Frederico Rato José Filipe Salreta January 28 2016 Government policy in light of Macau's demographic and economic challenges Rato, Ling, Lei & Cortés Advogados | Private Client & Offshore Services - Macau Frederico Rato, José Filipe Salreta Private Client & Offshore Services IntroductionTourism numbersIllegal immigrationTourist policeCommentIntroductionThe recent rapid growth of Macau's economy, largely based on the gaming industry, has resulted in the highest income per capita in the world. However, the same economic developments have put enormous pressure on the human and social fabric of Macau – immigration has soared and the number of mainland tourists has tested transport, security and living space. The consequences of these economic and social changes have been tentatively remedied by measures announced by Macau's secretary for security at the end of 2015.Tourism numbersMacau's population was an estimated 437,455 people in 1999, and currently stands at 643,100.(1) Between 2007 and 2015 the labour force increased from 293,300 to 400,900. In the same period, the number of non-resident workers in Macau increased from 66,769 to 182,246, 116,941 of which (64.16% of the total) came from mainland China. The near tripling of non-resident workers and the doubling of their proportion in relation to the active population (which increased from 22.76% to 45.45% of the total) shows the weight that they currently have in the local economy, as well as the challenges that this ratio holds for Macau's economic fabric.In an area of only 30.4 square kilometres,(2) high population numbers are compounded by the number of tourists and visitors increasingly travelling to Macau since the handover. In 1999 7,443,924 tourists entered Macau. This figure rose to 27,003,370 in 2007, and skyrocketed to 31,525,632 in 2014. Compared to the resident population, in 1999 the proportion of residents to the monthly tourist average (620,327) was 70.52%, demonstrating the importance that tourism already had at the time. In 2014, for a total population of 636,200 people, the proportion of residents to the monthly average number of tourists (2,627,136) decreased to 24.21%. Notwithstanding the enormous benefits that this extraordinary number of tourists presents, it has also created many challenges for the socioeconomic fabric, challenges which have yet to be adequately addressed or resolved.Illegal immigration On presenting the 2016 Policy Address, the secretary for security, Wong Sio Chak, stated that "illegal immigration is critical and tends to worsen" in the region. The government therefore intends to review the Illegal Immigration Law and increase the period of detention for expulsion proceedings from 60 days to 90 days.(3) According to local authorities, from January to October 2015, 1,200 titles of temporary stay were issued, with 280 registered cases of expulsion and more than 900 pending cases. With regards to individuals who exceeded the length of stay permitted by law, the commander of the Public Security Police of Macau said that for 2015 "more than 41,000 people overstayed in Macau, compared to 24,000 recorded last year ".(4)Tourist policeIn 2016 the secretary announced the creation of 'tourist police', in order to:prevent crime in certain areas;undertake screening and crowd control; andassist in cases of document loss.The tourist police will be composed initially of 20 elements, with plans to expand to more than 30 elements in 2017.(5)The government intends to diversify the economy, a policy which is based on the following five pillars:promoting healthy development in the gaming sector;developing construction in a world city of tourism;fostering emerging industries and supporting the development of small and medium-sized enterprises;protecting rights and interests of resident workers; andpromoting closer regional cooperation.(6)Although the government is trying to remedy the visible effects of tourist and visitor numbers, the same represents only a fraction of the problem. In fact, pursuant to Law 21/2009, which defines the general framework for hiring non-resident workers and establishes several principles which seek to protect the job security of local workers, Macau now understands that a labour shortage was caused by accelerated population growth after the liberalisation of the gaming sector in 2001. Thus, after a maximum unemployment rate of 6.8% in 2000, unemployment fell to 1.7% in 2014, standing at 1.9% in November 2015, which could be indicative of a severe lack of manpower in the region.(7) This in turn has had a tangible effect on the competitiveness of the economy by limiting the human resources available to local industries. By restricting the increase in competitiveness of the local economy, the current legal framework is not only out of touch with today's situation, but also with the needs of the immediate future.Comment The measures presented by the government appear to be mere palliatives for a socioeconomic fabric that was unprepared for such economic growth and now shows signs of fraying at the edges. The diversification of Macau's economy aims to make the region less prone to a slowdown in the gaming sector and, accordingly, the government has proposed promoting the "development of the conventions and exhibitions sector, cultural and creative activities and traditional Chinese medicine".(8) However, these measures do not solve the lack of political and organisational coordination within the government, which could prevent the respective heads of cabinet from articulating the measures presented for the purpose of pursuing a clear policy line.It is therefore necessary, on the one hand, to review the legal and regulatory framework in force, providing greater flexibility for hiring non-resident workers and rendering the local economy competitive. On the other hand, the government, in cooperation with the Pearl River Delta region and in conjunction with central government policies, must clearly define the economic plan that it wants for Macau, in which the gaming sector would serve as an anchor, and establish an ongoing dialogue between their cabinets, so that the proposed measures are not confined to enclosed sectors but have a tangible effect on the competitiveness of the local economy and on improving the population's quality of life.For further information on this topic please contact Frederico Rato or José Filipe Salreta at Rato, Ling, Lei & Cortés Advogados by telephone (+853 2856 2322) or email ([email protected] or [email protected]). The Rato, Ling, Lei & Cortés Advogados website can be accessed at www.lektou.com.Endnotes(1) Data from the Macau Statistics and Census Service Bureau.(2) Data from the Macau Cartography and Cadastre Bureau, available at www.dscc.gov.mo/ENG/knowledge/geo_statistic.html.(3) Agência Lusa news story, November 30 2015, available at www.sapo.pt/noticias/macau-quer-aumentar-para-90-dias-periodo-de_565c41b251ad4af6328ddb09.(4) Hoje Macau news story, December 1 2015, available at http://hojemacau.com.mo/2015/12/01/governo-reve-lei-da-imigracao-ilegal-detencao-passa-para-90-dias/.(5) Idem, ibid.(6) Macau Government Policy Address for the 2016 Financial Year Report, pages 20 to 25.(7) Data from the Macau Statistics and Census Service Bureau, available at www.dsec.gov.mo/TimeSeriesDatabase.aspx.(8) Macau Government Policy Address for the 2016 Financial Year Report, page 21.