CHINA: Macau Gaming Boom at a Cost

• by Antoaneta Bezlova (macau)
• Friday, April 17, 2009
• Inter Press Service

The former Portuguese enclave may have surpassed Beijing mandarins’ wildest dreams by becoming one of the fastest growing economies globally, clocking annual growth of 30 percent in 2007 and overtaking the world’s gambling capital Las Vegas in earnings, but the boom has come at a cost.

A string of corruption and money laundering scandals involving Chinese communist party officials and managers of state firms have filtered through the press, creating a wave of resentment on the mainland where the leadership is attempting to reinstate Confucian virtues of plain living and honest public service as the mantras of the day.

Meanwhile, the enclave’s freewheeling dash for growth has alienated chunks of Macau population that have been left out of the development loop and are unable to share in the gambling bounty.

Editorials in China’s state press have described an 'epidemic of gambling,' afflicting large groups of mainland population and leading to countless losses of family savings as well as huge amounts of public money gambled away at Macau’s casino tables. While the amount of lost public money has not been reported, the Beijing Youth Daily went as far as saying earlier this year that reckless gambling by officials was a 'threat to the national treasury'.

What is more, commentators have warned that the survival of China’s entrepreneurial culture is in danger after a series of gambling-caused bankruptcies hit the province of Zhejiang – China’s export powerhouse for everything from socks and buttons to toys and artificial flowers. Famous for private initiative and hard-working businessmen, Zhejiang has been at the forefront of China’s transformation as an economic tiger.

An investigation by the China Business Journal found that in 2008, Zhejiang private entrepreneurs gambled away at least 1.3 billion RMB (191 million dollars) in Macau, leading to the closures of scores of factories in the province. 'To save Zhejiang from gambling means to save China’s private business culture,' proclaimed an editorial in the newspaper.

'For many mainland Chinese arriving in Macau the feeling is sensational,' says Zeng Zhonglu, a gaming industry expert at Macau Polytechnic Institute. 'This is their first visit to a legal gambling spot and they are dazzled by the opportunities and by the freedom. They want to gamble big and they want to win big.'

Feng Ruxue, a loud and brash 38-year-old punter from Fijian province, describes her first feeling at entering the cavernous casino of the Venetian, Macau’s plushest gambling spot, as being 'awestruck.' She couldn’t remember what struck her more – the opulence of the place with its palatial pillars and engraved dragons on the ceiling, or the fact that there were so many Chinese people openly engaged in a pastime that has been banned in mainland China for decades.

'It was incredible! In broad daylight there were hundreds of people betting and gambling lots and lots of money,' she says.

Along with opium and prostitution, gambling was among the vices that Chinese communists banned and vowed to extirpate upon seizing power in 1949.

But Macau – an old trading post where Portuguese enjoyed a colonial status similar to that of the British in Hong Kong - remained a haven for gamblers, gold smugglers, opium and gun dealers and all kinds of shady businesses. After gambling was legalised in 1964, the sleepy fishing village was drawn out of its colonial slumber as it gradually became a magnet for gamblers all over the region.

The notion of Macau’s seediness was so enduring that a 1952 Hollywood film noir 'Macao' by Josef von Sternberg opened with a local customs officer greeting the arrival of three Americans with the famous: 'In Macau, everything is a gamble.'

While gambling has been a seamy part of Macau’s existence for 150 years, it was not until it returned to Chinese sovereignty in 1999 and its new leaders, hand-picked by Beijing, embarked on overhauling the tiny enclave’s fortunes that the gambling industry got a serious shot at making big profits.

The first foreign-owned casino opened in 2004. At the end of 2008, Macau had 31 licensed casinos, along with scores of new hotels and huge shopping centres, transforming this once tranquil place of just half-a-million people into a bold and brash twin of nearby Hong Kong. Last year the enclave received 23 million visitors, more than half of them from mainland China.

'I miss the old days when we all knew our neighbours and everybody had the same worries about earning their daily bread,' sighs Sit Chi Shin, 63, as he sips tea at one of the small cafés on the street leading to the iconic St. Paul’s cathedral here.

'We have too many foreigners now and I sometimes feel lost. And young people don’t want to study any more. They think they can take a shortcut to getting rich by working for the casinos.'

The Macau government’s labour policy mandates that only locals can be employed as casino croupiers. But the huge demand from rapidly rising numbers of gambling tables has also meant that young people with relatively little training were able to start earning big money all too quickly. Last year the university enrolment rate dropped to about 34 percent, down from 39 percent before 2004.

'Croupiers in Macau could earn as high as 15,000 patacas (1,900 dollars) a month,' says Zeng Zhonglu, adding that the average salary is around 8,000 patacas. 'Of course, there are people who are disgruntled and unhappy – they can’t share in the gambling boom but suffer the consequences of high inflation and high property prices'.

Authorities recognise the brewing crisis and have doled out cash to ease people’s grievances. Last year, long-term residents of Macau received 5,000 patacas each. This year the cash handed out has risen to 6,000 patacas per person.

Meanwhile, Beijing is dealing with the social domino effect of the 'gambling epidemic' by cracking down on the gambling habits of party leaders and public figures. Last year, it announced a drastic reduction in travel visas to Macau, limiting trips from the mainland to once every three months, and for no more than seven days.

Party investigators have issued a stern warning about corruption among party and government officials, singling out the danger of gambling. In a widely publicised speech titled 'The Socialist Concept of Honour and Disgrace' recently, president and party chief Hu Jintao reminded the public of Confucius’ 'eight disgraces,' including the pursuit of profit.

When Vice-President Xi Jinping - in charge of Hong Kong and Macau affairs in the communist leadership - visited Macau in January, he gave no indications that the travel ban would be eased any time soon. Instead he called on Macau politicians and society to diversify the local economy and rely less on gambling.

But observers believe diversification would be difficult as the tiny enclave lacks the land and human resources to replicate Las Vegas success by developing convention centres and an entertainment industry.

'Macau is impossible without gambling,' says Harald Bruning, director of The Macau Post daily and a long-term resident. ‘It is like thinking of Rome without the Pope.'

Ironically, Beijing’s disaffection with the rewards of gambling and attempts to cool growth are occurring just as regional competition in the industry is heating up, with Singapore, Vietnam and the Philippines all in the midst of big gaming projects.

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

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