When the new concessions were signed, the government was aware of the risk of delegating part of its functions to the six gambling operators. A new era was beginning, in which it seemed that a government of chips was being asked to stage its own demise. The term of the contracts and the timetable for diversification were calculated… and they were right. Adequate economic diversification was wanted by 2035; the same year in which the concessions would end if they were extended. Two years on, it’s already clearer that the gaming industry will be Macau’s cornerstone for a long time to come.
The city’s economic structure is far from a different future, even disinterested in an alternative reality. If this were not the case, there is a lack of structures and talent to create extraordinary revenues to sustain the standard of living that has been cemented in the meantime. On the other hand, by giving concessionaires the obligation to finance, plan and even execute diversification plans, a gap in the government’s competence in the management and development of emerging industries is exposed. Not to mention the senior civil servants who are being recruited by the concessionaires, precisely to set up these “new departments”, which are crucial to fulfilling contractual obligations. The current path may lead to a quantitative and qualitative slimming down of the Administration; the opposite is more likely to happen in the concessionaires, due to the new designs.
Even if the government is only responsible for policing the private sector, there are other dangers inherent in the strategy, starting with the obvious conflict of interest. At project meetings with the concessionaires, it is rare for the public sector to want to hear about revenue; they usually even ask for more money for the events, unconcerned about the financial balance. It gives the impression that as long as you show Beijing what you’re doing… everything is fine. When the concessionaires turn off the tap, tensions are created on both sides, because they can’t be asked to create new lines of business where there is no business.
The government will have to rethink this cooperation sooner or later. If the new infrastructures and services provided by the concessionaires don’t make money, diversification is just an illusion. The economy won’t grow, jobs will stagnate and a society will continue to be shaped that only lives off tourism or subsidies.
The biggest mistake lies in creating diversification that only lives on image. It doesn’t translate into numbers. It’s also important to realize that small and medium-sized businesses must be an active part of the future. The space must be created for them to reinvent themselves, joining the joint efforts of the government and the concessionaires. Diversification cannot be combined with two, nor is that the basis of the concept. The third player needs to feel that it has a place at the table, that it is given the means to make a difference at local and regional level. Just as the game is learning to live off the mass market, so Macau must learn to develop its business fabric.
