Macau was returned to the People's Republic of China (PRC) from Portuguese administration on 20 December 1999. Portuguese seafarers first settled in Macau in the 16th century and Portugal administered the region until the handover to the mainland.
Macau's Basic Law or mini-constitution was promulgated by the PRC's National People's Congress in 1993. It specifies that Macau's social and economic system, lifestyle, rights, and freedoms are to remain unchanged for at least 50 years after the transfer of sovereignty to China.
Under the principle of "one country, two systems", Macau enjoys a high degree of autonomy in all areas except in defence and foreign affairs. The Basic Law provides for an independent executive, legislature and judiciary.
Under Macau's executive led system the Chief Executive (CE) is responsible for implementing the Basic Law and other laws of Macau. The CE makes policy decisions and has the power to initiate legislation. The CE also appoints an Executive Council of between seven and eleven members who are consulted on major policy decisions. The CE is appointed by Beijing after election by a 300-member Election Committee representing Macau's business, cultural and social interests.
CE's are elected for five years and limited to two terms in office. Edmund Ho Hau Wah was Macau's inaugural CE, serving two terms. Dr Fernando Chui Sai On became Macau's second CE on 20 December 2009.
Besides the CE and Executive Council, Macau has a Legislative Assembly which is responsible for general lawmaking, including taxation and passing Macau's budget. The Assembly has 29 members: twelve directly elected, ten indirectly elected members representing functional constituencies and seven members appointed by the CE. Members of the legislature serve four-year terms.
Macau's civil law tradition is inherited from Portugal, though judicial links with Portugal were severed in June 1999. The judiciary comprises a Court of First Instance, a Court of Second Instance, a Court of Final Appeal, a Lower Court and an Administrative Court. Members of the judiciary are selected by an independent committee and appointed by the CE.
While Beijing controls Macau's foreign affairs, as with Hong Kong, Macau has considerable autonomy in some external matters, mainly concerning economic and cultural relations and related agreements. Macau is a member of several international organisations including the World Trade Organization, as a separate customs territory.
Next Legislative Assembly elections are due to be held in 2013 and next CE elections in 2014.
In his third annual policy address in November 2011 CE Chui announced the government would canvass public opinion on possible changes to the method of electing the Legislative Assembly.
Macau's Basic Law contains provisions which allow for the electoral system to be changed after 2009. The Basic Law says that any changes to the method of selecting the CE or the Legislative Assembly must be reported to the National People's Congress Standing Committee for approval. In his announcement CE Chui said the Macau government had sought an interpretation of the Basic Law from the NPCSC Standing Committee regarding possible electoral reforms.
In late December 2011, the Standing Committee delivered its interpretation, clarifying various issues, including the need for electoral reforms to be cleared by a two-thirds majority of the Legislative Assembly. The Committee highlighted the need for any reforms to be approved by the CE before being forwarded to the NPCSC for final approval. The Committee also stressed that any final decision on whether reforms were necessary was reserved for the Standing Committee.
After conducting eight consultations in January 2012 on the method of selection for the CE and the Legislative Assembly the government submitted a report to the National People's Congress Standing Committee summarising the opinions and submissions received. Media reporting following the consultations indicated that while the majority of residents want reform, opinions differ on the number of directly and indirectly-elected seats to be made available. The government then held a second round of public consultations on electoral reform and, on 9 May 2012, the Legislative Assembly passed the so-called 'mainstream option' for the Assembly, which adds two directly-elected and two indirectly-elected lawmakers. The option for the CE will add 100 members to the election committee. The amendments have now been referred to the NPCSC for final approval.
Macau has experienced very strong economic growth in recent years, underpinned by liberalisation of the gaming industry and high levels of investment in associated property and tourism infrastructure. Gaming has been licensed in Macau since 1850 and the region is the only part of China where casinos are permitted to operate. Gaming revenues, which generate about 80 per cent of government revenue, have reached record highs but have exhibited slower growth at 3.2 per cent year-on-year in October 2012, compared to 25.7 per cent in May 2012. Macau now generates five times the gambling revenue of Las Vegas, thanks mainly to high-rolling VIP gamblers from the mainland.
Despite international uncertainty and China's cooling economy, Macau's GDP grew by 20.7 per cent in 2011, driven by growth in gaming revenues, increasing visitor arrivals and strong domestic demand. Per-capita GDP rose to a historical high of USD$66,311 which is one of the highest in the world. The Macau government predicts low double-digit growth for 2012. Real GDP grew by 12.6 per cent year-on-year in the first half of 2012.
Inflation remains a concern, although at 5.19 per cent in October 2012 it appears to be trending down. Furthermore, with strong economic growth and almost full employment (unemployment is currently two per cent); Macau is confronting a severe labour shortage. It is likely that competition for labour will continue to increase with a number of casino operators awaiting approval for expansion projects. Non-resident workers currently constitute about a fifth of Macau's total population of 500,000.
The gaming industry dominates the local economy to the extent that it accounts for around 20 per cent of local jobs. Traditional industries such as clothing and manufacturing, by contrast, continue to decline. The Macau government aims to diversify the economy and the labour market away from its high level of dependence on gaming and gaming-related employment by stimulating the growth of sectors such as conferences and exhibitions, sport and leisure, and entertainment.
A Closer Economic Partnership Arrangement between Macau and China came into effect in 2004, initially covering select trade in services and investment facilitation. The CEPA now comprises several supplements. Supplement IX, signed in July 2012, expands the range of services and non-services measures and now includes education and training and rail transportation. There are now a total of 48 liberalised service sectors and 318 liberalisation measures. By the end of the mainland's 12th five year plan (2011-15) trade in services is expected to be fully liberalised.
China is Macau's principal source of imports and Macau depends on China for most of its food, fresh water, energy and, increasingly for labour. Projects such as the Hong Kong-Macau-Zhuhai bridge, due for completion in 2016, will further connect Macau with the greater Pearl River Delta, reducing travel times and assisting with the flow of goods and labour. The combination of the CEPA, tourism, gaming and the mainland's decision to ease restrictions on renminbi transactions for Macau residents will increase the territory's economic integration with the PRC. Macau exercises jurisdiction over Henqin Island, which it leases from the PRC, on which the University of Macau is opening a new campus in 2012. The Island will be linked to Macau by an underwater tunnel.
Australia and Macau enjoy good relations at the government and officials levels. The following high-level visits from Australia have taken place since the territory was returned to the mainland:
- An Australian Parliamentary delegation, led by then Speaker of the House of Representatives Mr Harry Jenkins MP, visited Macau in April 2010.
- Ms Florinda Chan, Secretary for Administration and Justice and deputy to the Chief Executive, visited Australia in September 2003 to learn of Australia's experience in governance and administrative reform
- Ms Teresa Gambaro, then Parliamentary Secretary for Foreign Affairs, visited Macau on 27 October 2006 and met Florinda Chan and leading Macau-based Australian executives.
- Then Trade Minister the Hon Mark Vaile MP visited Macau in May 2000 for an Australian trade promotion.
- Then Foreign Minister the Hon Alexander Downer MP led a high level Australian delegation to the 1999 handover ceremonies to convey Australia's interest in seeing Macau's "high degree of autonomy" continue in accordance with the Sino-Portuguese Joint Declaration and the Macau Basic Law.
There have also been frequent visits by Australian State Government representatives, including the Lt. Governor of South Australia (December 2009), the South Australian Minister for Infrastructure, Transport and Energy (July 2010) and the Western Australian Minister for Sport, Recreation, Racing and Gaming (October 2010).
Australia has strong business interests in Macau including in the design, construction, project management and fit-out of casinos, marinas and entertainment projects in Macau. Melbourne-based Crown Limited has an interest in the $549 million Altira, which opened in 2007, and the $2.3 billion City of Dreams, which opened in June 2009. Both projects are operated by Melco Crown Entertainment, a joint venture between Crown Limited and Hong Kong-listed Melco Entertainment Limited. The City of Dreams casino currently contributes approximately 18 per cent to Macau's gaming revenue.
The booming gaming industry is creating opportunities for Australian businesses providing gaming products and services. Aristocrat has already established itself as the largest provider of gaming machines in Macau. Transcity Asia, a subsidiary of Transcity Group based in Melbourne, opened in Macau in 2010 offering repair and service capability for gaming machines.
Bilateral merchandise trade is modest: in 2011-12 the total volume of merchandise trade was $54 million, up from $44 million in 2010-11. Australian exports account for more than 75 per cent of total two-way merchandise trade. Major items are prams, toys, games and sporting goods; live animals excluding seafood; and curtains and other furnishing articles. Australia's main imports from Macau are medicaments including veterinary and pharmaceutical products.
Trade statistics may understate the true level of exports from Australia to Macau because there are few direct shipping services and many products, especially food and beverages, which are repacked and trans-shipped via Hong Kong, are not recorded as being of Australian origin.
Australia and Macau signed a Tax Information Exchange Agreement on 12 July 2011.
Approximately 2,000 people of Macanese descent live in Australia and around 1,000 Australians live in Macau.
Consular services for Macau are provided by the Australian Consulate-General in Hong Kong. From 1 July 2012 Macau residents will no longer need a visa label for any Australian visas. The visas will be linked electronically to their passports.
Austrade established an office in Macau in July 2005. Together with the South Australian and Queensland Government trade departments, Austrade supported the first Australia Food Festival in Macau in May 2012 aimed at promoting Australian food and drink products.
Last updated November 2012