Macau Brief

Overview

Macau 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.

Political overview

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.

Economic overview

Macau has experienced very strong economic growth in recent years (an average rate of 15.5 per cent a year between 2003 09). Liberalisation of the gaming industry and high levels of investment in associated property and tourism infrastructure have underpinned Macau's growth. Gaming has been licensed in Macau since 1850 and the region is the only part of China where casinos are permitted to operate. The Global Financial Crisis resulted in a severe but short-lived recession, with the Macau economy contracting by 13.4 per cent in the first half of 2009. Economic growth has since rebounded strongly and Macau's real GDP grew by an astonishing 40.2 per cent in the first half of 2010, driven by casino revenue which grew an unprecedented 57.8 per cent over the full year. In revenue terms the Macau gaming market was in 2010 about four times the size of its Las Vegas strip equivalent.

A Closer Economic Partnership Arrangement between Macau and China came into effect in 2004, increasing the territory's economic integration with the PRC. The December 2009 announcement by the People's Bank of China that it would ease restrictions on yuan transactions for Macau residents will further enhance this trend. 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.

Macau's growth is expected to ease throughout 2011. In part this is due to the high comparison base against 2010 figures– which will be difficult to maintain – as well as an indirect cooling effect of tightening central government monetary policy. Higher interest rates and lender reserve requirements announced by Beijing over recent months are expected to reign in liquidity on the mainland, with a direct flow on effect for Macau. The Macau government's cooling measures, including caps on gaming table numbers, may also have a dampening effect on real GDP growth.

Bilateral relationship

Approximately 2,000 people of Macanese descent live in Australia and the following high-level visits have taken place:

• An Australian Parliamentary delegation, led by the Speaker of the House of Representatives Mr Harry Jenkins MP, visited Macau during Easter 2010.
• Ms Florinda Chan, Secretary for Administration and Justice and deputy to the Chief Executive, visited Australia from 20 to 26 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 officials, 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).

Bilateral merchandise trade is modest: in 2009-10 the total volume of merchandise trade was $54 million, compared with the $75 million in 2008-09. Australian exports account for nearly 80 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.

Austrade established an office in Macau in July 2005. Consular services are provided by the Australian Consulate-General in Hong Kong.

Trade successes

Australian companies are involved in design, construction, project management and fit-out of casinos, marinas and entertainment projects in Macau; they are supplying gaming machines and IT systems to the new casinos, and a range of food and beverages to Macau's hotels, restaurants and retail outlets. Leighton Construction, Meinhardt Engineering, WT Partnership (quantity surveying) and Aristocrat (gaming machine supplier) are some of the Australian companies currently active in Macau.

Melbourne-based Crown Limited is involved in a number of casino projects in Macau, including: 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.

Since March 2007, Australian shipbuilding company Austal has won a number of multi-million dollar contracts for the supply of high-speed ferries to service waters around Hong Kong and Macau.

Australia is a significant source of bloodstock, animal feed, veterinary products and management expertise for Macau's racehorse and greyhound industries.

Last updated January 2011