there is a need to ensure that the small businesses remaining local—the lifeblood of the city’s way of life—have a future, one that younger generations can feel confident about.
One hopes the current and the incoming government (and socio-economic actors) will have the ability, determination, and conditions to effectively make the cake bigger and more inclusive, ensuring that SMEs aren’t left to live on crumbs. And, by the way, it would be wise to ensure that the lion’s share is not seized by the entrenched interests that hinder our city’s modernization.
