Macau's casino slump is an opportunity to retool the economy
Sonny Lo calls on the government to improve transport services, resurrect municipal councils, and work with business to seek out new avenues of growth, supported by proper skills training
The ongoing decline in casino revenues in Macau points not only to the need for the special administrative region's recently announced austerity measures in all government departments, but also the imperative of diversifying its economy.
By the end of this year, the government will have to handle the review of the casino industry with great care and sensitivity by instilling a sense of confidence among operators, and pre-empting any political protests that may erupt in the midst of a regional economic downturn.
The government has already mentioned the need for consolidation in the casino industry, which could be seen as a signal to operators to slow expansion. Indeed, the recent closure of some VIP rooms means local and overseas operators will have to be realistic. An overly optimistic outlook will likely spell disaster in a small economy that has been heavily dependent on the casino sector to drive the development of other sectors such as retail, catering and hotels.
If government austerity measures prove insufficient, we could expect cuts in subsidies dished out to ordinary citizens, which would demoralise society.
There is no sign of a let-up in the mainland's anti-corruption campaign, nor are mainland high-rollers returning in numbers comparable to a few years ago. The nadir for casinos may not have been reached yet.
The lack of unique industries, other than casinos, means the elite must think hard about what sort of Macau they would like to see in the midst of China's 'One Belt, One Road' policy
It is imperative, therefore, for the government to deal with some issues. First, the bureaucracy is small and has limited capacity. It must enhance transport services by reorganising tour bus routes and services, to link all heritage sites with casinos.
